Premier

In relation to the memorandum of understanding (MOU) signed at the Green Hydrogen Summit between the Western Cape, the Eastern Cape and the Northern Cape, the Department of Economic Development and Tourism informed me that:

(a) What is the intended goal of the MOU

Hydrogen is produced through a process called electrolysis where hydrogen is separated from oxygen by using electricity. The hydrogen is “green” when the electricity used in this process is generated through renewable sources including solar and wind. The African continent and specifically the west coast of Southern Africa (including the Western Cape, Northern Cape and Namibia) has an abundance of sunshine and wind, which makes it a favourable location for the production and export of green hydrogen.

The three provinces are aiming to cooperate with each other towards developing the green hydrogen sector. The provinces have a common interest to promote socio-economic development and a Just Energy Transition. Green Hydrogen presents a lucrative opportunity to realise the common vision shared by the three provinces. The most important objective is to contribute to the climate goals and promote sustainable development through decarbonization, while benefiting from excess energy and water for local resource resillience.

Green hydrogen is in great demand, especially from Europe and the export thereof can contribute significantly to the country’s GDP. On their own, the commercial business cases for the provinces are too fragmented and the bankability of their projects is not optimal. Through the MOU, the efforts of the three provinces are combined to provide an integrated, complementary solution to addressing both domestic and international demand. By working together, the three provinces can harness the required scale of production as well as the complementary nature of different wind and solar generation assets (i.e. producing electricity at different times, providing a wider spread of electricity production across time and lowering the overall cost of producing green hydrogen).

(b)       What are the financial implications of the MOU for the Western Cape Government

The MOU itself does not tie the WCG into any financial commitments, but rather helps to optimise the current resources and leverage external resources. Furthermore, the MOUs enable the province to more easily access international donor funding towards the development of the Western Cape’s Green Hydrogen’s goals.  It should be further noted that the budget allocation for Green Hydrogen is currently being reviewed as part of the ordinary budget process.

(c)       How will the MOU contribute to job creation in the Western Cape?

As this is a nascent industry that does not have comparative numbers elsewhere in the world, the job-creation numbers for the Green Hydrogen economy are based on studies and estimates. Some of the data sources indicate the following:

• Noted by one of the investors announced at the SA Green Hydrogen Summit: 10 000 Western Cape jobs over 2 years (one specific investor)
• Minister Ntshaveni (in her announcement on the Green Hydrogen Commercialisation Strategy): 370 000 jobs by 2030
• Green Hydrogen Commercialisation Strategy: 1.6million jobs in South Africa by 2050
• Minister of Electricity at the SA Green Hydrogen Summit: 3.6 percentage points added to annual GDP by 2050

Moreover, Green Hydrogen will help secure existing jobs that are threatened because of the Carbon Border Adjustment measures being introduced in the majority of our export markets.