Exploring Economic Expansion of Green Hydrogen Production in South Africa

Abstract

Hydrogen is a crucial energy carrier for the Clean Energy Sustainable Development Goals and the just transition to low/zero-carbon energy. As a top CO₂-emitting country, hydrogen (especially green hydrogen) production in South Africa has gained momentum due to the availability of resources, such as solar energy, land, wind energy, platinum group metals (as catalysts for electrolysers), and water. However, the demand for green hydrogen in South Africa is insignificant, which implies that the majority of the production must be exported. Despite the positive developments, there are unclear matters, such as dependence on the national electricity grid for green hydrogen production and the cost of transporting it to Asian and European markets. Hence, this study aims to explore opportunities for economic expansion for sustainable production, transportation, storage, and utilisation of green hydrogen produced in South Africa. This paper uses a thematic literature review methodology. The key findings are that the available renewable energy sources, incentivizing the green economy, carbon taxation, and increasing the demand for green hydrogen in South Africa and Africa could decrease the cost of hydrogen from 3.54 to 1.40 €/kgH₂ and thus stimulate its production, usage, and export. The appeal of green hydrogen lies in diversifying products to green hydrogen as an energy carrier, clean electricity, synthetic fuels, green ammonia and methanol, green fertilizers, and green steel production with the principal purpose of significant energy decarbonisation and economic and foreign earnings. These findings are expected to drive the African hydrogen revolution in agreement with the AU 2063 agenda.

1. Introduction

World hydrogen production is largely from natural gas (48% and tagged grey hydrogen) via methane steam reforming and is marked by considerable CO₂ emissions, which contribute to ozone layer depletion, which in turn leads to global warming [1]. With the global consensus to reduce CO₂ emissions and to deploy green fuels toward attaining zero-carbon emissions, green hydrogen (hydrogen produced via solar, wind, hydro, and biomass energy) is presently gaining popularity as a cleaner hydrogen and future fuel. The global average CO₂ emissions is projected to decrease from 14 kg CO₂-eq/kgH₂ in 2024 to 2–12 kg CO₂-eq/kgH₂ in 2050 owing to the increased production of green hydrogen [2]. The global green hydrogen market was estimated at USD 3.2 billion in 2021, with an economic expansion expected to grow by 39.5% from 2022 to 2030 [3]. South Africa sees green hydrogen as crucial for its just transition strategy and commitment to the Paris Agreement on decarbonising the economy. The implementation of the hydrogen roadmap initiated for South Africa is expected to address electricity supply challenges, promote inclusive growth, and assist the government in reducing unemployment, poverty, and inequality, among other things [4]. A 1 GWe of hydrogen energy is estimated to create about 300–700 jobs in the power to hydrogen value chain [3,5]. South Africa has the competitive advantages of cheaper real estate, renewable resources (solar, biomass, and wind), and platinum (for catalysts) [6,7]. Consequently, there is an integrated hydrogen ecosystem bringing various hydrogen applications in the country together to form an industrial cluster, called Hydrogen Valley [8]. The deployment of green hydrogen addresses the national energy security through fuel domestication, energy sustainability and security, and economy decarbonisation. The success of the project relies on various stakeholders, such as zero-carbon climate-related signatories, investor groups, associations and councils, organisations, agencies, and governments [9]. Environmental policies advocate for the domestic production and supply of hydrogen as an innovative and zero-carbon fuel intended to gradually substitute fossil fuel-based energy supply across the world [4].

Green hydrogen production in South Africa has gained momentum with financial investment, such as the Atlantis Industrial Development Zone hub in the Western Cape and Coega Special Economic Zone in the Eastern Cape with USD 6 billion-plus [3,10]. The definition of green hydrogen is not yet universal, but a spectrum of requirements, such as sustainable raw materials, renewable energy sources, transparency on the production process used, and low emission GHG intensity factors, including at the point of use [11]. Currently, over 80% of hydrogen is produced from fossil fuels, but it is less desirable due to its carbon footprints [12]. On the other hand, the cost of green hydrogen is high despite its impressive environmental benefits. The cost of green hydrogen is the most expensive at 3.54 €/kgH₂ compared to grey hydrogen at 1.33 €/kgH₂ [13]. The cost of green hydrogen can be reduced to 1.40 €/kgH₂ in countries that have high renewable energy sources [14]. The climate in South Africa favours renewable energy sources, such as wind power, hydro, and solar [15]. Water electrolysis produces the purest form of green hydrogen due to its chemical properties, decomposing water into hydrogen and oxygen. The identified points for green hydrogen production in South Africa target desalinated seawater from salt processing plants, in consideration of freshwater scarcity [3]. Nonetheless, the cost of desalination is insignificant at only 4% compared to that of electrolysers [3].

The demand for green hydrogen in South Africa is currently insignificant, which implies that the majority of the production must be exported. Exporting hydrogen can be challenging due to pressure and temperature issues, but it can be liquefied or transformed into other carriers, such as ammonia and methanol [3,14]. In addition, the existing pipelines can be modified for a cost-effective option to shipping hydrogen in Africa. Alternatively, five pillars have been proposed in terms of policy support for the economic expansion of domestic hydrogen, owing to the need to keep pace with the global climate drive [16]. These policy support pillars outline measures to stimulate domestic utilisation and the creation of export opportunities through the institution of new global markets for green hydrogen and its derivatives. These pillars are as follows: (1) the establishment of targets and/or long-term policy, (2) the creation of demand, (3) the mitigation of investment risks, (4) the promotion of research development and innovation, strategic demonstration projects, and knowledge-sharing signals, and (5) the harmonisation of standards and the removal of barriers [7,17]. A key element to increase hydrogen appetite lies in the production cost which influences selling prices as well as practical demand for green hydrogen by local industries, citizens, and businesses.

