Egyptian Parliament Greenlights Legislation for Incentivizing Green Hydrogen

In a groundbreaking move, Egypt's parliament has taken a significant step by approving legislation aimed at incentivizing the production of green hydrogen and its derivatives. This legislative initiative aligns with Egypt's strategic vision to position itself as a prominent producer and exporter of environmentally friendly fuel. The newly endorsed law is crafted to offer a spectrum of incentives, exemptions, and guarantees, fostering an environment that encourages the retention of existing investors committed to green hydrogen production through memorandums of understanding (MoUs) and framework agreements.

Egypt has already achieved a notable milestone by securing 29 MoUs for green hydrogen, further solidifying its commitment to sustainable energy endeavors. Building on this success, an additional nine framework agreements were inked after the hosting of COP27 in 2022. These agreements, concentrated on green hydrogen projects within the Suez Canal Economic Zone (SCZone), signify substantial investments amounting to a staggering USD 85 billion (EUR 77.58 billion). The overarching goal is to cultivate an appealing investment landscape that empowers these dedicated investors to accelerate the implementation of their projects within Egypt, positioning the country as a global hub for green hydrogen.

The incentives outlined in the legislation are specifically tailored to projects related to the production of green hydrogen and its derivatives. A crucial stipulation is that project agreements must be formalized within a specified timeframe. Encompassing various facets, these projects include the establishment of facilities dedicated to green hydrogen and its derivatives production, water desalination, renewable energy plants, as well as the transportation, storage, and distribution of green hydrogen. Moreover, the law extends its purview to cover manufacturing equipment for the production of green hydrogen and its derivatives.

A key feature of the legislation is the substantial incentive value, ranging between 33% and 55% of the tax paid. This incentive is calculated based on the income generated directly from the project's activities. Additionally, the law introduces a value-added tax exemption for essential elements crucial to these projects, including equipment, tools, machines, raw materials, and transportation means (excluding passenger cars). Furthermore, the legislation extends eligibility for incentives to encompass project expansions, provided that expansion agreements are finalized within seven years from the commencement of the plant's commercial operation.

This legislative stride underscores Egypt's steadfast commitment to cultivating a sustainable and competitive landscape for green hydrogen production. By offering robust incentives, exemptions, and guarantees, the government aims to attract and support investors, facilitating the realization of green hydrogen projects. This, in turn, contributes to Egypt's burgeoning prominence in the global green energy arena. As the nation positions itself as a hub for green hydrogen, this legislative framework serves as a catalyst for transformative initiatives that align with the imperatives of a cleaner and more sustainable future.