Egypt has attracted an estimated more than $100bn of investments in green hydrogen, according to a Rystad report seen by fDi Intelligence, as the country leverages its green potential ahead of COP27.
Some 70% of these investments are linked to projects unveiled since May this year, with a swathe of new foreign investors clinching deals with the Egyptian government, including Australian mining giant Fortescue’s green energy arm Fortescue Future Industries (FFI), India-based Acme Group and UAE-based Alcazar Energy.
“Egypt is on the way to becoming a global powerhouse in the green energy value chain”, Andrew Forrest, executive chairman of FFI, said in a statement in September.
The report outlines that since May, nine projects have been announced in Egypt with a combined annual hydrogen production capacity of 2.1 megatonnes (Mt), pushing the nation’s total planned hydrogen production to 3.6Mt — second only to Australia with 9.23Mt.
The majority of this $100bn investment come from foreign firms, with more than 53% of investments pledged by Middle Eastern ($28.6bn) and European ($24.4bn) companies, and more than 21% from Indian companies. FFI is expected to be the biggest single investor, with committed investments of roughly $20bn.
“We expect to see an increase in foreign investment once Egypt further showcases its strategies and policies at the coming COP27 event,” the report adds.
Between January and July, fDi Markets tracked 89 projects into Egypt worth a record $86.9bn — the highest investment figure into Egypt of any full year and the highest capital expenditure figure so far recorded this year.
Green hydrogen powerhouse?
So far, many of Egypt’s announced green hydrogen investments have flown into the Suez Canal Special Economic Zone (SCZONE), which also held follow-up meetings in recent weeks with companies that have existing memoranda of understanding to develop green hydrogen projects in Egypt — namely, Norwegian Scatec, Danish Maersk and German Siemens, according to the Rystad report.
Jack Kennedy, associate director and head of the Middle East and North Africa desk at S&P Global Market Intelligence, says there is “a strategic aspect to Egypt’s positioning”.
He explains that green hydrogen has a strong future as a transition energy fuel in the Mediterranean as “EU countries come to terms with the likelihood that more stringent emission reduction regulation has an impact on traditional heavy industries, and as such are willing to fund hydrogen production facilities in Egypt for import”.
The EU, which plans to import 10Mt of hydrogen in 2030 from outside the bloc, issued a joint statement with Egypt in June on their shared commitment to the green transition.
Running ahead of reality?
Benedict Craven, principal economist and country risk manager for Middle East and Africa at the Economist Intelligence Unit, says that “Egypt’s ambitions are running well ahead of reality”.
It would take a lot of work for Egypt to be able to export green energy to the likes of Europe, he says, and there needs to be more renewable energy in Egypt’s energy mix to power green hydrogen facilities.
As it stands, Egypt’s production of green hydrogen stands at zero, while renewable energy sources account for 11% of the country’s total electricity matrix. However, the country has world-class solar energy and wind energy resources, and the government wants to increase the supply of green power to 42% of total supply by 2035.
"Egypt’s government is on a mission not only to ‘think green’ but also ‘act green’ in all policies and projects to help preserve the environment and bring sustainable energy to the country's population," Rania Al-Mashat, the country's minister of International cooperation, wrote in an op-ed on fDiIntelligence.com in 2021.
As it hosts this year’s COP27 in the seaside resort town of Sharm El-Sheikh, all eyes will be on Egypt in November.
“The wider framing of COP27 is almost certainly going to be used by the Egyptian government as an opportunity to present relative political stability in Egypt under the rule of president Abdel Fattah El-Sisi, and a chance to publicise major infrastructure projects,” Mr Kennedy adds.