States across the Middle East and North Africa are jostling for a share of the international investment flooding into the nascent green hydrogen sector, highlighting their ease of access to potential markets, superior climate, low population densities, well-developed energy infrastructure, and a domestic industrial base ripe for hydrogen-based decarbonisation.

However, Egypt holds an unbeatable trump card in the form of control over the Suez Canal—through which more than a tenth of global trade passes—at a time when the international shipping industry and its clients are waking up to the need to decarbonise maritime transport. And Cairo is taking full advantage, signing up a plethora of investors in preparation for making the industry a central theme at the Cop27 climate change summit that it will host in two months’ time.

In late August, the government signed memorandums of understanding (MoUs) with seven firms to develop projects at the Suez Canal Economic Zone (SCZone). Plans for the zone envision production of more than 3mn t/yr of green hydrogen, mainly for conversion into green fuels, at a total investment cost of more than $30bn. The government has signed up Australia’s Fortescue Future Industries, and another six preliminary commitments—notionally worth some $10bn—were sealed earlier this year.

$30bn – Planned investment in Suez Canal Economic Zone

The largest of the latest batch of deals calls for India’s Acme to invest $13bn in a 2.2mn t/yr green hydrogen plant at Ain Sokhna—an existing industrial hub at the southern end of the canal that is home to the bulk of the schemes proposed. The firm has a stated aim to produce 10mn t/yr of green ammonia by 2030 and has projects relatively far advanced both in its home market and in Oman. Fellow Indian firm Renew Power signed an MoU in July to invest $8bn setting up a 220,000t/yr green hydrogen plant at the Ain Sokhna site. The schemes reflect the tight political and economic ties between the two governments alongside a shared goal of becoming major green hydrogen players.

Stronger testament to the wider intergovernmental relationships being leveraged by Cairo in its green hydrogen buildout is the continued prevalence of developers from the UAE—one of its closest political allies and with which it entered an ‘industrial partnership for growth’ in May, designed to promote cross-border private-sector investment.

The UAE’s Alcazar Energy Partners and KK Power International joined Abu Dhabi government-owned Masdar and Dubai-based Amea Power on the investor roster in August’s MoU flurry, promising schemes producing 230,000t/yr of ammonia and green hydrogen respectively.

Saudi Arabia provided another of the deals in the form of a commitment by Riyadh-based Alfanar to invest $3.5bn in a 500,000t/yr green ammonia scheme—with signature witnessed by a senior official from the Kingdom’s investment ministry.

UK-based infrastructure investors Globeleq and Actis were the only European participants in the recent rush—the former promising to plough $11bn into a three-phase project ultimately scaling up to 3.6GW of electrolysers. Local developer Mediterranean Energy Partners completed the group.

Globeleq says its 100MW pilot phase would focus on green ammonia-based fertilisers—with green fuels, still an untested market, to be considered in the longer term. Egypt, a major fertiliser producer, is well-placed to capture future demand for green ammonia.

Bunkering

Refineries and petrochemicals plants in the area also constitute potential hydrogen customers. However, the bulk of the deals thus far unsurprisingly aim ultimately at producing carbon-free fuels for bunkering, as pressure grows to clean up the heavily polluting global shipping industry—not least from importers increasingly forced to consider products’ lifecycle emissions.

In a sign of the importance Cairo is according its hydrogen drive, President Abdel Fateh el-Sisi met the CEO of Danish shipping giant Maersk on 19 September, saying afterwards that an agreement had been reached to collaborate in making Egypt a hub for the production and distribution of carbon-free shipping fuels that included a $15bn project. The head of state also met Fortescue’s CEO the week before to discuss the Australian company’s plans, which include a 9.2GW green hydrogen plant.

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Author: Clare Dunkley