South Africa has taken a major stride towards establishing a green hydrogen sector this week, as the country on Tuesday launched a $1 billion green hydrogen fund. The South Africa government launched the fund in partnership with the governments of Denmark and Netherlands, and is anticipated to help kick-start development of green hydrogen projects in the country.
The launch of the fund dubbed SA-H2 fund was announced by South Africa’s President, Cyril Ramaphosa, Danish Prime Minister Mette Frederiksen and Dutch Prime Minister Mark Rutte. The Danish and Dutch leaders are in South Africa on a two-day working visit.
The SA-H2 fund received an initial seed funding of $250m from Dutch investment firm, Invest International, and is backed by climate finance investment firm, Climate Fund Managers (CFM), financial services group Sanlam, the Development Bank of Southern Africa (DBSA) and the Industrial Development Corporation (IDC).
“Green hydrogen projects in South Africa can contribute to local sustainable development and support the energy transition locally as well as in export markets,” said Joost Oorthuizen, CEO of Invest International.
“While deploying its funds, Invest International makes efforts to demonstrate strong environmental and social commitment, strive for local impact and inclusive growth, and combine the expertise of Dutch and South African businesses,” Oorthuizen added.
Public-private collaboration in establishing SA-H2 Fund
According to the fund’s backers, the SA-H2 Fund initiative will aim to secure US$1 billion in funding, to be raised directly in South Africa or indirectly via other channels. They highlighted the significance of partnership of private and public enterprises, international and domestic institutions to establish SA-H2, saying it reflects the immense potential of blended finance in tackling the climate crisis.
Andrew Johnstone, CEO of Climate Fund Managers, said: “To achieve Net Zero by 2050, urgent and unprecedented action is needed. We believe that green hydrogen is both the pathway and the solution to the global energy transition. South Africa combines deep technical and capital markets with world-class conditions for generating renewable electricity through solar and wind power, key drivers in the production of green hydrogen.
“Fitting within the framework of the Just Energy Transition, SA-H2 will help empower South Africa to claim its rightful place as a world leader in this exciting and necessary sector. SA-H2, once established, will join the recently announced SDG Namibia One fund (aiming to secure US$1 billion in funding to be raised directly in Namibia or indirectly via other channels), as the second-of-its-kind, regional blended finance fund to develop and fund green hydrogen projects,” adds Johnstone.
