GREEN HYDROGEN How South Africa can capitalise on it, and why we need to do it now

A recent IEA report makes the call for a massive increase of concessional finance to mobilise largescale private investment in hydrogen projects in developing countries. But how can hydrogen (a gas) be green and why is it necessary in the energy system?

In what was dubbed a “landmark” report, the International Energy Agency (IEA), the International Renewable Energy Agency (Irena) and the UN Climate Change High-Level Champions released the Breakthrough Agenda Report 2022, which provides an independent assessment of the historic commitments made by governments at COP26 in 2021, and the recommendations in the run-up to COP27.

The report delivers a clear call to action for governments along with key recommendations that can help to rapidly reduce emissions, cut energy costs and boost food security for billions of people worldwide, in line with the goal of keeping global warming to a maximum of 1.5°C (the tipping point). A large focus of the report was ramping up development of low-carbon and renewable hydrogen – recommending an increase of less than one-million tons in 2020 to about 150-million tons by 2030, which requires doubling each year from today. The report looked at how international cooperation can increase the availability and affordability of renewable and low-carbon hydrogen and makes a strong call to increase concessional finance by multilateral development banks to mobilise large-scale private investment in hydrogen projects in developing countries.

“What’s different about this report is its focus on international collaboration,” Simon Sharpe, director of economics for the UN Climate Change High-Level Champions said at the launch of the report. “There are many other reports out there saying what countries or businesses can do individually. This is about how they can work together to achieve more than the sum of their parts. It can do that with faster innovation, stronger incentives for investment, larger economies of scale and level playing fields where we need them. All those things can make transitions faster, less difficult and at a lower cost.”

Elizabeth Press, director of planning and programme support at Irena, says that “hydrogen is everybody’s darling at the moment, there is a lot of policy attention to this… on where international cooperation can really shift the needle on hydrogen.”

Hydrogen research in South Africa was motivated in part by the potential impact that the transition away from the internal combustion engine (ICE) to battery EVs would have on the country’s platinum mining industry. Together, South Africa and Zimbabwe hold over 90% of the world’s known PGM reserves. Since 30% to 40% of the supply goes into the production of catalytic converters for ICE vehicles, the initial focus of research was on hydrogen-powered fuel cell EVs as an alternative market. It is estimated that South Africa has the potential to produce six-million to 13-million tons of green hydrogen and derivatives a year by 2050. To do so would require between 140 and 300GW of renewable energy. President Ramaphosa, November 2022

Doubling every year also requires an accelerated deployment of renewable power. To reach these targets, a sharp escalation in financing across the hydrogen value chain is required. Out of the hydrogen production that exists today, only 1% of it is “climate-proof”. But how is hydrogen used to create electricity and why is it necessary for us to include it in the energy mix?

Hydrogen In The Energy System

Will Swart, an energy engineer at Meadows Energy, explains that there are several ways to produce hydrogen, but the most common is through hydrolysis – using electricity to split water molecules into hydrogen gas and oxygen atoms – this process is very energy intensive, so it’s only “green” hydrogen if this process is fuelled by renewable energy (such as wind or solar), not from fossil fuel energy (such as coal) called “grey hydrogen”, which is what Sasol does.

“And then you can convert that hydrogen back into electricity through a process where hydrogen reacts with oxygen across an electrochemical cell producing electricity and water – so, it’s basically the reverse of when you produce it.”

Tobias Bischof-Niemz, energy expert and CEO of renewable energy company ENERTRAG South Africa, agrees and explains that hydrogen acts as an energy carrier – you can either store hydrogen or use it right away. “If you use the hydrogen in a direct reduction furnace, for example in a steel plant, then the hydrogen effectively burns and becomes water again.”

Unless there is a gas leak, there are no emissions that go into the atmosphere, just water vapour – making it “green”. While Bischof-Niemz acknowledges that we do have to monitor leaks, he said that even with an enormous leakage of 10% of hydrogen – which is “actually impossible, because a lot of the hydrogen will immediately be converted into something else, like ammonia” – the global warming potentials of the entire leak would only be less than 1% of today’s CO2 emissions.

IS HYDROGEN REALLY NECESSARY?

Well, hydrogen has three real benefits – long-term storage, economic opportunities from exporting it to other countries and decarbonising the environment. While long-term storage is not as relevant in a country like South Africa with less seasonal variability (we have more consistent solar, for example, unlike countries in Europe), hydrogen is a technical necessity to decarbonise our environment. Press from Irena say that a driving force behind green hydrogen development is that it is a “climate imperative”.

“There are absolutely areas where we know no other solution exists today, and that the hydrogen needs to be advanced for that purpose,” says Press. Bischof-Niemz explains that green hydrogen is a technical necessity in a completely decarbonised, net-zero world because there is no other (known) way to decarbonise steel, shipping, aviation fuel, fertiliser or chemicals. For example, large container ships cannot run on batteries and need a fuel, and a green one at that. “So, naturally we need a fuel that is made out of the new primary energy which will be electricity from sun and wind,” says Bischof-Niemz.

The report highlights that there are limited alternative clean energy solutions in sectors such as heavy industry, shipping, aviation, seasonal electricity storage and potentially segments of heavy-duty trucking.

Considering that transport has the greatest reliance on fossil fuels internationally, the need for hydrogen becomes more obvious.

