President Cyril Ramaphosa met with two prime ministers from the Netherlands and Denmark on Tuesday to conclude talks on the launch of a new SA-H2 Fund (SA-H2). The announcement came during a joint working visit by two visiting heads of state – Prime Minister Mark Rutte of the Netherlands and Prime Minister Mette Frederiksen of Denmark, in Pretoria.
SA-H2 is an innovative blended finance fund that will facilitate and accelerate the development of a green hydrogen sector and circular economy in South Africa. The fund is supported by Climate Fund Managers (CFM) and Invest International B.V. (II) of the Netherlands, Sanlam, the Development Bank of Southern Africa (DBSA), and the Industrial Development Corporation of South Africa (IDC), in collaboration with other strategic partners.
During the meeting that Ramaphosa had with the two heads of state, a Heads of Agreement was concluded with the intention to launch SA-H2.
The fund initiative is aimed at securing R18-billion in funding, which will be raised directly in South Africa or indirectly via other channels through a partnership of private and public enterprises and international and domestic institutions in South Africa and Netherlands.
SA-H2 echoes the immense potential of blended finance in tackling the climate crisis, and its focus will be to fast-track the mobilisation of funding towards the development and construction of large-scale green hydrogen infrastructure assets across South Africa.
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.
“Hydrogen replaces carbon-intensive fuels, reducing emissions and environmental impact. It also enables efficient storage and utilisation of energy from renewable sources, which can be more intermittent, ensuring a reliable supply. Hydrogen energy production provides a clean, versatile and efficient energy source that can drive the transition to a low-carbon economy, helping end the climate crisis and secure a more sustainable and prosperous future.”
Group executive in project preparation at the DBSA, Catherine Koffman, said: “Succeeding in a just transition to cleaner energy rests on our ability to create a viable marketplace that attracts and mobilises public and private capital, and this fund will do just that. We will create and use innovative blended finance architecture and structuring to build a substantial pipeline of green hydrogen projects in South Africa. This will give private sector developers access to risk capital from an early stage of development, throughout construction and into operations.”
CEO of Invest International Joost Oorthuizen said SA-H2 is a showcase of how public, private, international, and local parties can join forces to create a catalytic effect on the development of an exciting new sector.
“Green hydrogen projects in South Africa can contribute to local sustainable development and support the energy transition locally as well as in export markets. 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,” said Oorthuizen.
IDC COO Joanne Bate said: “The green hydrogen economy presents new economic opportunities, new skills, employment and community opportunities for South Africa. The development of this new industry will support the longer-term energy security priority, and the just energy transition contribution will proactively address socio-economic development. South Africa will position itself as a globally competitive player in this industry. More importantly, green hydrogen will enable the local decarbonisation of hard-to-abate industrial sectors.”
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