Transitioning SA's Petrochemical Value Chain

It is estimated that roughly 2.6 Mtpa of grey hydrogen are produced and used by Sasol; 2.1 Mtpa at the Secunda facility and the remainder in Sasolburg (Business Engagement). The use of low-grade and low-cost coal allows for correspondingly low-cost hydrogen production, estimated at roughly $2/kg.

At Sasol’s Capital Markets Day in 2021 it was indicated that, by 2030, 10% of Sasol’s hydrogen demand will be met with green hydrogen. This will be followed by a more comprehensive transition post 2030.  By 2040, 40% of hydrogen demand is to be met by green hydrogen, and by 2050, 100% of hydrogen supply will be green.

Based on Paris-aligned net zero pathways for the South African economy, local green hydrogen supply is projected to ramp up from the late 2020s early 2030 onwards, initially stimulated by demand for green-hydrogen related exports including green iron, steel and ammonia. Domestic demand within industry and heavy–duty mobility is expected to take longer to ramp up, and studies suggest that by 2050, SA could be producing anywhere from 2.5-9.5 Mtpa of green hydrogen, of which 50%-60% could be targeted at the domestic market.

The table below summarises estimates of the initial scaling and eventual size of the green hydrogen market across key modelling studies. Notably, from a policy perspective, South Africa’s Green Hydrogen Commercialisation Strategy targets green hydrogen production of 1 Mtpa by 2030, 3.8 Mtpa by 2040 (of which 2-3 Mtpa would be for domestic production) and 7 Mtpa by 2050.