Green hydrogen offers great economic potential to SA; getting it right a big challenge

Johannesburg - The national drive to a lower carbon future and greener economy will require large-scale collaboration, and success will necessitate enduring and resilient partnerships between sector leaders. This was the perspective of President and CEO of Sasol Fleetwood Grobler in PSG's recent Think Big webinar, which forms part of a series of dialogues around some of the country's most pressing issues.

The topic of the most recent PSG webinar was the future of traditional fuels and green hydrogen, which coincides with renewed awareness around sustainability issues with COP27 underway during November 2022.

Grobler is a member of the Green Hydrogen Panel, the inaugural Chair of the Energy Council of South Africa, a Board member of the Belgium-based Hydrogen Council and a Founding and Steering Committee Member of the African Business Leaders Coalition of the United Nations Global Compact. Grobler and his executive team are actively working to transform Sasol into a more sustainable and future-fit enterprise, with an ambition of reaching net zero emissions by 2050.

As he explains, a focus on green hydrogen is an important component of this strategy, but needs to be seen "through the lens of the long-term" rather than as a "quick fix". Importantly, green hydrogen can play a valuable role in hard-to-abate sectors, like the transport sector, steel and mining industry.

There is already a captive demand for grey hydrogen in South Africa (using coal as production input), which is encouraging for Sasol given its ambitions to pivot to green hydrogen. Added to this is the growing long-run global demand for green hydrogen, with the Global Hydrogen Council predicting that the world will need about 400 million tonnes to be supplied over long distance by 2050, which emphasises the opportunity for SA to become an exporter. This is even before considering the potential of re-industrialising South Africa through green hydrogen economy initiatives locally, by focusing on green steel manufacturing and mobility industries where heavy-duty fuel cell electric vehicles can be used for commercial and mining purposes, for example.

Leveraging this "symbiosis" in a deliberate move towards pooling the country's resources is how South Africa can leapfrog ahead in the green energy game, argues Grobler. Because, as he explains, South Africa measures up against the best in terms of its endowment of solar and wind energy resources. To successfully unlock this potential, however, the industry will need to present a unified voice to government, ensuring that regulation and infrastructure are prioritised to create an enabling environment for the energy sector.

While he sees enormous potential ahead for the country, successfully leveraging these opportunities is a big task that may stretch beyond the abilities of a single company. As he explained: "Collaboration will be the name of the game going forward. The days of 'closed corporate strategies' are behind us and players in renewable energy cannot afford to 'go it alone.'" He cites Sasol's recent collaboration with ArcelorMittal as one example of how the potential synergy between sectors and industries that were once viewed as being 'worlds apart' can now be explored. He also sees Sasol as holding a 20% to 30% stake in such collaborative ventures, rather than focusing on solo implementation.

In Grobler's estimation, the establishment and "smooth running" of this part of the economy will take between six and eight years to come to fruition due to the complexity and bankability of these types of projects. In the short term, the task at hand for players like Sasol is to secure off-take agreements with parties in countries in the European Union, and the Far East like Japan and South Korea to reach the levels of scale and economic viability needed to ensure the feasibility of the projects.