South Africa has potential to unlock carbon-free chemicals sector, new study finds

If South Africa can unlock disruptive technology, especially green hydrogen, it could decarbonize its petrochemical and chemical sectors and become one of the world’s leading producers of green fuels and chemicals for household and household use. ‘export.

The outlook for South Africa’s crude refineries is less positive, however, as the aging fleet is unable to produce the cleaner fuels required by looming regulations stipulating the transition to ultra-low sulfur gasoline and diesel products from September 1, 2023.

These are two of the main findings of a study conducted by the National Business Initiative (NBI) in collaboration with Business Unity South Africa and the Boston Consulting Group to investigate the prospects for decarbonization of the domestic chemicals and petrochemicals sector.

Industry currently accounts for 13% of South Africa’s emissions, 90% of which is produced by Sasol, which uses coal and gas to produce synthetic fuels and chemicals in Secunda and Sasolburg.

The industry directly employs around 140,000 people and supports over 690,000 indirect jobs.

The final report will be released on October 21 ahead of the COP26 climate talks in Glasgow, Scotland, at which NBI will have a booth where it hopes to showcase South Africa’s prospects for green industrialization.

In a presentation on the results of the study, Stephen Nicholls, NBI environment manager, said South Africa’s opportunity to become a global manufacturer of green fuels and chemicals was based on three competitive advantages of the country in the production of green hydrogen and synthetic fuels.

“First, South Africa has some of the best solar and wind resources on the planet.

“Second, it has access to enough land and seawater for desalination, which can also serve a dual purpose of improving water security.

“And third, it features unique Fischer-Tropsch technology for enriching hydrogen into hydrocarbons such as e-methanol and sustainable aviation fuels (SAFs),” Nicholls explained.

Green hydrogen is produced by using renewable electricity to separate water into hydrogen and oxygen, using an electrolyser.

Sasol, which has placed green hydrogen at the center of its recently renewed strategy, is currently studying, in partnership with Enertrag, Afrox and Navitas, the production of SAF from green hydrogen at its Secunda complex in Mpumalanga.

The study indicates that the demand for green hydrogen could reach between 160 and 300 million tonnes as countries seek to use hydrogen and hydrogen derivatives to decarbonize hard-to-reduce sectors of aviation, long-distance sea and land freight, chemicals, steel and cement.

South Africa, along with countries like Chile, Namibia, Saudi Arabia and Australia have had the opportunity to become specialist producers of green fuels and chemicals, Nicholls said.

President Cyril Ramaphosa also recently highlighted the opportunity for green hydrogen, stating that South Africa was ready to be “a major exporter in this market, to use hydrogen to rapidly decarbonize our existing industries and attract new markets. industrial investments from all over the world ”.

The NBI study added that South Africa is well positioned to supply the European market, where annual demand for hydrogen and fuels could reach around 30 million tonnes by 2050.

Along with a conducive policy environment, Nicholls said establishing international partnerships and pilot projects will be essential to spur research and development, levy deals and to secure the cheap funding needed to unlock the opportunity.

By comparison, the country’s fleet of conventional refineries is expected to close by 2030, due to its declining competitiveness vis-à-vis imports.

Nicholls said the risks associated with these closures – including security of supply, social and balance-of-payments risks – will need to be managed well over the medium term.

“But the changing demand landscape is also creating opportunities for South Africa in the long term.

“South Africa could become a major producer of green synthetic fuels and green chemicals, especially electronic ammonia and SAF for local demand and export, through decarbonization and conversion of its synthetic fuels sector. “

He said it was therefore a priority for South Africa to develop a green fuels and chemicals industrialization plan and to develop a national green hydrogen vision and marketing strategy.