Green Hydrogen Incentives Bill
Green Hydrogen Incentives Bill
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 reflected the Egyptian trends in the field of climate change locally, regionally and globally, as the Egyptian ambition inCOP27 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.
The past two years have only been the establishment of a promising market in the field of clean energy investment. Between these two years, efforts focused on green hydrogen, a gas capable of confronting climate change, not only inAfrica, but on all continents of the world.
This green transformation in energy and its products requires a package of measures and a number of laws to help 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.
Based on the above,House of Representatives approved a draft law on incentives provided by the government to projects to produce green hydrogen and its derivatives.
In addition to the fact that this promising law aims to transform Egypt into a regional and global center for clean energy, attractingforeign investments is one of its primary goals, and approving incentives for green hydrogen projects and its derivatives is an opportunity to achieve Sustainable Development Goals (SDGs), and a step towards increasing job opportunities in the Egyptian energy market.
Not only that, but the law will be one of the directives ofthe private sector, which has become closer to fulfilling its social responsibilities, and this will increase after these incentives were officially approved, as they can help the private sector support the national economy in line with strategies and interim plans.
These incentives were not only a government response, but rather a rapid 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 for green projects in the field of energy. But this was in dire need of a body based on the matter, so the establishment of theNational Green Hydrogen Council; 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 in a number oftax exemptions, which amounted 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 the golden license for the green ammonia production project __EG_PH_38, at a cost of 5.5 billion dollars. 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 asNational 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.
The Ministry of Finance will also bear 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.
Among the non-tax incentives included in this decision: Reducing the value of fees for using seaports, maritime transport, and ship service fees, by 30%, and the value of the right to usufruct industrial lands designated for establishing theFactory for the production of green hydrogen and its derivatives was reduced by 25%.
It is worth noting that hydrogen has entered many industries. It is used in oil refineries and petrochemical factories, in addition to the production of fertilizers, its important role in some metal works, and its ability to be a sustainable, environmentally friendly fuel, and capable of achieving theSustainable 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 To move to clean energy.
