Green hydrogen provides exceptional incentives for Egyptian investments

Green hydrogen exceptional incentives for Egyptian investments

The year 2023 was a major Egyptian step towards greater interest in the field of energy and ways of green transformation in this vital sector. Before that, the year 2022 was a mirror that reflects the Egyptian trends in the field of climate change locally, regionally and globally, as the Egyptian ambition in COP27 was taking into account the shift towards green hydrogen and its investment future, and even towards the future of all forms of new and renewable energy.

This transformation - the energy transformation - is necessary to build a sustainable world. Because it is closely related to sustainable development, the transition to new energy or clean energy is capable of improving development indicators in all sectors, especially the education, health and agriculture sectors. New energy will also be able to protect the environment and its resources from the deterioration it has been experiencing since man entered the era of the industrial revolution.

Hence, the past two years were the establishment of a promising market in the field of clean energy investment, and the beginning of this establishment was at the twenty-seventh Conference of the Parties (COP), which was held under the presidency of Egypt last year in the city of Sharm El-Sheikh, and there its outcomes were related to new and renewable energy. Because of its role that will be effective in mitigating the effects of climate change, as well as the ability of the “energy transition” to implement what the parties pledged to the Paris Agreement - and other climate agreements - regarding reducing harmful emissions.

Between these two years, efforts focused on clean energy and its role in achieving Sustainable Development Goals (SDGs), especially green hydrogen, a gas capable of confronting climate change, not only in Africa, but on all continents of the world, especially Egypt, which is blessed with solar energy that helps produce low-cost green hydrogen.

This green transformation in energy and its products requires a package of measures and a number of laws that can overcome its difficulties and improve its resources. The green transformation also requires comprehensive cooperation between the government and the private sector to implement relevant initiatives and strategies.

For the above, the government sought to activate measures aimed at transforming Egypt into a regional and global center for clean energy. Attracting investments in this type of energy is a primary goal of these measures. To support green hydrogen projects and its derivatives; Until we achieve the goals of sustainable development through the energy market and other Egyptian markets.

Not only that, but these incentives for green hydrogen projects can be a guide to the private sector, which has become closer to achieving its social responsibilities, as these incentives can help the private sector support the national economy in line with strategies and interim plans.

These incentives are a government response, or rather a quick government response to meet the needs of the private sector. In order to support his investments that work to develop the Egyptian economy, the state had to provide these incentives to green projects in the field of energy. But this was in dire need of a body based on the matter, sothe National Council for Green Hydrogenwas established in September of the current year; In order to be responsible for approving methods that suit the legislation, systems and rules of work in the field of green hydrogen and its derivatives; To keep pace with the global movement.

Therefore, the establishment of the National Green Hydrogen Council was a necessary prelude to the approval of these incentives, which are represented by tax exemptions amounting to 33%. With this council, Egypt answered the question: Who will be responsible for regulating the green hydrogen production sector and issuing its certificates?

Before that, the Egyptian government took a number of measures that helped reach this stage, such as it issued a golden license for the green ammonia production project, at a cost of $5.5 billion. The government also worked to establish a green hydrogen production project in the city of Ain Sokhna, with a capacity of 100 megawatts. All of this was an activation of relevant Egyptian strategies, such as the National Green Hydrogen Strategy.

As for the content of these incentives - in addition to tax and customs exemptions - they are exempting equipment, tools, raw materials and means of transportation - other than passenger cars - from value-added tax. The incentives also included that the Ministry of Finance commit to bear the value of the real estate tax on green hydrogen project buildings and its derivatives.

With these incentives, the Ministry of Finance also bears the value of the stamp tax and documentation fees due on contracts for establishing companies working in the field of green hydrogen, and other facilities such as: allowing companies that will work in this green field to import on their own - or through others - what they need to establish, operate and develop their project, while allowing the establishment of customs ports for the project’s exports.

As for the non-tax incentives, they are: Reducing the value of fees for using sea ports, maritime transport, and ship service fees, by 30%, and the value of the usufruct right of industrial lands designated for establishing a factory for the production of green hydrogen and its derivatives was reduced by 25%.

In conclusion, we should realize the importance of these incentives supporting green hydrogen and its derivatives, which are used in many industries. It is used in oil refineries and petrochemical factories, in addition to the production of fertilizers and its important role in some metal works, and its ability to be a sustainable, environmentally friendly fuel, and capable of achieving Sustainable Development Goals (SDGs) - especially the seventh goal: clean and affordable energy - which we discussed with research and analysis in the article:Green hydrogen... a major investment for the transition to clean energy.