CFM Launches €150M Energy Transition and Green Hydrogen Fund

Southern African New Green Hydrogen Projects to be Given Top Priority by New Investment Vehicle

Climate Fund Managers (CFM), a pioneer in climate-resilient solutions in Africa, and its Asian and Latin American counterparts introduced a new investment fund, Climate Investor Three (CI3). CI3 has been created to invest in southern Africa's energy transition prospects with a specific emphasis on green hydrogen production and infrastructure development in South Africa and Namibia.

The initiative has the vision of targeting rising markets in an attempt to position Africa's south as a global green hydrogen hub. This comes at a time when clean energy alternatives are increasing in demand, with numerous sectors looking for ways to cut down on their carbon footprint. Green hydrogen has emerged as a fundamental component towards the achievement of this, especially in hard-to-decarbonize sectors like heavy transport, aviation, steel, and chemicals.

What is Green Hydrogen?
Green hydrogen is an emission-free form of energy obtained through the electrolysis of water to oxygen and hydrogen by applying renewable energy resources like solar or wind energy. The advantage of electrolysing hydrogen is that there are no emissions released while carrying out this method of getting the energy as against the conventional hydrogen production process which is a carbon-emitting system.

Hydrogen is an energy carrier and, if sustainably produced, can be one of the means of tackling hard-to-electrify and hard-to-decarbonize sectors. They are industries like heavy transport, steel, aviation, and chemicals and constitute a very considerable share of the world's carbon footprint.

CI3 Fund Structure
The CI3 fund has a blended finance, where public capital and private capital are blended together to reduce the risk of investments. The method tries to ensure that investment in green hydrogen schemes is more practical for private investors through having opportunities of more lower-risk ones with late-stage investment and being backed by early-stage investments, which are of greater risk.

The fund has two large components:

Development Tranche: It funds projects in earlier stages during this phase, incubating ideas into successful business plans. In this phase, money from the public is used to fund risks associated with prior project development stages.

Equity Tranche: As the projects grow mature and become highly developed, the fund progresses to the equity tranche that leverages private capital through making secure investments.

CI3 will be used to fund the building of infrastructure used in green hydrogen production, including renewable energy facilities, electrolysis facilities, and transport and storage facilities. By concentrating on these important factors, the fund aims to create a sustainable framework for green hydrogen production and availability in southern Africa.

Strategic Emphasis on South Africa and Namibia
The CI3 fund will be concentrated in South Africa and Namibia, the southern African countries with the most desirable natural resources to produce green hydrogen. The two nations have an abundance of sunshine and wind, which are sources of the renewable energy utilized in the production of green hydrogen at a competitive price.

South Africa has particularly been preparing to position itself as one of the global top producers of renewable energy based on its expanded solar and wind portfolios. Namibia also offers immense potential based on large sections of land space and good climate for the production of renewable energy. With such two natural sources added to contributions from the CI3 fund, these countries have all the means to be trendsetters of the world's green hydrogen industry.

Quickly Transforming the Southern Africa Region to Low-Emission Economic Growth
The green hydrogen investments can be the answer to allow the region to grow into low-emission economic growth. With their renewable energy potential, Namibia and South Africa not only could produce enough energy for themselves but also as clean energy exporters to the rest of the world, such as Europe and Asia.

Increased demand for green hydrogen aligns with the world's climate goals, specifically the achievement of a net-zero world. Southern Africa, while making the transition, can be best positioned to be at the forefront of producing green hydrogen since abundance of sources of renewable energy is a global competitive advantage.

Private Sector Development and Employment Creation Options
The CI3 fund-financed green hydrogen projects will be expected to create new economic and job opportunities for southern Africa. Along with the production of renewable energy and hydrogen, the development of hydrogen storage and transportation infrastructure will require substantial investment, creating new jobs in the region.

The structure of the fund promotes private investment, which has the potential to spur additional investment in clean energy technology and innovation. Given that demand for green hydrogen is on the rise around the world, southern Africa has a potential market to benefit from higher consumption of this clean source of energy.

Conclusion
Launch of the Climate Investor Three (CI3) fund is a key step towards facilitating the energy transition in southern Africa, and specifically, the production of green hydrogen and supporting infrastructure. The fund will drive the development of a green hydrogen industry that has the potential to facilitate the attainment of global climate objectives as well as regional low-emission economic development through the harnessing of the region's rich renewable energy resources.

With the CI3 fund's long-term strategic emphasis in South Africa and Namibia, CI3 is poised to lead the charge in positioning southern Africa as a competitive player in the global green hydrogen market, for local and international initiatives in avoiding climate change.