It is against this backdrop that this study aimed to evaluate the economic feasibility for sustainable production, transportation, storage, and utilisation of green hydrogen produced in South Africa. This present study is expected to provide an updated scholarly documentation of knowledge to the renewable energy and hydrogen community concerning the state of global and localised (in South Africa) green hydrogen production (demand and supply) with a narrowed focus on green hydrogen opportunities and market expansion in South Africa stimulated by the duo of emissions mitigation and commitment to global signatories, treaties, and economic and foreign earning benefits driven by international trading and exportation. As green hydrogen is key to local and global energy decarbonisation, this work addresses renewable energy in agreement with the sustainable development goals geared toward the circular and hydrogen economy of which South Africa is of huge importance as the 14th CO₂ emitting nation in the world [18]. Drivers and catalytic projects to stimulate green hydrogen production, domestic expansion, and exportation are also highlighted. This work was intended to corroborate the AU 2063 agenda concerning affordable, clean, sustainable, and accessible energy in Africa [19] by projecting the extents of enviable efforts and landmark achievements of South Africa on green hydrogen as a future no-carbon fuel to serve as a fronter model for the continent in demonstrating Africa’s unwavering commitment to tackle economic, climate, environmental, and energy issues. The key objectives of this study are given in Figure 1.

This paper was divided into four sections, with Section 1 introducing the topic concerning the economic expansion of green hydrogen production in South Africa. Section 2 provides the methodology engaged in the work. Section 3 presents the results and a discussion of the areas of hydrogen production routes in South Africa, renewable energy governance, expansion of the green hydrogen production economy, and the expansion of green hydrogen demand and supply, all in relation to South Africa. Section 4 focuses on the conclusion of this paper.

2. Methodology

The constructivism paradigm, also known as interpretivism, symbolic thinking, or hermeneutics is used to allow multiple ways of presenting situations based on proponents, knowledge, and perceptions gathered from the literature review [20]. This paradigm is relevant to this study as it seeks to understand the economic value of green hydrogen production in South Africa and the prospect of its international trade with the overall potential of global and local decarbonisation of energy resources. The research approach employed is an integrative literature review which builds from existing knowledge in a systematic way by synthesizing knowledge arranged into themes that unpack the aims of the paper [21]. The themes provide insight into the existing literature concerning South Africa on green hydrogen production pathways, governance on renewable energy, green hydrogen economy expansion, the impacts of hydrogen development on different fronts, the safety of hydrogen deployment across the value chain, green hydrogen demand expansion drivers, the decarbonisation of different sectors such as transport, power generation, and industry, and the supply and demand of green products for economic gain.

To achieve the aforementioned, the Scopus database was chosen, owing to its large volume of documents, to garner documents (primarily original journal articles and review papers). In addition, documents related to energy agencies/institutes (such as the International Energy Agency and various energy institutes) and the South African government ministries/agents on the Hydrogen South Africa initiative and roadmap. Keywords, such as green hydrogen production, hydrogen, hydrogen economy, and others focused on South Africa found relevant to this study were used in the search process. A refinement of the raw documents was performed to align with the overall focus and objectives of this present work. The refined documents were then used to synthesise analysis and discussions in the drafting of this study. In addition, the analytical process involved identifying hydrogen production pathways that are lower in cost and have lower environmental footprints, and an economic evaluation of the green hydrogen economy in South Africa, particularly supply and demand. Figure 2 shows the schematic order of the work.

3. Results and Discussion

The thematic analysis of the literature search for the economic expansion of green hydrogen production in South Africa yielded the following themes: green hydrogen production pathways, governance on renewable energy, and the green hydrogen economic drivers. The following sections will elaborate on these findings.

3.1. Production Pathways of Green Hydrogen in South Africa

Hydrogen can be produced from different pathways, technologies, and feedstocks that include both non-renewable and renewable resources [9,15,22]. Hydrogen production techniques include coal gasification, natural gas steam reforming, high-temperature electrolysis, water electrolysis using solar, wind, or nuclear energy, thermochemical water splitting, biohydrogen, photocatalysis, and biomass gasification [2,23,24]. The various hydrogen production techniques yield colour-coded hydrogen based on its environmental impact, as depicted in Figure 3. Hydro-driven hydrogen production paths were shown to be the most cost-effective, followed by natural gas, coal, wind, solar, and biomass-driven hydrogen production pathways [25]. Wei et al. conducted a study to assess strategies to reduce greenhouse gas emissions from 14 kg CO₂-eq/kgH₂ in 2024 to 2–12 kg CO₂-eq/kgH₂ in 2050 [2]. The strategies included region-based feedstock supply, electricity decarbonisation through hydrogen production, and technical advancement. Green hydrogen has the most expensive production costs but causes the lowest, or no, environmental footprint.

South Africa has huge potential to maximise its green hydrogen production by diversifying production pathways, taking advantage of all available natural resources, such as water, wind, land, biomass, and organic wastes. South Africa is endowed with ideal weather (abundant year-round sunlight and high wind speed) conditions for the generation of solar and wind energy, which are the typical renewable energy sources used in green hydrogen production [6,11]. The high solar and wind availability in South Africa, marked by a lower cost of electricity compared with the cost of electricity from coal, would expectedly promote green hydrogen production and the deployment of hydrogen electrolysers, eventually reducing the cost of green hydrogen production and, thus, enabling investments to be attractive to potential funders. The low cost of real estate and availability of land for green hydrogen project construction need to be supplemented with an enabling regulatory environment to accelerate green hydrogen development [7]. South Africa is ranked as the third country in the world on photovoltaic renewable energy potential due to a mean of 2500 h of sunshine per year and a mean daily solar irradiance of 4.5–6.5 kWh/m²/day [26,27]. Subject to technical renewable energy potential findings, wind, solar photovoltaic, and concentrated solar power technical potential in South Africa was estimated to be 41,195 TWh/year, 42,243 TWh/year, and 43,275 TWh/year, respectively, which excluded forests, water bodies, protected areas, cities, and urban areas [28]. However, these values represent <0.4% of the projected 17.8 GWe of renewable energy installed capacity by 2030 via the Renewable Energy Independent Power Producer Procurement Programme [29].

