COP 27 in Egypt is coming to an end, and it seems that there are going to be a lot of difficulties with getting the world to take proper action on climate change. The debates, as expected, revolved around who’s going to pay.
Developing countries are determined that industrialised nations must foot the bill to fix a problem they are in large part responsible for. There was a lot of discussion about loss and damage, and who pays for the catastrophic consequences of climate disasters, which are exacerbated by the rise in global warming. Developing countries made a united plea for countries to, at the very least, honour the promises they have already made. Connected to financial responsibilities, there was a call for multilateral development banks and lending systems to be re-imagined, to make them fit for purpose.
South Africa was in a unique position in Egypt as one of the few developing countries that are already well on the way to receiving financial aid, through the Just Energy Transition Partnership, although the format of that aid is still being ironed out. But President Cyril Ramaphosa, before COP 27 even started, laid out the areas of focus for that money.
Much of the focus is on South Africa’s major problem. Our power is coal-based, and unless that changes we won’t meet our targets for lowering our greenhouse gas emissions. That issue is obviously compounded by the fact that it is also a system that is not functioning very well at the moment. But these issues and debates have been well ventilated and will continue to be so. Ramaphosa told COP 27 that there are two other areas of focus for South Africa’s energy future – green hydrogen, and electric vehicles.
Getting involved in the production and manufacturing of a segment of the electric vehicle market makes perfect economic sense. Vehicle manufacturing has long played a large part in the South African economy. As the world starts moving away from fossil fuels towards renewable energy transport, South Africa must keep up with international developments.
Green hydrogen also plays a large role in the idea of a just transition from fossil fuels. It’s a new industry in South Africa, so any developments in the sector will add to GDP and most importantly create new jobs.
But what is green hydrogen?
The World Bank estimates that the demand for hydrogen will increase by close to 10% a year until 2030. Its uses continue to expand – in power generation, manufacturing processes in industries such as steelmaking and cement production, fuel cells for electric vehicles, heavy transport such as shipping, green ammonia production for fertilizers, cleaning products, refrigeration, and electricity grid stabilization. The current problem is that over 95% of current hydrogen production is fossil fuel-based.
Green hydrogen uses renewably generated electricity to split water molecules into hydrogen and oxygen. Falling renewable energy prices, as well as improved technology, means green hydrogen is becoming more viable. There are hopes that it will eventually become as cost-effective, even on a large commercial, scale, as natural gas. But that is still some way off, which means if South Africa gets involved now, we are in a new industry from the outset. That’s good economics.
South Africa is well positioned logistically to get into the business early. The best place for green energy production is close to where renewable energy is produced. Many of South Africa’s solar and wind farms are located in isolated regions, in provinces that could benefit greatly from an injection of investment. Plans are being set in motion.
The Government is planning to hold a three-day Summit on green hydrogen in Cape Town at the end of the month.