Addressing a delegation from the European Bank for Reconstruction and Development (EBRD) in early March, Egypt’s petroleum and mineral resources minister Tareq el-Molla declared an ambition to make the country a hub for the export of green hydrogen to Europe. His words were music to the ears of his European guests, who shortly afterwards formally agreed to help shape the government’s hydrogen strategy.

Cairo has already moved with uncharacteristic speed over the past year to grab a foothold in the fledgling industry. However, the plans have been lent huge impetus by Europe’s newfound rush to find alternatives to Russian energy supplies.

Egypt’s ample reserves of sun, wind and land make it an obvious candidate for green hydrogen production. And as the carbon-free fuel’s international stock has risen over the past year, a string of European companies have committed with varying degrees of concreteness to develop projects there.

Belgian marine specialist Deme, Italian oil major Eni and German power giant Siemens—all of which are already major investors in the country—have already announced their interest.

The government decided early on to prioritise green hydrogen over blue, with the country’s surplus natural resources channelled into increased exports. But an overarching hydrogen strategy—originally promised by end-2021—remains pending.

The government decided early on to prioritise green hydrogen over blue

A decree issued in mid-March recognises the production, storage and export of green hydrogen and ammonia as comprising part of the Egypt’s economic development strategy, as defined under an investment law promulgated in 2017 – making investors therein eligible for numerous incentives. Tax and customs relief, simplified licensing procedures, and reduced land allocation costs could now potentially be made available to qualifying projects.

European interest

The EBRD’s visit yielded a memorandum of understanding (MoU) to assist Egypt’s Ministry of Electricity and Renewable Energy and Ministry of Petroleum and Mineral Resources with the strategy’s preparation. The EBRD will support in assessing potential production of hydrogen and its derivatives, and advise on necessary regulatory changes.

The EU-affiliated bank’s eagerness to assist is understandable. Egypt is ideally located to provide a sizeable chunk of the imports of the resource envisaged under the EU’s RepowerEU roadmap, unveiled by the European Commission in early March shortly after Russia’s invasion of Ukraine and designed wean the bloc off Russian gas by end-decade.

Spurred by increasing confidence in long-term market demand, investors—primarily European—are already showing growing interest, with two major new projects announced last month alone. On 10 March, Norwegian solar specialist Scatec signed an MoU with the General Authority of the Suez Canal Economic Zone (SCZONE), the Sovereign Wealth Fund of Egypt (TSFE), the Egyptian Electricity Transmission Company (EETC) and the New and Renewable Energy Authority (NREA) to develop a green ammonia plant at Ain Sokhna on the west coast of the Gulf of Suez, which is emerging as an nascent industry cluster.

$5bn – Estimated cost of Ain Sokhna green ammonia project

SCZONE chairman Yehia Zaki welcomed the deal “as a first step towards the adoption of the green ammonia technology and creation of a green fuels industrial hub” in the area. The estimated $5bn facility will be built in stages, with the 1mn t/yr first phase due online in 2025 and expanded threefold thereafter.

Scatec had also announced plans last October to develop a 50-100MW green hydrogen plant at the same site as part of a joint venture with Dutch/UAE Fertiglobe, which would offtake the output to produce green ammonia at its existing fertiliser plant nearby.

The Norwegian solar firm had already been involved in Cairo’s accelerated renewables buildout in the late 2010s when it completed a 390MW solar PV complex at Benban in October 2019.

Local talent

Local entrepreneurs have also spotted an opportunity. On 15 March, newly formed clean energy investment firm Mediterranean Energy Partners appointed UK energy services provider Petrofac to conduct feasibility studies on another green ammonia project at the port of Ain Sokhna, producing 125,000 t/yr of the material for export.

Later in the month, Denmark’s Maersk affirmed the potential for the port, which  is located at the mouth of one of the world’s busiest shipping lanes,  to become a centre for low-carbon bunkering, signing an MoU with SCZONE, TSFE, EETC and NREA to conduct a feasibility study on a project to produce green hydrogen and marine fuel. The shipping company would offtake the hydrogen as part of plans to decarbonise its fleet.

Senior Egyptian officials have been chivvying those firms that provisionally committed last year to make good on their promises. In late February, President Abdel Fateh el-Sisi discussed green hydrogen with Deme, which had stated intent in March last year to explore its potential production in the country. And last month, el-Molla met representatives from Siemens, which announced plans in August to develop a 100-200MW green hydrogen plant at an unspecified location.

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Author: Clare Dunkley