Suez Canal Economic Zone signs $15bn energy deals  

Suez Canal Economic Zone

• Green hydrogen project planned
• Link-ups with two Chinese energy companies
• Cairo offers incentives for hydrogen

Egypt’s Suez Canal Economic Zone signed a $6.75 billion deal with China Energy Engineering Corporation on Tuesday, for a green ammonia and green hydrogen project to be built in its Sokhna industrial zone. 

On the same day, another Chinese company, Hong Kong’s United Energy Group, signed a memorandum of understanding for a potassium chloride production complex in the economic zone. It is expected to invest up to $8 billion. 

The China Energy project aims to produce 1.2 million tonnes of green ammonia and 210,000 tonnes of green hydrogen each year, according to an Egyptian cabinet statement.

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Finance minister Mohamed Maait announced on October 13 that Egypt’s government was seeking to boost local green hydrogen production to meet the targets in its National Climate Change Strategy 2050. 

It is offering incentives for green hydrogen production, including tax rebates of 33 to 55 percent. 

Egypt aims to capture between 5 and 8 percent of the global commercial market for green hydrogen.

“The total green investments in Egypt have increased from 15 percent in 2020/19 to 30 percent in 2021/20,” Maait told Egypt Daily. “We aim to reach 50 percent in the coming fiscal year.” 

Egypt’s ambitions to develop a green hydrogen industry were given a boost in September with the announcement that BP is to invest $3.5 billion in the country over the next three years.

A portion of the funding will go towards renewable energy projects with the production of green hydrogen highlighted as the most important area. 

The Egyptian government has signed more than 20 green hydrogen memoranda of understanding – a potential $83 billion pipeline – but only a few have developed into tangible projects. 

Analysts say the country’s volatile currency and lack of a clear investment framework are likely to be deterring some potential investors.

The European Bank for Reconstruction and Development has been working to kick-start the industry. 

In October last year, the bank granted an $80 million equity bridge loan to Egypt Green Hydrogen, a company based in the Suez Canal Economic Zone, to develop and operate the first green hydrogen facility in Egypt.

This will act as a proof of concept for similar projects in Egypt and is targeting annual production of up to 15,000 tonnes of green hydrogen.