South Africa launches green hydrogen guidelines

From the newsletter

South Africa has launched two key tools to guide the development of its green hydrogen sector: an Environmental Impact Assessment (EIA) guideline to support environmental assessment experts in the sector and the South African Green Hydrogen Potential Atlas, an online geospatial tool designed to map potential green hydrogen hotspots.

• The timing of South Africa’s move is critical. The Paris Agreement's 2050 carbon neutrality target has accelerated the global clean energy transition, with green hydrogen emerging as a key alternative. This shift has driven a surge in demand, projected to range between 150 and 500 million metric tonnes annually. With Africa’s vast renewable energy resources, particularly wind and solar, many Western nations are looking to the continent to meet their green hydrogen needs.

• For instance, the European Union aims for carbon neutrality by 2040 and, under its RePowerEU plan, has set a target to import 10 million tonnes of green hydrogen by 2030, much of it expected to come from Africa. South Africa, with its abundant renewable energy potential, extensive coastline, and well-developed port infrastructure, holds a strategic advantage in producing cost-effective green hydrogen and its derivatives to meet this growing global demand.

More details

• South Africa faces pressing domestic challenges. The country’s energy sector remains heavily reliant on coal, which accounts for 85% of its electricity generation, according to the International Trade Administration. Chronic power shortages and persistent load shedding since 2007 have underscored the urgent need for a more sustainable and secure energy solution. Green hydrogen is being positioned as a long-term strategy to mitigate these issues while reducing dependence on fossil fuels. 

• These capabilities are supported by robust policies such as the Hydrogen Society Roadmap for South Africa, the Green Hydrogen Commercialisation Strategy for South Africa, and the Just Transition Framework. The newly launched EIA guideline and the Atlas further strengthen the policy framework by streamlining environmental assessments and providing a tool to optimise hydrogen project locations.

• To secure its place as a key supplier in the global hydrogen economy, South Africa aims to produce 13 million tonnes of green hydrogen and its derivatives by 2050, potentially creating 360,000 jobs in the sector. As one of Africa’s leading green hydrogen players, alongside Namibia, Kenya, Egypt, Morocco, and Mauritania, the country is actively strengthening its policy framework and infrastructure to attract investors and establish itself as a major exporter.

• To accelerate this growth, the country has formed partnerships with Germany, Japan, the Netherlands, Denmark, and the United Arab Emirates, all of whom have expressed interest in investing in hydrogen production and infrastructure. These nations stand to benefit from securing a stable supply of green hydrogen to meet their decarbonisation targets, while South Africa gains access to foreign capital and technical expertise. Notably, Germany’s development agency (GIZ), under its H2.SA programme, funded the development of the two newly launched tools, reinforcing its commitment to supporting South Africa’s green hydrogen economy.

• While these international partnerships provide crucial financial and technical support, South Africa still faces significant hurdles in scaling up its green hydrogen sector. One of the primary hurdles is infrastructure. Transporting green hydrogen requires specialized pipelines, as existing gas infrastructure would need costly modifications to accommodate hydrogen’s properties. A 2023 Hydrogen Transport Comparison Report found that alternative transport methods, such as high-pressure compression or conversion into ammonia, introduce inefficiencies that could result in up to 48% hydrogen loss. 

• Economic viability is another major concern. The cost of producing and transporting green hydrogen remains significantly higher than that of fossil fuels—up to five times more expensive. Exporting green hydrogen across oceans presents logistical challenges, limiting South Africa’s ability to compete with producers closer to key markets. Without guaranteed offtakers or financiers, large-scale investment in production facilities remains a risk.

• Addressing these barriers will determine whether South Africa can transition from ambition to execution in its green hydrogen sector.

Our take

• The newly launched tools are crucial in accelerating South Africa’s green hydrogen sector. While their tangible impact remains to be seen, they represent a significant step in positioning the country within the global clean energy transition.

• South Africa’s green hydrogen ambitions will be tested by its ability to bridge the gap between policy and execution. While the new guidelines provide a structured approach to environmental assessments and project siting, their impact will ultimately depend on how efficiently they are enforced and integrated with broader energy transition efforts.

• While South Africa has the resources and policy frameworks to support large-scale green hydrogen production, its success will depend on overcoming infrastructure constraints and ensuring market readiness.