Press Release from 2023-11-07 / Group, KfW Development Bank

Launch of green hydrogen in South Africa: harnessing the extraordinary potential of renewable sources of energy

  • EUR 23 million for a promotional programme to build a green hydrogen economy
  • Contributing to a socially affordable energy transition
  • Developing an environmentally sustainable, less coal-based, climate-resilient economy

Today, on behalf of the German Federal Ministry for Economic Cooperation and Development (BMZ), KfW signed a contract with the South African state-owned promotional bank Industrial Development Corporation (IDC) for EUR 23.1 million to start a promotional programme to build a sustainable hydrogen economy. IDC will use this to finance reference projects for the large-scale production and use of green hydrogen and its by-products. These include, for example, hydrogen-powered lorries and buses for long-haul transport, the production of sustainable aviation fuel and the production of green ammonia for export.

“With its large areas of available land and extraordinarily large number of renewable energy sources, South Africa offers excellent general conditions for the development of a thriving, globally competitive green hydrogen industry. At the same time, our support makes a significant contribution to South Africa’s economic development and job creation, thus contributing to a socially acceptable energy transition in South Africa,”

said Christiane Laibach, Member of the Executive Board of KfW Group.

The greatest challenge for green hydrogen and its downstream products is the large price difference compared to conventionally produced hydrogen from fossil fuels. The financial support for these projects is intended to improve their profitability and thus raise the interest of additional private investors as well as alleviate uncertainties regarding the green hydrogen market.

The funds are a further contribution to the Just Energy Transition Partnership (JET-P), which South Africa agreed with Germany, three other countries and the EU at the UN Climate Change Conference in Glasgow. As part of the JET-P, commitments of up to USD 8.5 billion were made to South Africa by the partner countries for the next three to five years in order to support South Africa’s phase-out of coal as it moves towards a more environmentally sustainable economy.

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