Fortunately, the cost of solar energy has decreased by 88% over the last 10 years to USD 0.048/kWh [30], making solar energy deployment for green hydrogen more attractive in terms of cost. Based on this fact, green hydrogen production via solar energy (solar photovoltaic and concentrated solar power) in South Africa can be facilitated at a lower cost through the Renewable Energy Independent Power Producer Procurement Programme. The low electricity cost is advantageous and would enable and encourage green hydrogen production with possible reduced levelised cost. South Africa is a water-scarce country. Green hydrogen production from water electrolysis would be in conflict with the United Nations Sustainable Development Goals 6 (Clean Water and Sanitation) and 7 (Affordable and Clean Energy) [31]. To abate the controversy on water poverty, electrolysis of desalinated water is most favourable, particularly for the identified projects [32] with biomass as another option [33]. However, recent studies have revealed technological development in terms of redox-mediated and membrane-based electrolysers for direct utilisation of seawater for hydrogen production, which would positively impact green hydrogen production from seawater [34,35]. The Coega Special Economic Zone has salt-producing plants that already discharge desalinated water as a by-product, while the Saldanha Bay Special Economic Zone is located closer to the solar and wind energy-producing sites in the Northern Cape province [27]. The availability of renewable energy sources at a reasonable cost could decrease the cost of green hydrogen from 3.54 to 1.40 €/kgH₂ [7]. The affordability of green hydrogen will increase access to the product and subsequently expand its demand. Furthermore, South Africa offers enabling economic and renewable energy regulatory environments such as the recently launched hydrogen roadmap to promote the growth of green hydrogen [8].

3.2. Governance on Renewable Energy in South Africa

South Africa has a long history of being proactive in creating a conducive regulatory environment for the rollout of renewable energy. As early as 1996, the South African Constitution was deliberate on the need to formulate a national policy to give direction for sustainable energy production and distribution to improve the lives of its citizens [36,37]. Sustainability is the use of indigenous and natural resources, which mitigate the use of fossil fuels to reduce the emission of greenhouse gases. In 2015, the United Nations adopted the “Paris Agreement” to address the challenges of climate change and to reduce greenhouse gas emissions of 43% by 2030 [38]. Different Ministries in South Africa, such as the Presidency, Trade and Industry, and Higher Education, Science and Innovation, engage in policy development on renewable energy and hydrogen production. Hydrogen production has emanated from section 19(1), subsection (f) of the National Energy Act of 2008 [39,40]. The policies and frameworks inform decision-making, legislation, regulation, and enforcement issues. The renewable energy policy should address equity, fair pricing (economic, environmental, social), fair government allocation of functions, fair participation of stakeholders, and engagements in global agreements [38,40]. Several initiatives that demonstrate energy production, distribution, and utilisation, such as the Naledi Trust Project Anglo America, Cofimvaba Rural Schools fuel cells, and Hydrogen Valley Feasibility Investigation-eThekwini/Richards, exist in South Africa, to name a few [41]. South Africa has continued to document strategic frameworks, such as the South Africa Low-emission Development Strategy (SA-LEDS) and the Hydrogen South Africa Roadmap [30], which are connected and an extension of the Integrated Resource Plan (2019) [26], the Renewable Energy Independent Power Producers Programme [29,42], and Hydrogen South African Hydrogen Infrastructure [27,43].

3.3. Expansion of Green Hydrogen Economy in South Africa Context

3.3.1. Energy Consumption Trends

Full domestic production of green hydrogen in South Africa has enormous potential socioeconomic and environmental benefits. This includes lowering the carbon footprint of energy production processes, better air quality, and the country’s overall greenhouse gas emissions, as well as a significant and impactful economic boost and job creation, as new industries emerge leveraging individual components of the green hydrogen value chain, one of which is the valorisation of platinum group material resources in the country [8,27,44]. The International Energy Agency report on the World Energy balances from 2000 to 2021 revealed a 564.9% increase of supply from wind and solar compared to a 73.3% increase from coal [45,46]. The primary energy sources are marked by a relative increase in supply but the renewable energy sources, especially wind and solar energy, showed a significant increase as a demonstration of the investment and concerted global efforts in improving these sources of energy towards the energy transition from carbon-based energy sources to carbon-less energy [9]. The energy consumption statistics by sector showed that transport (26.7% and 1.27 × 10⁸ TJ), industry (30.1% and 1.13 × 10⁸ TJ), and residential (21.5% and 9.0 × 10⁷ TJ) are the leading consumers [47]. Comprehensive statistics on the trend of world’s total energy supply by source and total final energy consumed by sectors from 1990 to 2021 are displayed in Figure 4 and Figure 5, respectively. From Figure 4, the use of coal moderately increased over time and remained relatively constant, owing to its use mostly for electricity generation. Oil usage remained relatively unchanged over time, while natural gas use significantly surged over time, owing to its low carbon emissions leading to its global consumption and attention in reducing carbon footprints. This pattern of energy supply via different sources (Figure 4) has translated to final energy consumption in various sectors of the global economy, as presented in Figure 5. The industrial sector, followed by transport and residential sectors are the leading sectors consuming supplied energy sources, mainly the fossil fuels of coal, natural gas, and oil. It is pertinent to add that the supply and consumption of carbon-based energy sources (mostly oil and coal) have continually and relatively unabatedly contributed to the present climate and environmental global woes, as witnessed concerning global warming and climate change, and the attendant global effects. However, in recent times, a small and notable contribution is observed concerning the supply of renewable energy sources (solar, wind, hydro, biofuels, etc.) owing to the increasing need for energy (as shown in Figure 4) which are reflected in the final energy consumption in different sectors.

In a similar vein, South Africa’s energy supply in 2021 was 5.21 × 10⁶ TJ, while the domestic supply was put at 5.88 × 10⁶ TJ [48,49]. The excess amounts were from imported coal, natural gas, and oil. Coal, natural gas, nuclear, hydropower, biofuels, oil, and wind and solar supplied 5.42 × 10⁶ TJ, 1.31 × 10³ TJ, 1.35 × 10⁵ TJ, 7.35 × 10³ TJ, 2.45 × 10⁵ TJ, 1.91 × 10³ TJ, and 7.15 × 10⁴ TJ, which accounted for 92.14%, 0.02%, 2.29%, 0.12%, 4.16%, 0.03%, and 1.22%, respectively [50]. The industry, transport, residential, commercial, agriculture, non-specified, non-energy, and fishing sectors of South Africa were responsible for 37.55%, 26.31%, 16.46%, 7.36%, 2.97%, 1.62%, 7.61%, and 0.11%, respectively, of the total final energy consumption of 2.58 × 10⁶ TJ. In terms of energy supply, coal is the predominant energy source in South Africa, followed by renewable energy sources (biofuel and wastes), which contradicts the global trend for energy sources (see Figure 4 and Figure 6). However, a similar trend of industry, transport, and residential, as major sectors involved in the final energy consumption of the energy sources, is recorded (see Figure 5 and Figure 7). This energy consumption caused the total CO₂ emissions of 391.74 Mt, with electricity generation accounting for 54.8% of the total CO₂ emitted in the year 2021 [51]. The energy sector was responsible for over 81% of total CO₂ emissions.

