In a significant step towards promoting a sustainable hydrogen economy, the German Federal Ministry for Economic Cooperation and Development (BMZ) has joined forces with KfW, signing a contract with the bank South African public promotion agency, the Industrial Development Corporation (IDC). The agreement involves an investment of 23.1 million euros to launch a promotional program aimed at building a sustainable hydrogen ecosystem.
Under this program, the IDC will use the funds to finance benchmark projects focused on the large-scale production and use of green hydrogen and its by-products. These projects include the development of hydrogen-powered trucks and buses for long-distance transportation, sustainable production of aviation fuel, and manufacturing of green ammonia for export.
South Africa, with its vast expanses of available land and abundant renewable energy sources, is considered an ideal location for the development of a thriving and globally competitive green hydrogen industry. KfW Group Board Member Christiane Laibach highlighted that the support provided not only contributes to South Africa’s economic development and job creation, but also plays a vital role in facilitating an energy transition. socially acceptable in the country.
The main challenge facing green hydrogen and its downstream products is the significant price difference compared to conventionally produced hydrogen from fossil fuels. The financial support allocated to these projects aims to improve their profitability, attract additional private investors and alleviate uncertainties surrounding the green hydrogen market.
This financing initiative aligns with the Just Energy Transition Partnership (JET-P), a commitment forged between South Africa, Germany, three other countries and the EU at the United Nations Conference on climate change in Glasgow. Under JET-P, partner countries have committed up to $8.5 billion to South Africa over the next three to five years. This significant financial support aims to support South Africa’s gradual transition towards a more environmentally sustainable economy.