ALL-ELECTRIC NOT FEASIBLE

Ronny Kaufmann, CEO of Swisspower, a strategic alliance of the most important city utilities in Switzerland, speaks about the importance of leveraging a country’s natural resources when it comes to the energy mix and the importance of green hydrogen for storage. Kaufmann says he does not believe in an all-electric energy system because it “has its systemic failures and is a romantic view for some people”. Using other energy sources, such as hydrogen or biomethane, is better than just producing electricity in certain cases. “But a world where you substitute all energy resources into electricity will not work. It is better to use hydrogen than fossil gas – and an all-electric world is not feasible.”

Energy expert Clyde Mallinson says one criticism of hydrogen development is that South Africa doesn’t require long-term storage. “This is not currently the case in many higher latitude countries, who have massive inter-seasonal variances in solar in particular,” he says. Bischof-Niemz agrees that long-term storage is less relevant in a country like South Africa, but says it is still needed in sectors that cannot decarbonise otherwise. Additionally, hydrogen could become more relevant in South Africa as renewable generation increases and if we create surpluses. For example, Kaufmann explains that every country has its own energy technical environment, and for Switzerland it’s a hot summer and a very cold winter, which means in summer there is a surplus of electricity. Switzerland produces as much energy in summer as possible and uses the surplus (from renewables or nuclear sources) to pump water to the mountains where they have dams. Then in winter, when electricity demand is higher, they use this water to generate power.

Kaufmann explains that like Japan (but unlike South Africa), Switzerland doesn’t have a lot of surface but it does have verticals in the landscape, which it uses to produce energy. Historically, it was much easier to produce water than solar energy, so most of Switzerland’s electricity comes from hydropower (pump storage from dams and runof-the-river hydroelectricity).

In South Africa, using our space and wind and solar potential and storing surplus energy through green hydrogen could be beneficial.

“A lot of people think it’s the answer to energy storage,” says Swart, referring to hydrogen. “Wind and solar only produce power when the sun is shining or the wind is blowing. But if you use that renewable energy to produce hydrogen, then you have a means to store that energy.”

Kaufmann adds: “There are a lot of production possibilities for gas, like using electricity surpluses you have from the summer that you can’t store with renewable sources.”

Bischof-Niemz explains that hydrogen is not an alternative storage to batteries but can be used in addition. Batteries are “perfectly suited to balance the day-to-night-time fluctuations, but hydrogen is better suited for the long term, because you can store it away inexpensively without losing anything.”

Swart adds that with its good wind and solar resources, South Africa could set up plants to produce green hydrogen, which it could export to “anyone across the world to use that to produce green electricity, which could be huge for South Africa”.

The country has abundant natural resources and available land for the process and is thus ideally positioned to produce enough green hydrogen to both decarbonise many of its own energy-intensive industries and tap into the rapidly building global demand for the fuel, according to research commissioned by the EU Delegation to South Africa. For example, Switzerland, which doesn’t have naturally occurring fossil fuels such as gas or coal, doesn’t import coal but does import renewable gas. Kaufmann says the country has a target to make its gas consumption more renewable. And like many countries in Europe, it is highly dependent on Russian gas. “Societies are realising that we have to first diversify the origin of our gas suppliers and then make our gas consumption more renewable,” says Kaufmann.

SOUTH AFRICA’S PLANS FOR HYDROGEN

South Africa already produces hydrogen – but it is “grey” hydrogen from fossil fuels (coal), which results in massive carbon emissions.

Bischof-Niemz’s research found that Sasol’s Secunda site in Mpumalanga – which converts large quantities of coal into fuels, chemicals and CO 2 – is one of the world’s largest sources of CO2, emitting 57-million tons every year. Secunda has a Fischer-Tropsch reactor, into which hydrogen and carbon monoxide is placed to create liquid hydrocarbons, such as petrol and aviation fuel. While it produces dangerous emissions now, this technology could be used to create green hydrogen. “It’s a huge liability, but you can turn it into an opportunity as well, because the Fischer-Tropsch technology is needed in the long run in a decarbonised world to produce aviation fuel,” says Bischof-Niemz, explaining that in a completely decarbonised world we will need chemical facilities like the Fischer-Tropsch reactor to produce synthetic aviation fuel.

And South Africa does have plans to make hydrogen production green – President Cyril Ramaphosa, in his 2022 State of the Nation address, announced R270-billion for the development of a hydrogen pipeline. And Minister of Higher Education, Science and Innovation

Blade Nzimande has launched South Africa’s Hydrogen Society Roadmap, which proposes that hydrogen be used throughout the economy. There seem to be plans in place, but what the breakthrough report indicates is that this needs to happen now.

“This report is totally right. We need more engagement, more money in the system, more courage, more economies of scale,” says Kaufmann, adding that the second thing that stood out in the report was that “we’ve got to be faster”.

THOUGHT [ECO]NOMY

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THE BREAKTHROUGH

Agenda Report

2022 | International Energy Association | International Renewable Energy Agency | UN Climate Change High-Level Champions | [2022]

The world is facing multiple and compounding crises. The effects of climate change are intensifying. The availability and affordability of both energy and food are at risk in many countries, contributing to a broader cost-of-living crisis. The response must not be to slow down the transition to sustainability but to move even faster.

A massive scaling up of clean energy investment and deployment worldwide is needed to enhance energy security, affordability and access, and the transition to sustainable land use is essential to protect our food systems against future shocks. This report is a joint product of the IEA, IRENA and the UN Climate Change HighLevel Champions. Each organisation has brought its own expertise to deliver clear recommendations for the actions that governments and companies need to take. Many now see the opportunities of the low-carbon transition and are competing to lead the development of new technologies. This is to be welcomed.

The opportunity is for countries, businesses, communities and citizens to work together to accelerate the growth of global markets for clean technologies and sustainable solutions while continuing to compete to supply them.