3.3.2. Global Hydrogen Demand and Supply

According to one report, the future of global energy is dictated by four principal trends, which include a rising utilisation of low-carbon hydrogen, growing electrification, swift expansion in renewables, and a lessening role for hydrocarbons [52]. This renewed future has stirred global concern in terms of future fuel(s) to drive the global economy without adverse and detrimental footprints on the climate, environment, and human health. This has channelled a good and worthy course that would drastically provoke increased global demand and supply for hydrogen, touted as the new fuel on the horizon. The emergence and growing demand and supply of hydrogen would expectedly disrupt the existing global energy demand and supply, energy balance, and energy value chain [8]. As the global energy supply pattern shows increasing use of fossil fuels (coal, natural gas, and oil) which are carbon-intensive fuels and contribute immensely to global warming and climate change, but with correspondingly less and increasing deployment of renewable energy sources. Addressing the present fossil fuel consumption trend in relation to different sectors and the emission-induced climate–environment–health challenges is of global concern crying out for attention. The utilisation of hydrogen as a zero-carbon fuel has attracted global attention as a panacea to the decarbonisation of global energy sources for improved climate and environment.

Both upstream and downstream of the world energy value chain are projected to experience gradual and long-term rearrangement and readjustment as the whole world journeys into the anticipated circular and hydrogen economy.

Table 1. Values (in metric tonnes) of global hydrogen demand and supply in 2018 [9].

Hydrogen Supply			Hydrogen Demand
Source	Amount (Mt)	%	Sector	Amount (Mt)	%
Dedicated production			Pure hydrogen
Natural gas	~67.4	47.8	Refining	38	26.7
Coal	~25.8	18.0	Ammonia	31	21.8
Oil	~0.7	0.5	Transport	0.01	N
Electricity/other	~0.7	0.5	Other	4	2.8
Total production	94.6	66.7
By-product H2	48	33.2	H2 mixed with gases
			Methanol	12	8.4
			Direct Reduced	4	2.8
			Iron
			Other (heat)	26	18.5
			Losses	27.4	19.2
Total	142.6			142.4

provides the global hydrogen demand and supply. A breakdown of the global hydrogen supply and demand in 2018 is provided in Table 1 and this reveals the balance in hydrogen supply and demand. The hydrogen supplied was mostly produced from natural gas, with over 67 Mt (>47% of hydrogen demand), while the highest demand of hydrogen was for oil refining, with 38 Mt (26.7% of total demand). Both the demand and supply are expected to increase with growing attention for hydrogen (from grey hydrogen to green hydrogen) as a zero-carbon fuel and a promising and sustainable fuel to provide significant decarbonisation of global energy sources.

Countries like Germany, Canada, USA, France, Great Britain, China, South Korea, and Japan, as well as the Benelux and Scandinavian countries, are leading and intensifying the development and propagation of hydrogen production technologies and other related landmark efforts on the hydrogen value chain of production, storage, transportation, distribution, and utilisation toward a sustainable, low-carbon and carbon-less economy. A typical hydrogen value chain is presented in Figure 8. Trailing these foremost countries are countries such as South Africa, India, Brazil, New Zealand, Spain, Australia, Portugal, Chile, and Italy making concerted efforts towards joining forces with the leading countries in the global hydrogen deployment race and competing favourably for successful uptake and actualisation of the hydrogen roadmap and projects [40]. Green hydrogen accounts for just 4% of the 8 million tonnes of hydrogen consumed in Europe, it is expected to play a progressively vital role as an integrator of individual energy-based sectors and as an energy carrier empowering the decarbonisation of energy-based processes that are hard to electrify directly. Also, green hydrogen’s share in the European energy makeup is projected to surge from the current 2% to 13–14% in 2050 [40]. To achieve the goal of dipping the EU CO₂ emissions by 50–55% in 2030, hydrogenation of the EU is confirmed by the EU Commission to be a critical factor amongst other viable factors. The cost of hydrogen, in terms of production technology, from 2020 to 2022 is presented in Figure 9.

The global demand for hydrogen has surged by over 20 Mt in the last decade with methanol, ammonia, and crude oil refining production accounting for 90% of present demand. With the 70 million tonnes of hydrogen production in 2018, 76% was sourced from natural gas and the rest was mainly produced from coal. However, the future hydrogen demand is inclined to green hydrogen (at least for the long-term) which is presently 5% of the global hydrogen production, standing at around 500,000 tonnes per annum [6]. In reaction to this current production rate and future deployment of green hydrogen, a rise to 8.7 Mt per annum by 2030 was projected [40]. Also, rising from a relatively low quantity of hydrogen production in 2020, its production for direct use as a fuel and indirect deployment as a fuel derivative is projected to surge to 523 Mt by 2050 [54]. Additionally, hydrogen and its related fuels (methanol, ammonia, and aviation fuel) are expected to account for 14% of final energy consumption by 2050. With the global progression in hydrogen demand, due to its widespread applications in different sectors of the economy, and the diminishing technology costs, which makes hydrogen an eye-catching investment opportunity, a cumulative global investment of USD 450 billion is anticipated by 2030 and USD 12 trillion by 2050 [24]. The global cost of green hydrogen production subject to renewable energy resources is illustrated in Figure 10.

3.3.3. Hydrogen Deployment Impacts and Safety

The utilisation and processing of different energy resources using various technologies are associated with emission, environmental, technological, socio-economic, land availability, and water requirement issues. Therefore, a good understanding of the impacts of these factors by different stakeholders concerning the choice and acceptance of different technologies and the corresponding energy resources is very important. In the context of hydrogen production, the assessment of the impacts of different production technologies, routes, and feedstocks on diverse footprints, such as emissions, water, land, etc., along the entire value chain is crucial to its adoption and implementation as a future fuel on the global, national, regional, and local scale. In evaluating the well-to-wheel environmental impacts of hydrogen production, hydrogen from biomass, renewable-powered water electrolysis, fossil fuel with carbon capture and storage was associated with significant reduction in greenhouse gases in comparison to conventional hydrogen production routes, though accompanied with environmental issues [2,9]. Based on the electrical decarbonisation, technical advancement, and regional feedstock supply across 15 world regions, an assessment of the future life-cycle environmental impacts of hydrogen production using biomass and coal gasification, water electrolysis, and natural gas steam methane reforming was conducted until 2050 under three different scenarios [2]. With the net zero emissions by 2050 and the stated policy scenarios, global mean greenhouse gas per kg of hydrogen reduced from the present value of 14 kg CO₂-eq. to 9–14 kg CO₂-eq. in 2030 and 2–12 kg CO₂-eq. in 2050, hydrogen production using water electrolysis coupled with renewable electricity is expected to considerably drive low-carbon to zero-carbon energy transition to lower climate and other environmental footprints of hydrogen production. Therefore, green hydrogen deployment in South Africa via solar and wind energy powered electricity is expected to be related to zero greenhouse gas emissions with less overall environmental impacts.

