Transnet is set to get a R140 million shot in the arm from the about R630m grant funding announced by the EU Commissioner for Energy, Kadri Simson, towards building up South Africa’s green hydrogen production capabilities, as the EU spreads its sources of clean energy to support the market, which currently consumes 10 million tons of clean energy a year.
This comes as the EU yesterday announced two grants with a sum of R628m (€32m) in support of South Africa’s green hydrogen agenda.
At a briefing on the announcement alongside the Department of Electricity and Energy as well as the Department of Trade, Industry and Competition (dtic) yesterday, it was said that a R490m tranche was expected to leverage R10 billion in private and public sector finance across the hydrogen value chain, covering production, transportation, storage and downstream industries.
A second EU grant of R138m to assist Transnet in its turnaround strategy is expected to leverage additional funding for the green transformation of its core operational areas, including ports, rail, pipeline, engineering and related facilities.
This project’s main objective is to support the development of a green hydrogen ecosystem in South Africa and the entity, as an integrated transportation and logistics company, is expected to play a critical role across the hydrogen value chain for its operations as well as domestic and export markets.
The grant will help contribute towards ensuring that Transnet meets its own internal commitments as well as the government’s initiatives relating to the Hydrogen Society Roadmap.
The EU’s R138m (€7m) grant will be channelled through the Agence Française de Développement (AFD).
Minister of Electricity and Energy, Kgosientsho Ramokgopa, said the grant, separate from the endowment from international partners, was expected to help the country build hydro capacity to earn from demand for clean energy in developed countries.
“This speaks to it ability to access the market. We know that green hydrogen is not coming in competitively. You pay a premium for that. We know industrialised countries are ready to pay that premium,” he said.
“We expect the cost cap to come down about $1 per kilogram over a period of time, and become even more competitive. But I think we will use the opportunity and availability of the market to ensure that we exploit our endowments and build an industry.”
Simson said that through the recently formed Green Hydrogen Bank, the EU had received about 132 offers to supply clean energy, and it was on a quest to help the most promising of the countries, including South Africa, to build capacity for green hydrogen.
“Right now we consume 10 million tons of clean energy mainly hydrogen. We need to import natural gas, target for natural gas consumption,” Simson said.
“One way is to request our international partners and also help with the mechanism to support market development abroad and connect our demand centres with the most promising producers worldwide.”
Meanwhile, Ramokgopa said the all-round discussions also focused on the looming implementation of the Carbon Border Adjustment Mechanism (CBAM), which is likely to add the cost of exports for South African industries, particularly the steel and cement manufacturing sectors.
He said South Africa had expressed its concerns and the conclusion was an agreement that the EU and the country “work together“ on the CBAM considerations.
Simson also said the EU was at this stage collating information on the proposed act and was meanwhile explaining the successes that had resulted from internal processes, which the bloc hoped would inspire its international trading partners to comply.
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