Egypt

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GH2 Country Portal – Egypt

Green Hydrogen Vision

Egypt aims to be one of the largest exporters of clean hydrogen in the region, this has become a major goal in light of global changes related to the energy sector, as well as global economic and environmental changes in relation to climate change and the green economy. The Egyptian Government is achieving large-scale, low-cost Renewable Energy development and designing models for sustainably maximizing fiscal revenue and development in Renewable Energy investments in green hydrogen and ammonia production. Egypt’s world-class solar and wind resources give it a long-term competitive advantage in producing green hydrogen and green ammonia.

National Strategy

In August 2024, Egypt introduced its National Low-Carbon Hydrogen Strategy to diversify energy sources and shift towards a low-carbon economy. The government anticipates that this initiative will boost Egypt’s GDP by $18 billion and generate over 100,000 jobs by 2040. The strategy targets increased hydrogen production, promotes its utilization across sectors such as industry and transportation, and strengthens Egypt’s position in the global hydrogen marketplace.  

Prime Minister Mustafa Moadouli stated that this strategy aligns with Egypt’s ‘Vision 2030’ sustainable development goals, emphasizing the country’s natural resources—especially solar and wind energy—to enhance low-carbon hydrogen outputs. Mohammed Al-Homsani, adviser and spokesman for the House of Ministers, pointed out that the strategy was crafted in collaboration with international partners, including the European Bank for Reconstruction and Development. The National Council for Green Hydrogen, launched in 2023, will oversee the strategy’s execution. Furthermore, a new investment website has been created to encourage private sector involvement in green hydrogen initiatives. 

Capacity and Price targets

The "central” scenario: Under this less ambitious pathway, the country aims to produce 1.5 million tons of green hydrogen annually by 2030, with 1.4 million tons designated for export and 5.8 million tons by 2040, of which 3.75 million tons are intended for export. 

  • Statistical necessities: Achieving these objectives will require 19 GW of installed renewable capacity by 2030 and 72 GW by 2040, 13 GW of electrolyser capacity by 2030 and 48 GW by 2040. Egypt would secure 5% of the predicted tradable market in low-carbon hydrogen if successful by 2040. The investment required for the necessary electrolyser capacity is estimated at USD 10 billion by 2030 and USD 24 billion by 2040. 

The "green” scenario: In this more ambitious scenario, the country plans to produce 3.2 million tons of green hydrogen annually by 2030, with 2.8 million tons earmarked for export and 9.2 million tons by 2040, including 5.6 million tons intended for export. 

  • Statistical necessities: To meet these targets, 41 GW of installed renewable capacity will be necessary by 2030, 114 GW by 2040, 27 GW of electrolyser capacity by 2030 and 76 GW by 2040. Egypt would obtain 8% of the expected tradable market in low-carbon hydrogen if realised by 2040. The projected investment for the required electrolyser capacity is USD 22 billion by 2030 and USD 34 billion by 2040. 

Impact Targets

The strategy suggests a three-phase plan to develop the country’s hydrogen economy.

  • The pilot phase, which will last until 2030, will see the government offer close support for initial projects and establish a fit-for-purpose governance structure.
  • A scale up phase will be implemented between 2030 to 2040 focusing on lowering the cost of production to scale up to GW production capacity.
  • The final full market implementation phase from the 2040s onwards will maintain Egypt’s market position and make use of hydrogen locally to support decarbonisation. 

Policy Spotlight

  1. In 2020, Egypt revealed plans to invest around EGP 134.2 billion by 2050 to build seawater desalination facilities aimed at generating 6.4 million cubic meters of drinkable water daily. This project will occur in six five-year phases, starting with an initial investment of EGP 45 billion to establish 47 desalination plants by 2025. Ayman Soliman, CEO of the Sovereign Fund of Egypt, mentioned last year that the nation aims to finalize contracts for 21 desalination plants during this first phase of the expansive initiative. Given Egypt's water scarcity issues, the country will likely need water desalination to produce green hydrogen, which typically requires significant water. Additionally, the electrolysis process creates brine, which presents disposal challenges and risks damaging marine ecosystems if not appropriately handled. Furthermore, new renewable energy sources must support hydrogen production — akin to the EU's "additionality” requirement — to ensure that existing renewable energy outputs are not redirected from the power grid. 
  2. Fertiglobe, a urea and ammonia exporter based in the UAE, finalised a EUR 397 million offtake agreement with Germany's H2Global program in July 2024. This agreement allows them to supply green ammonia from their Egyptian facilities to the EU from 2027 to 2033, covering 10% of Germany’s annual ammonia requirement. Last December, the company dispatched the first ISCC PLUS-certified (International Sustainability and Carbon Certification) green ammonia shipment to India from their electrolyser facility in Egypt’s Suez Canal Economic Zone. 

Financing

The strategy proposes a three-part approach: utilising concessional financing from development banks and multilateral funds, attracting foreign investors, and providing incentive packages by the Egyptian government. 

• Concessional financing: EU institutions, alongside various international financial organisations, stand out as possible contributors, offering concessional finance as part of the Economic Investment Plan for the Southern Neighbours. Dedicated funds like the Green Climate Fund, the Green for Growth Fund, and the Global Environment Facility can also provide this type of financing. 

• Building partnerships: Financing opportunities may arise from the developing Mediterranean Green Hydrogen Partnership between the EU and Egypt, aimed at enhancing hydrogen trade among Europe, Africa, and the Gulf. 

• MDB-friendly funds: Possible funding sources include the European Bank for Reconstruction & Development (EBRD), which provides loans and assistance to the energy sector, along with the European Investment Bank, IMF, and World Bank. The EBRD is also noted as one of the major foreign investors in Egypt. 

• Foreign investment remains significant: Egypt has entered 23 Memoranda of Understanding (MoUs) — seven of which were signed earlier this year — along with nine partnership agreements with various low-carbon hydrogen project developers and investors, marking Egypt’s entry into the sector. To capitalise on the positive trajectory indicated by these MoUs, the National Council for Green Hydrogen and its Derivatives (NCGH), established a year ago, should evaluate the actual economic impacts of the initial hydrogen initiatives, including the advantages of different business delivery models (BOT, BOOT, or PPP) employed in the agreements. 

Additionally, the government introduced the Law No. 2 of 2024 regarding Green Hydrogen Incentives in January 2024, which outlines various incentives for green hydrogen projects and their derivatives. Under this law, the Egyptian government will provide a cash investment incentive known as the Green Hydrogen Incentive, equivalent to 33% up to 55% of the tax paid on income realized from activities related to a clean hydrogen project. The law includes VAT exemption on equipment, tools, machines, devices, raw materials, supplies, and necessary transportation means needed for initiating green hydrogen projects. Additionally, exports from these projects will be subject to VAT at a rate of 0%.  

Furthermore, the government provides several other non-taxation incentives, such as (a) the establishment of special customs ports for green hydrogen projects’ exports and imports; (b) a 30% deduction on fees for the use of seaports, maritime transport and ship services; (c) a 25% deduction on the value of industrial land rights for green hydrogen; (d) a 20% deduction on the value on land rights for storage at ports, for up to ten years after signing project agreements with the government; (e) a grace period for the payment of land use fees for industrial and storage land specific to a project and its expansion; and (f) a cap on international employees at 30% of the workforce on a project, with a minimum requirement of 20% local content.

Government green hydrogen lead

  • The Cabinet.

  • Ministry of Electricity and Renewable Energy