To recognise the social hotspots in the value chain for green hydrogen produced in seven countries (China, Oman, Saudi Arabia, South Africa, Chile, Australia, and the US) through solar and wind energy powered water electrolysis, a cradle-to-gate social life cycle assessment was carried out [56]. Results demonstrated that producing green hydrogen in South Africa poses the greatest risk to most social indicators, such as gender wage difference, bargaining and association rights, fair salary, child labour, and unemployment. This is due to the lower gross domestic product/purchasing power equivalence per capita and poor working conditions compared to the other countries. Contrary for other countries, the risk to the majority of the studied social indicators considerably declined when principal equipment is mass-produced within the country than trade in from other countries. Also, the results showed that owing to the complexity of the green hydrogen supply chain because of key equipment outsourcing from developing countries notable for poor working conditions is a key social hotspot for the sustainable development of these countries.

The impacts of diverse hydrogen production technologies with different energy sources on the technical, economic, and environmental factors were examined [57]. Biomass gasification is found to be the most striking technology concerning cost of production and efficiency with the solar-powered electrolysis observed to be least attractive. Also, nuclear-based and wind-based electrolysis were the most eco-friendly technologies with the coal gasification technology being the worst. Considering all the factors, the wind, biomass, and nuclear technologies performed better than the coal, solar, and natural gas-based technologies. El-Emam and Ozcan [58] reported the least environmental impact for nuclear- and wind-based hydrogen production technologies, with the most noted for solar- and geothermal-based technologies. Thus, hydrogen production routes using renewable energy sources are observed to be eco-friendlier than fossil-based hydrogen production routes.

Hydrogen deployment into the energy mix of any country (for example South Africa) can affect water demand for energy and it depends on the hydrogen production route, quantity of hydrogen demand, and the resources available. Depending on the water resources in a locality and country, hydrogen production can cause local water scarcity with and without stress on national water consumption. Thus, the water footprint owing to hydrogen production is worth considering. Recently, the water footprint of different hydrogen production routes, in terms of the primary energy sources, feedstocks, and water infrastructure requirements, was examined [59]. Green hydrogen production via renewable energy-powered electrolysis was reported to possess the lowest water footprint (with wind energy having 65 m³/TJ and solar energy 204 m³/TJ) mainly owing to the low water footprint of the renewable energy sources. A considerably higher water footprint was observed for blue hydrogen produced using coal (564 m³/TJ) and natural gas (369 m³/TJ), which is attributed to water requirements connected to these fossil fuels concerning carbon capture storage. Also, hydrogen produced using nuclear energy has a water footprint of 741 m³/TJ, whereas hydrogen produced from biomass has more than 50,000 m³/TJ. It can be deduced that green hydrogen production from solar and wind impacts significantly less on the water footprint compared to other forms of hydrogen (blue, turquoise, pink, etc.) and from biomass, as it has the advantage of reducing water demand in energy sectors, and thus, strengthening the future role of green hydrogen in fulfilling South African and global energy demands with significantly less stress on local and global water scarcity, respectively. Although, in comparison to other forms of energy, hydrogen production results in a relatively higher water footprint which greatly varies on the hydrogen production route. As with South Africa, solar and wind energy powered hydrogen production via water electrolysis remains a viable option as they result in a significantly lower water footprint as few parts of the country experience water scarcity in certain times of the years. This further supports the deployment and prospect of green hydrogen in the country.

Environmental concerns across the hydrogen value chain have identified hydrogen as an indirect greenhouse gas estimated with a global warming potential of 5.8 for a 100-year timeframe, which is recently evaluated as 11 ± 5 [9]. This can be linked to the possible hydrogen leakage across the hydrogen value chain, which is very important and requires serious control measures within the hydrogen economy. As hydrogen is highly explosive and flammable, invisible to the naked eye, and without odour, its leakage is extremely dangerous in indoor and outdoor spaces. Thus, safety is a very important issue concerning hydrogen utilisation as a future fuel which cuts across the hydrogen value chain, most crucial is the storage and transport. Hydrogen safety as a serious challenge involves embrittlement of steel materials with time (making hydrogen pipes costlier than natural gas pipes) which has a negative effect on their mechanical properties and thus requires extra safety measures. In the commercialisation of hydrogen, stringent and substantial safety regulations and codes are essential and these must be executed across the complete hydrogen value chain to ensure comprehensive safety. As international trade (green hydrogen in this case) will greatly profit from communal international standards for the safety related to the transportation and storage of hydrogen, and monitoring of the environmental impacts of hydrogen supplies, South Africa partook in the Regulations, Safety, Codes and Standards Working Group in addition to the Task Force on Hydrogen Production and Analysis of the International Partnership for Hydrogen and Fuel Cells in the Economy, which permits her to know about the existing regulations in other countries [60]. In view of green hydrogen development and environmental impacts in South Africa, the National Environmental Management Act may be used to an extent or amended to develop regulations and standards concerning the environmental impact of hydrogen storage on land. Policies will also be developed, expanded, and enhanced concerning environmental regulations and standards related to the entire hydrogen value chain to actualise green hydrogen introduction and development.

3.3.4. Green Hydrogen Supply and Demand in South Africa

In 2018, ZAR 54 billion accounted for South Africa’s net import of foreign crude oil [60]. The ever-fluctuating crude oil price and the instability in supply security are key factors considered outside the need to decarbonise the economy that is highly coal-dependent in line with global dictates and outcry, as a matter of urgency, to considerably reduce the country’s heavy dependence on foreign oil and other fossil fuels (imported natural gas and coal) in general. Domestic production and deployment of hydrogen for energy, primarily for the energy sector, could minimise capital outflows from South Africa and enhance its balance of payments. Additionally, other social-economic benefits include reduced transport-based emissions, job creation, energy security, improved air quality, and economic development in terms of green hydrogen, ammonia, and hydrogen-derived fuel exportation [7,61].

