Egypt, responsible for no more than 0.6 per cent of the world’s total greenhouse gas emissions, is highly vulnerable to water scarcity, rising sea levels and other adverse impacts of climate change.
To adapt and mitigate, the country has been shifting to a sustainable economy, and hosting COP27 has accelerated the pace of the transition. According to the National Climate Strategy published in May, the government wants to spend $211 billion on mitigation and $113 billion on adaptation by 2050, with money deployed in key sectors including energy, transport, agriculture and water.
In July, Egypt submitted its Nationally Determined Contributions (NDCs), a measure of country efforts to reduce emissions and adapt to the impacts of climate change, updating the figures submitted in its 2015 NCDs. The new submission includes plans to reduce emissions by a third by increasing the contribution of renewables to the energy mix from the current 10 per cent to 42 per cent by 2035.
The latest step on the road to greener energy is increased investment in green hydrogen, an eco-friendly fuel producing no greenhouse gas emissions that can be used in many industries.
While Egypt plans to issue its green hydrogen national strategy during COP27, recent months have seen tens of initial agreements and memorandum of understanding (MoU) to produce green hydrogen in the Suez Canal Economic Zone (SCZ). Some estimates put the value of green hydrogen and ammonia projects in the pipeline at $64 billion.
The war between Russia and Ukraine has highlighted the need to find alternative sources for energy and Egypt will use its hosting of the COP27 to promote SCZ as a new regional hub for the production of green hydrogen.
Egypt is aiming to supply eight per cent of global green hydrogen demand which will yield annual export revenues of $18 billion, Minister of Electricity and Renewable Energy Mohamed Shaker told last week’s economic conference.
Most new projects will, at least initially, target foreign markets. A good example is the new green hydrogen and ammonia facility in Ain Sokhna, built by Norway’s Scatec energy and the Sovereign Fund of Egypt. It will have a production capacity of one million tonnes annually, with the capacity to expand to three million tonnes, all of which will be exported.
The government this year added producers of green hydrogen and ammonia to the companies covered by the 2017 investment law, granting them investment incentives that include a deduction of between 30-50 per cent of costs from their tax bills, and a flat custom rate on their imports.
At the beginning of March, the European Bank for Reconstruction and Development (EBRD) signed a MoU with the Electricity and Petroleum Ministries to help create a comprehensive national hydrogen strategy covering production supply, demand and infrastructure.
The 42 per cent renewables target may seem ambitious but according to Reuters a report issued by the International Renewable Energy Agency (IRENA) in 2018 suggested Egypt could actually 53 per cent of its electricity from renewables by 2030.
A report issued in July by the American Global Energy Monitor, a research body focusing on clean energy, noted that Egypt’s operating wind and solar capacity places the country at the top of regional rankinigs, generating with 3.5 GW annually. The figures include only utility-scale projects with a capacity of at least 5 megawatts. Egypt is the MENA region’s leader in wind energy, generating 1.6 GW of electricity.
The 2014 power crisis, which saw repeated power cuts, triggered Egypt’s shift to renewables. A move that coincided with an overhaul of the energy subsidy system and the introduction of a feed-in tariff system to encourage investment in renewable energy.
According to Global Energy, Egypt is on course to bring 3.3 GW of utility-scale wind and solar projects online by 2024, contributing to meeting Egypt’s Integrated Sustainable Energy Strategy targets of 52 GW from both large-scale and distributed on-grid renewable energy across all renewable sources by 2035.
The Benban Solar Project, located in Aswan, represents a major step in the transition to renewables. The photovoltaic solar park is one of the world’s largest and has been developed by more than 30 companies from 12 countries. Developers of the plant, which is 40 km northwest of Aswan, are guaranteed a feed-in tariff price for 25 years. The Benban plant was connected to the national grid in 2019.
The 1.5-gigawatt project will provide electricity for over one million homes and help Egypt curb its carbon footprint. It is expected to save two million tonnes of greenhouse gas emissions annually, the equivalent of taking 400,000 cars off the road, according to the International Finance Cooperation (IFC), one of the main investors in the project.
Coming on the back of the 2014 plan to cut energy subsidies, phase out electricity subsidies and open the door to private sector participation in renewable energy production by issuing a feed-in tariff programme to leverage private sector capital and expertise to support the expansion of renewable energy resources, the construction of Benban marked a turning point in Egypt’s spending on energy.
Egypt is also expanding in wind energy production with more than 10 windfarms in El Zaafarana, Gulf El Zayt and Ras Gharib, the latter being Egypt’s first independent wind farm. Built on a build-own-operate basis, the projects have total investments of $380 (WHAT??? MILLION??), with Orascom Construction owning 20 per cent. Partial operation began in October 2019, with full capacity achieved in December of the same year. Notably, Orascom Construction together with its partners in the project held a ceremony to announce the commencement of construction in another 500 megawatt farm in the same area last week.
The government is also looking to entice investors to tap into the waste-to-energy (WtE) sector. In 2019, it issued guidelines for WtE investment and set a feed-in tariff. In 2020, the government announced that it was planning to generate 300 MW of electricity from WtE projects by 2025, though so far only five companies are operating in the WtE field, producing a total of 13 MW.
*A version of this article appears in print in the 3 November, 2022 edition of Al-Ahram Weekly