South Africa is turning sewage into clean fuel in a breakthrough project that could reshape how cities manage waste while helping heavy industries cut emissions.
Climate Investor Three (CI3), through its SA H2 Fund, has signed a development funding agreement with Green eFuels Producers (GeFP) to advance what is expected to become the country’s first large scale wastewater to green methanol facility in Gauteng.
The project, planned for the Vaal Special Economic Zone, will convert municipal sewage sludge from the Sebokeng Wastewater Treatment Works into green methanol, a low carbon fuel increasingly viewed as critical for decarbonising shipping, heavy transport and industrial manufacturing.
At full scale, the facility is expected to process about 90,000 tonnes of sewage sludge annually and produce roughly 14,300 tonnes of green methanol each year.
The project represents one of the continent’s most ambitious circular economy energy developments, combining wastewater treatment, renewable energy, green hydrogen production and carbon capture into a single industrial system.
Instead of relying on fossil fuels or agricultural feedstocks, the plant will extract biogenic carbon dioxide from sewage sludge. That captured CO₂ will then be combined with green hydrogen produced using renewable electricity to create e methanol.
The hydrogen will come from a planned 10 MW electrolyser powered by a 50 MW solar PV installation together with additional wind power sourced through South Africa’s electricity wheeling framework.
Developers say the project could prevent nearly 119,000 tonnes of carbon dioxide equivalent emissions annually by replacing fossil based methanol and reducing emissions linked to sludge disposal.
The facility is also expected to deliver major water and agricultural benefits. Around 50,000 to 60,000 cubic metres of industrial grade water could be returned to the local utility each year, while the treatment process is also expected to generate fertiliser by products.
The investment marks another major step for Climate Fund Managers (CFM), the blended finance infrastructure manager behind CI3, which is positioning Southern Africa as a future hub for green hydrogen and low carbon fuels.
The SA H2 Fund, which is targeting around USD 750 million, was established to support projects across the green hydrogen value chain, including electrolysers, green ammonia, green methanol and associated infrastructure.
Its investors include the European Commission, the Public Investment Corporation (PIC), Industrial Development Corporation (IDC), Development Bank of Southern Africa (DBSA) and Sanlam.
Under the agreement, SA H2 has committed up to USD 4 million in development funding for engineering studies, environmental assessments, permitting and commercial structuring ahead of financial close.
The fund also secured the right to participate in up to USD 26 million in equity funding once the project advances to construction.
Financial close is expected in the second half of 2027, with commercial operations targeted around 2029.
The project is expected to create up to 300 construction jobs and around 60 permanent operational positions in the Vaal region.
For South Africa, the significance goes beyond a single fuel facility. The project highlights how municipal wastewater systems could become part of the country’s broader energy transition by turning waste into a valuable climate solution.
If successful, the Gauteng facility could place South Africa among a growing group of countries developing next generation clean fuels from unconventional waste streams, helping build a new industrial market where sewage becomes a source of energy rather than an environmental burden.