Presently, South Africa produces almost 2% of global hydrogen production (which is grey hydrogen) and Sasol is the principal producer via its patented Fischer–Tropsch (FT) coal-to-fuel process [60]. The domestic production and supply of hydrogen as an innovative and zero-carbon fuel will substitute varying quantities/percentages of fossil fuel supply in South Africa, outside the quantities locally produced by Sasol for synthetic fuels and fertilizer production [33]. As the world progressively tilts towards countries with sufficient renewable energy resources to generate green hydrogen, South Africa holds a high stake as a country greatly blessed with wind and solar resources to produce green hydrogen to decarbonise its economy and export the same to countries in high demand for green hydrogen and its fuel derivatives (green methanol and ammonia) by leveraging a host of competitive benefits. Nevertheless, efforts to translate the present grey hydrogen market to a green hydrogen-based market at the expense of growing exports will necessitate strategic public–private and international partnerships to be reinforced and actualised in the short term.

According to the South Africa hydrogen roadmap, the country has projected the doubling of the current share of the global hydrogen market but, in this regard, the green hydrogen exported by 2050 [60]. This proposed green hydrogen supply plan entails 2% of the world’s green hydrogen for domestic consumption and at least an additional 2% for potential domestic hydrogen application and export prospects. With the plan for Japan and Germany to implement a complete transition to carbon-free hydrogen by 2040 and the anticipated high demand for green hydrogen in both countries, a worthy export opportunity is opened for countries like South Africa naturally endowed with bounteous renewable energy resources [62]. There are just two out of several countries that do not have the natural renewable energy resources to produce green hydrogen at scale, which South Africa can exploit to the fullness. Besides the projected demand increase for green hydrogen and the growth in the green hydrogen market in the next 10 to 30 years, countries are consciously and unconsciously migrating from carbon-intensive economies to low-carbon economies and, finally, to zero-carbon economies in the long run, which is essential and supportive of green hydrogen export for South Africa.

For South Africa, green hydrogen is estimated to cost between USD 3–6/kg, whereas grey hydrogen costs USD 1–2/kg [3,63]. Owing to decarbonisation-oriented policies that could involve incentives, carbon taxes, renewable energy/hydrogen production credit schemes, etc., the cost of green hydrogen is anticipated to stimulate the demand for it. In addition, intensified research in the development of novel and alternative low-cost green hydrogen production techniques/routes, projection in electrolyser capacity scaling and novel electrolyser development [64], and reduced cost of electricity in the medium (2030) and long (2050) term is amongst the crucial factors expected to drive a realistic and competitive cost for green hydrogen production in comparison to the current cost of fossil fuel production [10,64].

3.4. Green Hydrogen Demand Expansion Drivers in South Africa

As hydrogen, and specifically, green hydrogen is crucial to energy and fuel decarbonisation in South Africa, there is the need to promote domestic demand via the consumption of grey hydrogen and finally green hydrogen. The potential drivers of green hydrogen toward increased domestic demand of the same are considered in this section. According to the International Energy Agency, five key policy supports have been proposed for the advancement of domestic hydrogen economies to keep abreast with the global fight against climate change and global warming and the attendant effects [16]. These key policy supports provide frameworks to arouse local use and conception export opportunities through the establishment of new global markets for green hydrogen and its derivatives. These policy supports include the following: (1) the formulation of targets and/or long-term policy, (2) the demand creation, (3) the extenuation of investment risks, (4) the advancement of research development and innovation, strategic demonstration projects, and knowledge-sharing signals, and (5) the harmonisation of standards and removal of barriers [7,17]. The proposed drivers to stimulate green hydrogen demand in South Africa across the value chain are briefly highlighted below. Figure 11 presents the drivers of green hydrogen in South Africa.

3.4.1. Decarbonising Transport Sector

The transport sector in South Africa accounted for 10.8% of national greenhouse gas emissions, with road transport responsible for 91.2% [64]. The adoption of electric vehicles (battery and fuel-cell-powered) has been proposed to decrease emissions in the road sub-sector of the country [65]. This is because this sub-sector accounts for most emissions from this sector and the technology to address decarbonisation of this sub-sector is well developed in using hydrogen to power heavy-duty vehicles. South Africa boasts of over 300 battery electric vehicles with the demonstration of hydrogen fuel cells in scooters, forklifts, a mining locomotive, and golf carts [26,60,66]. As a mark of progress in this concern, Anglo American Platinum is to assess a fuel-cell mining truck at its Mogalakwena Mine in Limpopo. The cost competitiveness of battery and fuel cell electric trucks compared to conventional trucks is anticipated to appreciate as the total cost of ownership decreases to 30–40% by 2030 and 50–60% by 2050 [60], subject to an increase in hydrogen refuelling/charging station utilisation and scaling up of manufacturing of hydrogen-production technologies, station components, and fuel cells. As road transport decarbonisation is projected by 2050, that of the aviation, rail, and shipping sectors is intended to be addressed in the medium term (2025–2030). In this context, South Africa via Sasol has the skills, expertise, and unique and patented FT process to synthesise green methane, diesel, and jet fuel from the combination of green hydrogen and CO₂. This will provoke a competitive advantage in the production of liquid fuels using green hydrogen.

3.4.2. Decarbonisation of Energy-Intensive Industry

With the energy-intensive industries of South Africa consisting of minerals and metals production, petrochemicals and chemicals, construction, manufacturing and mining industries being responsible for around 25% of the national greenhouse gas emissions, the need to decarbonise these industries is of great national interest towards the drive for emissions abatement, in line with the global dictate. More than 50% of emissions from these industries emanate from the petrochemicals and chemicals industries, of which four crude oil refineries and Sasol facilities are prominent. Thus, South Africa has the opportunity to facilitate and use green hydrogen production to actualise the decarbonisation of these industries by 2050 and even be an exporter of green chemicals and fuels.

