Egypt plans boost to green hydrogen industry after COP27

Stacey Collins of Pinsent Masons said the nation’s role as host of COP27 in November last year had been a catalyst for the government’s decision to explore alternative energy sources. “Egypt has enjoyed large-scale solar and wind success in recent years, and it is now turning its attention to more advanced technologies, including hydrogen,” he added.

His comments came after the Egyptian cabinet met in May to approve a new Bill containing a package of incentives for green hydrogen projects. The incentive will include a host of tax exemptions, including on VAT and customs duties, as well as regulatory exemptions including on import and export registry. The Bill will also allow officials to grant so-called ‘golden licenses’ to certain projects – effectively giving their developers land allocation, building permit and management approval in a single step.

Collins said: “At COP27, Egypt signed eight framework agreements to develop green hydrogen and ammonia projects with a number of well-known industry partners. The country is now ranked as the largest destination for foreign direct investment (FDI) for mega projects thanks to the large-scale capital investments in 17 green hydrogen projects, which accounted for 97% of Egypt’s total inbound capital investment in 2022.”

The new incentives will apply to green hydrogen production projects, water desalination projects that dedicate some production to green hydrogen, and renewable energy plants that dedicate 95% of their production to feed green hydrogen production. They will also be available for green hydrogen transmission storage and distribution projects, as well as for companies that manufacture supplies necessary for green hydrogen projects.

Mariam Hassaballah of Pinsent Masons said: “Egypt is positioning itself as a regional hub for the hydrogen sector, and its ambition seems to be supported by various actors including the European Bank for Reconstruction and Development (EBRD).”

Egypt’s green hydrogen strategy adds to the significant expansion of global support for low-carbon hydrogen to both decarbonise jurisdictional emissions, and to assist with local energy security concerns. Collins said: “There is no doubt that the opportunities around low-carbon hydrogen have been spotted.”

He added: "Many countries are seeking to attract the credible developers, contractors and investors into their borders through favourable policies, regulation and financial support packages. For businesses that operate in the global low-carbon hydrogen market, understanding the best jurisdictions to focus efforts in is a key factor. This is a fast-moving and exciting market to be involved with at the moment.”