Large green hydrogen fund for South Africa

State-backed firms from the Netherlands have agreed to back the creation of two $1 billion green hydrogen funds in Namibia and South Africa, giving the country a stake in the development of an industry that’s expected to supply Europe with the green fuel.

Climate Fund Managers, a Hague-based company owned by Netherlands’s development bank FMO and South African insurer Sanlam, and Invest International BV will help run and finance the initiatives, according to statements.

The region’s abundant wind and solar resources, which would be used to provide the energy to split water, and South Africa’s deep capital markets have positioned it to potentially become a major producer of the green fuel, which is expected to ultimately replace natural gas.

“South Africa is uniquely positioned to become a key player in the global hydrogen market,” while the Netherlands could serve as an import hub, said Dutch Prime Minister Mark Rutte at an event in Pretoria on Tuesday.

Under the agreements, Invest International — a venture between the Dutch Finance Ministry and FMO — will supply seed capital of €50 million to South Africa’s SA-H2 fund and €40 million to Namibia’s SDG Namibia one fund, Kevin Anderson, head of strategic initiatives at Climate Fund Managers, said in an interview on Wednesday.

“We can bring international money to support them,” Anderson said. “The ticket sizes for green hydrogen projects are so large you are going to need international money.”

The Namibian fund will include the participation of the country’s Environment Investment Fund and will get some money from a €500 million allocation to Namibia from the European Investment Bank.

South African state development banks, the Industrial Development Corp. and the Development Bank of Southern Africa will participate in SA-H2 alongside Sanlam with their respective contributions to be negotiated. Both funds will operate as blended finance facilities, allowing public and private money to be invested in projects.

Rutte, who visited South Africa together with his Danish counterpart Mette Frederiksen, was accompanied by Allard Castelein, the chief executive officer of the Port of Rotterdam.

“It’s the biggest port in Europe. It can distribute the gas across Europe,” Anderson said.

Germany has also shown an interest in investing in southern African hydrogen. On a visit to the region in December, German Economy Minister Robert Habeck spoke of Namibia and South Africa’s potential to produce green hydrogen for export to Europe as he sought to bolster European energy security.

Germany’s RWE and consortium Hyphen Hydrogen Energy last year signed a memorandum that could see RWE buy as much as 300,000 tons per year of green ammonia, a hydrogen derivative that’s particularly suitable for transport by ship, from Namibia. German development bank, KFW, is funding hydrogen studies in South Africa.

“For South Africa this is in my opinion the new gold discovery,” said Anderson. “If we don’t seize this opportunity we will lose out.”


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