The UN COP27 Climate Change Conference that will take place in Sharm El-Sheikh in November is now just around the corner, and Egypt is continuing to position itself as a hub for green energy production and distribution.
With a renewable energy strategy aiming to increase the supply of electricity generated from renewable sources to 42 per cent by 2035, a green hydrogen strategy in the works and a massive green fuel deal, Egypt is turning to international partners in its ambitious plan to become an international hub for producing and distributing clean energy.
After signing a number of Memoranda of Understanding (MoUs) this year to increase production of green energy products and establishing a green hydrogen industry, Egypt is on the way to become an international leader in the green fuel industry through a cooperation agreement with the Danish company A.P. Moller Maersk, one of the world’s largest shipping lines.
Green fuel, also called e-methanol, is a clean fuel type used in operating vessels and can be made by combining hydrogen and carbon dioxide. This process becomes green when renewable energy is used as the source of the electricity.
A project to produce green fuel for vessels with an investment worth around $15 billion over three phases, was discussed last month between President Abdel-Fattah Al-Sisi and Maersk CEO Soren Skou. A final framework agreement is expected to be signed during the COP27 next month in Sharm El-Sheikh.
Hany El-Nady, chief group representative of Maersk Egypt, said that Egypt has the potential to become a world leader in the green fuel industry as it has an abundance of renewable energy sources, mainly solar and wind. It also has a modern infrastructure, and the Suez Canal is one of the world’s most important maritime trade routes.
The unique geographical location of Egypt and the availability of renewable energy resources could help accelerate Egypt’s journey to becoming a global energy hub and achieving crucial sustainable development goals in addition to the country’s efforts to help save the environment, El-Nady told Al-Ahram Weekly.
The green fuel project between Egypt and Maersk will generate about 100,000 jobs, he added, and the massive production scale will place Egypt ahead of the curve in global e-methanol production, a new technology with a currently low production capacity.
El-Nady told the Weekly that Maersk will provide training on the new industry and technologies, which will provide added value to the project and other similar projects in Egypt. “This can help provide a highly trained workforce that will benefit other projects in the future,” he said.
He noted that shipping firms have already started plans to replace their fleets with new-generation cargo ships that are able to run on the carbon neutral e-methanol. This is used to power the new generation of vessels. Total world production of e-methanol currently ranges between 5,000 to 10,000 tons, barely enough to fuel one of the new generation of vessels for one day.
Maersk, which has set a net-zero emissions target for 2040, has recently ordered 19 vessels that run on green fuel that are set to be delivered and start operation by mid-2025, El-Nady stated, adding that more shipping firms are set to follow.
“These vessels will require e-methanol for bunkering, and the multi-billion-dollar project with Egypt will deliver the needed quantities for Maersk and other firms’ vessels,” he said.
What makes the project special is that the customer is already guaranteed, meaning that the quantities of green fuel to be produced already have their buyer, El-Nady noted.
Phase one of the project will start production of 200,000 tons by 2026, with one million tons expected to be produced during phase two by 2028. By 2031-32, the full capacity of the project will reach three million tons of green fuel.
“Green fuel produced will help cover Maersk’s new vessels’ fuel needs,” he said, adding that green fuel produced from the project can help fuel other vessels transiting through Egypt from different ports.
El-Nady said that many governments around the world have outlined plans to allow only products manufactured in green factories, transported by green vehicles, and shipped overseas by green vessels to enter their territories.
“The future is going to be green, and clean fuel is an integral part of that,” he stressed.
He said that vessel-refuelling stations could be established in various Egyptian ports and not only in the Suez Canal, especially with the infrastructure modernisation efforts now taking place in the network of roads and ports on the Mediterranean and the Red Sea.
“This can give Egypt a competitive edge and make the country a leader in building bunkering and refueling stations, especially when the coming years witness a growing demand for e-methanol as more green vessels start operations on a larger scale,” he said.
Egypt can benefit from such projects by attracting more trade movement through the Suez Canal, as more vessels in the future will operate on green fuel.
About 12 per cent of global trade goes through the Suez Canal, and 22 per cent of the world’s container vessels pass through it every year. A quarter of this number belongs to Maersk, El-Nady said.
“More vessels will come to the Suez Canal when the project is completed because more maritime transportation companies are expected to operate green vessels in the near future,” he said.
The total investments of Maersk in Egypt currently stand at $1 billion, with about $750 million more to be added in an expansion project in East Port Said, according to El-Nady. An investment of $500 million is currently in the works, with an additional $250 million earmarked for the electrification and automation of the container handling terminal in East Port Said.
Maersk is also planning to establish logistics parks, El-Nady said, in order to be able to serve industrial areas in different governorates, helping them to transport their products to the terminals and export them to outside markets.
These parks will serve as assembly, packaging, and shipping areas, and they will handle customs clearances, he added.
*A version of this article appears in print in the 20 October, 2022 edition of Al-Ahram Weekly.