Home Editorials ‘Hydrogen Valley’ has potential to boost GDP by billions

‘Hydrogen Valley’ has potential to boost GDP by billions

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By Mandy Mlilo, Director: Hydrogen and Energy, Department of Science and Technology

Recent data released by Statistics South Africa shows that unemployment in South Africa has reached unprecedented levels. The results of the Quarterly Labour Force Survey for the third quarter of 2021 showed that the official unemployment rate had increased to 34.9%, the highest since 2008 when the survey began.

Promoting initiatives that encourage entrepreneurship and job creation, like the proposed South African hydrogen valley, are key to addressing this challenge.

The recent launch of a study on the feasibility of developing a hydrogen valley in South Africa is the result of many years of investment by the Department of Science and Innovation in scientific knowledge domains seen as critical for advancing South Africa’s socio-economic growth and global competitiveness.

One of these is the hydrogen economy, which has long been identified by the Department as a potential game-changer for the reindustrialisation of South Africa. The intention is to leverage the country’s abundant mineral and natural resources (including solar and wind energy, which can be used to produce hydrogen) to make the country an exporter of cost-effective green hydrogen to the world. The hydrogen valley initiative is supported by government as part of the country’s move towards a hydrogen economy and inclusive growth, and thereby reducing unemployment, poverty and inequality.

Nine promising projects

The hydrogen valley feasibility study identifies nine promising projects (across the transport, industrial and construction sectors) that could be used as a springboard for establishing the hydrogen valley. The valley will start near Mokopane in Limpopo and extend through an industrial and commercial corridor to Johannesburg, leading finally to Durban.

One project will focus on converting heavy-duty diesel-powered trucks into fuel-cell-powered trucks, which will support increased consumption of hydrogen in the transport sector. The projects will also facilitate the commercialisation of publicly funded intellectual property and the beneficiation of platinum group metals in targeted geographic areas.

The feasibility study projects that hydrogen demand along the corridor could reach up to 185 000 tons by 2030. The hydrogen valley has the potential to add between US$3.9 and US$8.8 billion to the country’s GDP (through direct and indirect contributions) by 2050, and to create between 14 000 and 30 000 direct and indirect jobs per year by 2030.

Government’s investments in the establishment of the hydrogen valley are aimed not only at addressing the country’s energy needs, but also at meeting the day-to-day socio-economic needs of ordinary citizens. The jobs that will be created will contribute to building a socially inclusive economy and implementing government’s Economic Reconstruction and Recovery Plan, as well as the achievement of the Sustainable Development Goals.

Successful implementation depends on the collective ability of key stakeholders to avoid potential hurdles

The successful implementation of a hydrogen valley depends on many factors, including the collective ability of key stakeholders to avoid potential hurdles. Regulations require players to follow permit procedures properly and observe safety requirements for hydrogen deployment. There may be preparation barriers if there is no governance model for the project, or if the project is not accepted by local communities. Funding may be a problem if private investment or public financial support cannot be obtained, and if the financial models around the initiative are not sustainable.

To support the successful implementation of the hydrogen valley, the Department of Science and Innovation will continue to work with other government departments to come up with a comprehensive approach to making sure that public sector funding can be mobilised to reduce the risks for private sector funding.

An inclusive, comprehensive and sustainable governance structure, anchored in the quadruple helix model (the public sector, the private sector, academia and civil society), will be established. An awareness campaign to engage with communities at the centre of the transition will be organised to ensure that buy-in is obtained.

The provision of tailor-made support to shovel-ready projects within the hydrogen valley can enable innovation in the policy-making process, while de-risking the financial and technical components of a project. Regulatory barriers will be fully researched and a detailed game plan for the necessary revisions will be established so that an enabling environment can be put in place as soon as possible.

 

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