Egypt plans to become a regional centre for green hydrogen and plans to export about 10 million tonnes of renewable energy to Europe.
The EU unveiled its REPower EU Plan in response to the hardships and global energy market disruption caused by the ongoing Russian-Ukrainian War with the intention of ending the EU’s dependency on Russian fossil fuels.
In addition to increasing the ambition of the EU’s own renewable hydrogen production to 10 million tonnes annually by 2030, the REPower EU Plan also sets a target of 10 million tonnes for renewable hydrogen import also by 2030.
Meanwhile, Egypt has prepared a national green hydrogen strategy in cooperation with the European Bank for Reconstruction and Development (EBRD), which is expected to be issued by the end of this year.
Minister of Electricity and Renewable Energy Mohamed Shaker addressed the executive summary of the strategy on the side-lines of the recently concluded UN Conference of Parties on Climate Change (COP27) that was held in Sharm El-Sheikh, pointing to Egypt’s ability to produce the cheapest green hydrogen in the world, allowing the country to benefit from its competitiveness to achieve an ambitious plan and reach 8% of the global hydrogen market.
Egypt’s President Abdel Fattah Al-Sisi recently announced the launch of the first phase of the first green hydrogen plant in the Suez Canal Economic Zone (SCZone) on the side-lines of the COP27 with the participation of Prime Minister of Norway Jonas Gahr Støre.
Additionally, on the side-lines of the COP27, Egypt signed a number of agreements and cooperation protocols with nine developers in the renewable energy sector at a value of $83bn.
Daily News Egypt obtained a copy of the country’s overall strategy, which included full details of the action plan that the Egyptian state will follow.
The strategy that was prepared by the EBRD predicted global hydrogen demand to be around 90 million tonnes, with around 70 million tonnes generated as pure hydrogen and 20 million tonnes as carbon-containing synthesis gas where hydrogen is part of a gas mixture. This excludes hydrogen which is produced as a by-product of some industrial processes (particularly oil refining and chlor-alkali) production and then re-used as a feedstock or fuel.
Egypt’s hydrogen demand is estimated to be around 2% of global hydrogen demand. Future production of hydrogen is expected to substantially increase as the world looks to decarbonise and improve energy security. The strategy estimates that the hydrogen economy will be 60% larger by 2030 and 400% larger by 2050, with 25% of the supply traded intentionally.
While the estimates may vary, the use of low carbon hydrogen as a means to achieve the Paris Agreement climate goal is undisputed. The initial demand for low carbon hydrogen is expected to be located in the US, Europe, South Korea, and Japan, with the most significant import market being Europe.
The strategy also includes an analysis of the current state of the hydrogen market, both in Egypt and globally, and takes into account international best practices in enabling low carbon hydrogen expansion according to different market maturity stages. Suggested below is a phased approach to hydrogen economy development in the country.
The action plan is divided into three phases — the Pilot Phase (in the 2020s), Scale-up Phase (in the 2030s), and Full Implementation Phase (in 2040 and beyond).
The Pilot Phase
The Pilot Phase contains immediate actions by the end of 2022 or the beginning of 2023 according to the governance framework, confirmation of the role, and responsibilities and composition of the existing intergovernmental and Hydrogen Committee.
The phase also encompasses the creation of thematic working groups within the Hydrogen Committee (focus topics depending on specific needs), a decision on the set-up of a Hydrogen Authority (focal point and one-stop shop for hydrogen projects development and support in Egypt’s delivery of a Hydrogen Strategy), and the organisation of stakeholder roundtables in Egypt (hydrogen market actors) and hydrogen diplomacy (active participation in international initiatives).
This is in addition to short-term actions in the next one to two years to implement market development incentives via new pilot projects identification, preparation, and delivery; incorporation of lessons learned from ongoing memoranda of understanding (MoUs) and conclusion of new agreements; and conducting studies, reviews, and assessments.
The Scale-up Phase
In the medium term, support for hydrogen technologies deployment and expansion will continue through the development of a national strategy for short-term and longer-term public support to be applied across the whole hydrogen value chain, and the roll out of sustainable development laws and regulations to incentivise the production of low carbon hydrogen.
Furthermore, future-proofing natural gas infrastructure investment for the transition to hydrogen will be reviewed, along with other natural gas pipeline extensions to industrial users; technical feasibility study on blending up to 100% hydrogen to future proof the industry and power generation will be conducted; guidelines will be set to increase hydrogen blending into the current gas grid for industrial areas; a strategy will be developed for low carbon hydrogen integration and gradual phase-out of the grey hydrogen production plants; and the scope of decarbonisation within the country will be increased by considering new hydrogen uses.
This is in addition to establishing the likely costs of carbon capture and transfer to storage sites and preparing a strategy to develop CCS hubs around key industrial areas such as Alexandria and Ain Sokhna.
The Full Implementation Phase
As for the next five to eight years, the strategy mentioned that Egypt will work to develop a robust governance structure for a thriving low carbon hydrogen economy in accordance with international best practice, which would ensure the establishment of a sustainable market while observing the necessary safety and environmental measures.
It also set targets for the 2030 and 2040 visions and an overall ambition for hydrogen economy development outlining key elements of the strategic framework, such as the creation of a leading international export hub for hydrogen and its derivatives and achieving energy security in the country.
The expected strategic outcomes by 2040 include reaching 5% of the global hydrogen market, setting up and localising the electrolyser manufacturing industry, and contributing to decarbonisation efforts of Egyptian flagship industrial sectors.
The strategy added that most low carbon projects require public funding for improved technology competitiveness and project viability. Concessional finance offers below-market rate finance in the form of low-interest loans with a longer repayment period, technical assistance grants, loan guarantees and to a lesser extent equity investment with a lesser value in shares requirement for targeted projects.
Often conditioned on achieving specific policy goals (reducing energy intensity of the economy, specific sectors’ decarbonisation rates, etc.), concessional finance is provided by development banks and multilateral funds and could play an important role in accelerating hydrogen technologies deployment and expansion, especially in countries such as Egypt.
It also explained that support from the government via a set of financial incentives could be foreseen to attract, encourage, and facilitate the development of pilot projects that are linked with clear local value added.