3.4.3. Green Enhanced Power Sector and Buildings

In South Africa, electricity generation primarily from coal-fired power plants is responsible for around 45% of national greenhouse gas emissions [67]. As the country is exploring and harnessing green hydrogen for energy decarbonisation, this promising clean fuel can also be stored and deployed as a means for energy storage, to assist in balancing the intermittency of renewable energy sources and grid balancing outside its use for power generation [68]. With excess renewable electricity during low energy demand, green hydrogen can be produced using electrolysis. The produced green hydrogen can be stored and later transformed to electricity using fuel cells or combusting the same during high energy demand to ensure a consistent energy supply and grid stability. Besides benefitting the gas grid through power-to-hydrogen/gas applications, it is also an avenue for economic recovery, as load-shedding engagements in previous years had a negative impact on the South African economy to the turn of ZAR 500 million per stage per day [60]. Via the micro grids, green hydrogen can be used to supply power to remote areas/islands (on- and off-grid), provide power for information and communications technology applications, serve as back-up power to minimise power outages, provide heat and electricity to the public and commercial buildings and the residential sector.

Through direct combustion of hydrogen-rich gas or 100% hydrogen in turbines, the use of green hydrogen could revolutionise the decarbonisation of the electricity generation sector. One study has shown that, with the generation of 45 MW through the combustion of up to 95% hydrogen in a refinery gas turbine in Korea, for over 20 years [53], this feat is achievable. Again, gas turbines operating on green hydrogen and ammonia are projected by 2030 with the need to address the higher nitrogen oxide emissions related to their combustion at higher operating temperatures [69,70].

Advancement in technology has led to the development and deployment of fuel cells operating with the use of methanol, hydrogen, or natural gas in data centres (to provide backup or primary power), public, commercial, and residential buildings. Such has been demonstrated in South Africa with the deployment of fuel cells in stationary applications to deliver backup power for telecommunications infrastructure and main power for public buildings (hospitals and schools) using pure hydrogen and methanol as fuel. Examples include 300 fuel cell units as backup power for cell phone base stations by Vodacom, fuel cells at 1 Military Hospital (Pretoria) to deliver primary power to a vaccination centre and COVID-19 field hospitals, and 100 kW fuel cell unit (powered with natural gas) operating at the Minerals Council building in Johannesburg [60]. Although costlier at present, compared to off-grid diesel generators, fuel cells can provide green off-grid power, especially to critical infrastructure, such as hospitals, data centres, and even building facilities, thereby decarbonizing this sub-sector.

3.4.4. Hydrogen Generation, Storage and Distribution Industry

Owing to the global and South African energy transition drive from low-carbon by 2030 to zero-carbon by 2050 using hydrogen, the production, utilisation, storage, and distribution of hydrogen in various forms is critical to stimulating hydrogen demand and supply for both domestic use and international export and market. Hydrogen generation via different production routes and techniques subject to the feedstock types and electricity sources, storage via adsorption, hydrides, compression, liquefaction, and reformed fuels, and distribution in the form of liquefied natural gas, methanol, ammonia, liquefied hydrogen, and liquid organic hydrogen carriers via pipelines, compressed gas tankers, and liquified hydrogen tankers as components of the hydrogen value chain [6,9] are critical to green hydrogen deployment to economy decarbonisation, in this case that of South Africa. The development and scaling up of cost-effective hydrogen production, transportation, and distribution industry in the country as a means to transition from grey and blue hydrogen to green hydrogen is a wake-up call to hydrogen market demand as well as assisting in achieving climate change commitments. However, at present, the most auspicious storage and transport options still require further enhancement in terms of technical and economic point of view. In addition, safety is crucial to the production, transport, utilisation, and distribution value chain of hydrogen, as the leakage of hydrogen as an odourless, explosive, colourless, and flammable gas is very dangerous.

In South Africa, the existing PetroSA gas pipeline infrastructure can be employed to transport hydrogen into the domestic and international markets as a similar infrastructure to that of natural gas networks will be required for hydrogen export. Nevertheless, slight modifications may be necessary to suit desired parameters, such as high pressures as a function of the product and transportation technique considered for cost-effectiveness. Also, the country could leverage its present port infrastructure to facilitate hydrogen exports, thus, serving to protect declining jobs and infrastructure linked to a reduction in global demand for coal exports. Additionally, the depleted gas fields on the South African coast and the associated infrastructure could be deployed for hydrogen storage.

3.4.5. Manufacturing of Fuel Cell Components and Hydrogen Products

South Africa produces the world’s largest quantity of platinum group metals which comprises osmium, palladium, ruthenium, platinum, iridium, and rhodium. She accounts for over 75% of global platinum group metals production. It is worth noting that the beneficiation of the metals is outside South Africa and are important component for catalyst development in fuel cells, membrane-electrode assemblies, electrolysers for hydrogen production, and its value chain. This has positioned South Africa to be a global force in the development and manufacturing of platinum group metals-based components for hydrogen deployment as a zero-carbon fuel to decarbonise global economies. This will serve as an opportunity to stimulate the national economy by meeting local and international demand for fuel cell and electrolyser components and driving advancement in fuel cell and hydrogen research development and innovation.

Establishing a manufacturing sector for hydrogen products and fuel cell components is very crucial to Hydrogen South Africa and green hydrogen initiatives, as it will encourage inward investment and promote the Just Labour Transition as high-quality jobs will be created. This proposed sector will simply facilitate the shift from conventional internal combustion engines to electric, hydrogen, and fuel cell vehicle manufacturing, and thus product exportation.

3.4.6. Creation of an Export Market for South African Hydrogen

Figure 12 provides the locations of the existing port infrastructures in South Africa for green hydrogen exportation. Without leveraging the renewable energy resources (wind and solar) available in South Africa, the country presently produces 2 Mt of grey hydrogen in terms of global hydrogen demand. This quantity is mainly generated from natural gas through Sasol (a state-owned petrochemical industry). By aligning with the Hydrogen South Africa roadmap, the global drive to decarbonise the economy, and the renewable energy endowment of South Africa to stimulate green hydrogen production, the country is well-positioned to produce and double its global contribution to hydrogen production by 2050 and, in this regard, green hydrogen. This is expected to be at a globally competitive price, and not only green hydrogen, but green ammonia, methanol, and other green chemicals. Exportation of these products will open a new frontier of global trade for South Africa and provide economic and foreign exchange earnings with Germany, Japan, and the European Union, amongst other countries currently showing potential demand and market for these green products. In addition, climate-driven international commitments are expected to provoke the demand for green hydrogen as South Africa’s green hydrogen cost attractiveness, hydrogen market confidence, and facilitating export infrastructure will influence international buyers. Decarbonising the power sector via substituting coal and natural gas with green hydrogen using the abundant renewable energy resources could both stimulate local demand for green hydrogen by 2050 and lower the price of green hydrogen to an economical price of USD 1.60 per kg by 2030. The levelised cost of green hydrogen production for selected developed and developing countries by different hydrogen production technologies is presented in Figure 13.

