Egypt is positioning itself as a global leader in green hydrogen production and is set to enact a new law offering incentives for projects in this sector.
As the host of COP27, Egypt aims to capitalize on its status as a top location for green hydrogen production and attract significant investments. With an impressive pipeline of energy projects and a strategic focus on becoming an energy hub, Egypt is poised for a prominent role in the global transition to sustainable energy.
On May 17, 2023, the Egyptian Cabinet approved a bill that provides incentives for projects involving green hydrogen and its derivatives. This legislation is designed to encourage environmentally friendly initiatives and accelerate the deployment of green hydrogen projects in the country. By offering attractive incentives, the government aims to attract both domestic and foreign investments in the sector, driving economic growth and advancing the energy transition.
The new law applies to a range of projects, including those involved in green hydrogen production, water desalination facilities dedicating a portion of output to green hydrogen, and renewable energy facilities allocating a significant portion of output to green hydrogen production and derivatives. To be eligible for incentives, projects must satisfy various requirements, such as commencing commercial operations within five years and incorporating foreign investment of at least 70% of the financing.
Projects meeting the requirements outlined in the law will benefit from financial and non-financial incentives. These include tax credits on revenues from green hydrogen production, exemptions from value-added tax (VAT) on necessary equipment and materials, and favorable treatment regarding taxes, fees, and licenses. The Golden License for projects under the Investment Law will also be granted, streamlining the approval process. Additionally, projects will have the freedom to import and export necessary equipment and materials without registration.
Despite economic challenges in recent years, Egypt’s strategic location and abundant natural resources make it well-positioned for success in the green hydrogen sector. The country’s commitment to legislative reforms, foreign direct investment, and technological advancements demonstrates its determination to overcome economic turbulence. By leveraging its unique advantages and fostering a supportive environment, Egypt is poised to become a significant player in the global energy transition, driving economic growth and sustainability.
