Transitioning SA's Petrochemical Value Chain

South Africa’s current policy direction for green hydrogen reflects a ‘hub-based’ approach. The ‘Hydrogen-Hub’ has emerged internationally as a strategy for stimulating green hydrogen uptake. This approach involves the intentional clustering of green hydrogen production activities close to areas of existing and/or potential demand, to benefit from economies of scale and improve logistical considerations. The intentional clustering aims to de-risk infrastructure investment in a market environment where price projections are still uncertain and where policy and regulatory support measures are still being developed.

South Africa’s Hydrogen Society Roadmap and Hydrogen Valley Feasibility Report in 2021 identified three green hydrogen supply-demand Hubs along the country’s N3 highway: Johannesburg, eThekwini/Richards Bay and Mogalakwena,– reflecting an initial focus to catalysing South Africa’s hydrogen economy through a heavy-duty green transport “corridor”. The Hubs were identified along this corridor based on potential for high concentration of future hydrogen demand by industries, capacity to produce hydrogen through access to renewable energy production sites, and potential contribution to a just transition.

The Johannesburg Hub activities are intended to be driven by industries which utilise grey hydrogen switching to green hydrogen as feedstock – a ‘no-regret’ strategy that includes Sasol’s activities i.e. chemicals and synfuels production.

South Africa’s Green Hydrogen Commercialisation Strategy, recently published for comment by the Department of Trade, Industry and Competition, builds on the Roadmap and Feasibility Report, expanding the set of identified hubs to include: the Vaal Triangle (incorporating Johannesburg and Mogalakwena), Saldanha Bay, Boegoebaai, eThekwini, Richard’s Bay and Coega (see the GH2 Hub map).

 The Commercialisation Strategy identifies ~20 ‘catalytic’ projects within these hubs, several of which have been gazetted as Strategic Integrated Projects in line with South Africa’s Infrastructure Development Act, enabling the projects to follow an expedited path to delivery with shorter timeframes for all necessary approvals. The Commercialisation Strategy has a primary focus on the green hydrogen export market, with many projects focussed on exporting products such as green ammonia, methanol, and Sustainable Aviation Fuels (SAF), allowing time for SA to gradually ramp up its domestic market.

In addition to a national view, regional opportunities for hydrogen hubs and clusters present an important opportunity and consideration. Namibia in particularly is moving swiftly and strongly into the hydrogen space, and there may be a number of opportunities for collaboration.