3.5. Catalytic Projects

In support of the energy transition from grey hydrogen to blue hydrogen and then to green hydrogen production, economy decarbonisation, and global climate commitments, the Hydrogen South Africa roadmap has been painstakingly and comprehensively designed. This is accompanied by the proposal of catalytic projects to progressively arouse domestic demand for all forms of hydrogen and their green derivatives to evidently demonstrate their possible commercial scalability and viability. These catalytic projects are to be deployed in preparing the country to demonstrate its commitment to the global demand for green hydrogen to capture a momentous share of the estimated demand of 530 Mt by 2050. In this context, South Africa is well positioned to project at least double its present share of the global demand for green hydrogen by 2050, of which green hydrogen deployment to the power sector for electricity generation and energy storage could drive a projected demand of 1.4 Mt by 2050. A total number of nine catalytic projects cutting across the industrial, transport, and building sectors have been proposed, of which four include the Coal CO₂-to-X project, Hydrogen Valley or Platinum Valley Initiative, the Sustainable Aviation Fuels Project, and Boegoebaai SEZ. Figure 14 provides the synergy between two of these proposed catalytic projects; Boegoebaai and Coal CO₂-to-X programmes.

The Platinum Valley Initiative is intended to stimulate the scale up of clean energy, emerging technologies, and abate emissions with the use of the large deposits of platinum in South Africa to drive the development of hydrogen-related technologies, hydrogen demand, and the hydrogen economy. Mobility, mining, and industrial and building hubs have been identified owing to their potential to promote high hydrogen demand in the future, to generate hydrogen (via solar, wind, and water infrastructure), and to contribute to a just transition. The switch from grey hydrogen to green hydrogen to produce green ammonia, ethylene, and fuel, and as a catalyst in steel and iron manufacturing, will drive the industrial hub as well as the mobility and mining hubs (for medium- and heavy-duty trucks, buses, and mining trucks) and building hub (fuel cell powering of hospitals, data centres, etc.)

Leveraging and incorporating the benefits of the triple helix linkages, the Coal CO₂-to-X project intends to utilise green hydrogen and to valorise the emissions (SO_x, CO₂, NO_x, etc.) released from coal-fired boilers to stimulate energy system decarbonisation in South Africa. This will lead to a considerable reduction in emissions while supporting and promoting a just energy transition agenda for the country. Overall, this will provide an opportunity to scale up the domestic hydrogen demand and create the potential for an export market.

The need to significantly decarbonise energy sources in South Africa (via abatement of national greenhouse emissions) coupled with the global agenda to transit from high-carbon to low-carbon and then to a zero-carbon economy has led to the designation of Boegoebaai SEZ as a project solely related to future fuels (green hydrogen and ammonia). As a port located in the Northern Cape coast, and with a large area of land, Boegoebaai will house a solar (30 GW) and wind farm, electrolysers (5 GW), and a desalination plant, and will benefit immensely from Sasol’s immense expertise in fuel production, especially the FT technology.

On a global scale, decarbonising the aviation sector is considered a challenging task, with South Africa not an exception [71]. Sustainable aviation fuel (SAF) is a viable option in transiting from the conventional aviation fuel to low- and zero-carbon fuels in an attempt to reduce emissions. Implementing SAF in South Africa is part of the catalytic projects to drive zero emissions and hydrogen economy to mitigate the aviation sector of the country. The use of biomass (wastes and crops) and other wastes and end-of-life products as feedstocks for SAF production is prominent in South Africa. This is anticipated to be promoted by the travel and tourism sectors, SAF upscaling based on the expertise of Sasol using the FT technology, and a potential partnership with global players. One example is the success of story, in 2016, of South African Airways commercial flights using SAF synthesised from a zero-nicotine tobacco plant, which led to possible carbon mitigation of the domestic airline, conformity with the international aviation emission mitigation framework, and led to emission abatement, better local air quality, enhanced fuel efficiency, improved energy security, reduced exposure to the instability of jet-fuel price and supply, the valorisation of wastes, job creation, and socioeconomic development [60].

The roadmap focuses on national ambitions, sector prioritisation, overarching policy framework, and the macroeconomic impact of the hydrogen economy throughout South Africa. Conclusively, biofuels and organic waste materials deployment as feedstocks for green and turquoise hydrogen production is anticipated to complement green hydrogen production from water, and grey and blue hydrogen produced from coal and natural gas, respectively, to achieve the much-desired decarbonisation of South Africa via the low- and zero-carbon emissions transition.

4. Conclusions

The future of green hydrogen in connection to the circular and hydrogen economy is expected to be driven by increased deployment, investment, and expansion of renewable energy to continuously decarbonise energy utilisation by gradually and consistently replacing carbon-based fuels with hydrogen-based fuels. In the case of South Africa, increased domestication of green hydrogen production by demand stimulation (via energy decarbonisation), infrastructure provision, and deployment across the value chain, policy implementation, provision of incentives, sustained and committed investment, political will power, etc., are amongst the key driving factors. A doubling of the current quantity of hydrogen produced (grey hydrogen) in South Africa by 2050 is achievable, owing to the level of preliminary commitments in terms of hydrogen road, planned supporting projects, existing base infrastructure, availability of resources, research development and innovation, human capital development, and training. It is essential that the outsourcing of the investors and the huge funds required for the investments in green hydrogen production and exportation amongst other factors, such as infrastructure and safety concerns, as the project is anticipated to drive foreign exchange and trades, local job creation, and manpower expertise. This is in connection with international climate-environment commitments to reduce greenhouse gas emissions as South Africa is among the top contributors.

In this context, South Africa appears to lead the African hydrogen revolution via the prospect of green hydrogen production and expansion for domestic utilisation and international export and trading. This agrees with the AU 2063 agenda and serves as a good template for other resource-endowed and visionary African countries. With all hands-on-deck, actualizing the lofty project of green hydrogen in South Africa, similar to other nations of the world, is expected for the global dimension of energy decarbonisation and a huge climate-environment impact of unquantifiable magnitude.