KfW Commits €23.1 Million To Boost South Africa’s Green Hydrogen Economy In Partnership With Industrial Development Corporation

In a significant move toward fostering a sustainable hydrogen economy, the German Federal Ministry for Economic Cooperation and Development (BMZ) has partnered with KfW, signing a contract with South Africa’s state-owned promotional bank, the Industrial Development Corporation (IDC). The agreement involves an investment of EUR 23.1 million to initiate a promotional program aimed at building a sustainable hydrogen ecosystem.

Under this program, the IDC will utilize the funds to finance reference projects focusing on the large-scale production and utilization of green hydrogen and its by-products. These projects include the development of hydrogen-powered lorries and buses for long-haul transport, sustainable aviation fuel production, and the manufacturing of green ammonia for export.

South Africa, with its vast expanses of available land and abundant renewable energy sources, is considered an ideal location for the development of a thriving and globally competitive green hydrogen industry. Christiane Laibach, Member of the Executive Board of KfW Group, emphasized that the support provided not only contributes to South Africa’s economic development and job creation but also plays a vital role in facilitating a socially acceptable energy transition in the country.

The primary challenge faced by green hydrogen and its downstream products lies in the significant price difference compared to conventionally produced hydrogen from fossil fuels. The financial support allocated to these projects aims to enhance their profitability, attracting additional private investors and alleviating uncertainties surrounding the green hydrogen market.

This funding initiative aligns with the Just Energy Transition Partnership (JET-P), a commitment forged between South Africa, Germany, three other countries, and the EU during the UN Climate Change Conference in Glasgow. As part of the JET-P, partner countries have pledged up to USD 8.5 billion to South Africa over the next three to five years. This substantial financial backing aims to support South Africa’s phased transition away from coal, moving toward a more environmentally sustainable economy.