Emerging market blended finance investment manager Climate Investor Three has, through its affiliate SA-H2 Fund Managers, signed a $4-million development funding agreement with project developer Green eFuels Producers (GeFP) to support the development of a first-of-its-kind green methanol production facility in Gauteng, South Africa.

The facility will process about 90 000 t/y of municipal sewage sludge from the Sebokeng Wastewater Treatment Works, in southern Gauteng.

Renewable energy, including 50 MW of co-located solar power and additional wind power, procured through South Africa’s wheeling framework, will be used to power a 10 MW electrolyser to produce green hydrogen.

This will enable the production of about 14 300 t/y of green methanol, which will create a circular waste-to-fuel solution.

Once operational, the project is expected to avoid about 118 950 t/y of CO₂-equivalent emissions, based on projected yearly green methanol production volumes and preliminary lifecycle assessment modelling.

The plant will also create up to 300 construction jobs and 60 permanent operational roles.

The development funding will support project development, including technical and engineering design, environmental- and social-impact assessments, permitting and commercial structuring required to advance the project towards financial close.

Further, the agreement also secures the SA-H2 Fund’s right to participate in equity funding for up to $26-million.

Financial close is targeted for the second half of 2027, with commercial operations expected to begin in 2029.

Wastewater treatment facilities generate sewage sludge as a by-product. Managing this material sustainably is a growing challenge for utilities in South Africa. By converting it into green methanol, the GeFP-led project diverts waste from conventional disposal pathways while creating a valuable fuel.

Methanol is a widely used industrial chemical, essential in producing plastics and other materials, says Climate Investor Three.

While conventional methanol is typically produced from fossil fuels, green methanol is made using renewable energy and sustainable carbon sources, such as biogenic waste and captured CO₂, and is emerging as a low-carbon alternative fuel in sectors such as shipping, power generation and aviation, which are difficult-to-decarbonise industries.

Additionally, the project will return an estimated 50 000 m³/y to 60 000 m³/y of industrial-grade water to the local water utility, which reinforces its circular waste-to-value model and supports improved water security and resource resilience in the Vaal region.

The project will also support a community development programme focused on skills development and socioeconomic upliftment in the Vaal region.

The project supports South Africa’s Hydrogen Society Roadmap, its Nationally Determined Contribution and broader decarbonisation objectives.

This hydrogen-based waste-to-value initiative also lays the foundation for a Green Methanol Corridor, which will enable scalable green fuel infrastructure across the country, says the Climate Investor Three fund.

“This project demonstrates the effects of energy transition for industrial operations in the real economy by turning everyday waste into a valuable low-carbon fuel, says SA-H2 Fund Managers CEO Mphokolo Makara.

“By transforming sewage into a productive resource, it addresses a key waste management challenge while supporting local jobs and strengthening South Africa’s industrial base through a just transition. It demonstrates how circular economy solutions can play a practical role in decarbonising hard-to-abate sectors,” she adds.

“This investment is a strong endorsement of our vision to produce green methanol using innovative, circular solutions. This project will contribute to decarbonising hard-to-abate industries while addressing local wastewater challenges, creating jobs, strengthening local value chains and generating long-term value for the Vaal region,” comments GeFP co-founder Chris Heinermann.

“The EU stands with its long-term partner South Africa to support its green transition. This green methanol project will help deliver lasting benefits for South Africa,” says European Commissioner for International Partnerships Jozef Síkela.

Through the €12-billion EU-South Africa Global Gateway Investment Package, the EU is working to unlock opportunities for cleaner growth, skilled jobs, local value chains and innovation, while also strengthening Europe’s energy and economic security, he says.

Climate Investor Three's SA-H2 Fund is a blended finance facility focused on energy transition and the green hydrogen value chain in Southern Africa.

The fund is supported by public and private sector investors, including the European Commission under the EU-South Africa Global Gateway Investment Package, Invest International, the Public Investment Corporation, the Industrial Development Corporation, the Development Bank of Southern Africa and Sanlam.

The agreement is Climate Investor Three's SA-H2 Fund’s second development funding investment in South Africa, after it invested in Hive Hydrogen’s Coega green ammonia plant in the Eastern Cape in 2025.

The transaction also represents the first external institutional investment in GeFP, supporting the company’s plans to develop scalable green methanol infrastructure that can be deployed across South Africa.