The Green Climate Fund has approved $140 million in catalytic financing for green hydrogen and industrial decarbonisation projects in South Africa and Namibia, split between two regional funds that target 30 to 40 projects.
The Green Climate Fund has approved $140 million in catalytic financing for green hydrogen and industrial decarbonisation projects in South Africa and Namibia. Its board agreed the package at its 46th meeting in Songdo, South Korea, on 27 October. The money will flow through Climate Fund Managers’ Climate Investor Three facility.
The financing forms part of the Southern African Industrial Decarbonisation Facility. The Green Climate Fund describes the facility as its first financing platform for decarbonising industrial value chains in Africa. The Development Bank of Southern Africa (DBSA) oversees the programme as the fund’s accredited entity.
South Africa receives $84 million, all of it for the construction equity tranche of the SA-H2 Fund. Namibia receives $56 million for the SDG Namibia One Fund. Of that amount, $15 million goes to early-stage project development and $41 million to construction equity. South Africa therefore takes 60% of the total and Namibia 40%.
Construction equity is the capital that pays for a plant while it is being built. Climate Investor Three uses a blended finance model, in which public and private money sit side by side. Concessional or catalytic funds absorb part of the risk that would otherwise deter commercial investors.
The programme sets four targets. It plans to mobilise capital towards a broader $1.2 billion investment target and to finance 30 to 40 projects. It also supports about 1.52 gigawatts of renewable energy capacity and the avoidance of an estimated 24.2 million tonnes of greenhouse gas emissions. All four are programme goals. None is an achieved result.
In South Africa, development funding agreements under the SA-H2 Fund cover two projects. Hive Hydrogen is preparing a green ammonia project at Coega. Green eFuels Producers is developing a facility that turns wastewater into green methanol.
In Namibia, agreements under SDG Namibia One cover four projects. They are the Hyphen green hydrogen project, HyIron’s Oshivela green iron project, Zhero Molecules’ Walvis Bay green ammonia project and the Dâures green fertiliser project. The agreements show that preparation work is advancing. The plants themselves remain unfinanced, unbuilt and not yet operating.
Earlier commitments sit behind the new approval. The SA-H2 Fund reached an initial close of 3 billion South African rand, about $182 million, in August. Commitments came from the Public Investment Corporation, acting for the Government Employees Pension Fund, together with Sanlam Life, the Industrial Development Corporation of South Africa and the DBSA.
The Climate Investor Three development tranche has separate backing. Invest International and the European Commission made initial commitments of €150 million under the EU’s Global Gateway initiative. That money pays for the early project work that comes before construction equity is needed.
Green hydrogen and its derivatives, including ammonia, methanol and green iron, are central to cutting emissions in steel, fertiliser and chemicals. Large projects elsewhere show the capital involved. ACWA Power completed construction at its $8.5bn NEOM green hydrogen plant, and the Hydrogen Council has identified a $130bn low-carbon hydrogen pipeline worldwide.
The approval shows how climate funds support early-stage hydrogen finance. First-of-a-kind plants struggle to raise development money, because lenders usually want proof of offtake, land and permits before they commit. By funding both development and construction equity, the Green Climate Fund covers two stages where private capital can be hard to find.
The split between the two countries also points to differences in project readiness. South Africa’s allocation goes entirely to construction equity, which suggests the SA-H2 Fund expects projects nearer a build decision. Namibia’s allocation includes $15 million for early-stage work, so part of its pipeline sits further back.
For developers in both countries, the approval adds a source of early-stage and construction-phase capital from the Green Climate Fund. The reporting names no final investment decisions and gives no start dates for any plant. Delivery will depend on each project reaching financial close, so the next milestones to watch are the first construction equity commitments from the two funds.
