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What is it, and can Egypt become a leading producer?

In the quest to combat climate change and remove fossil fuel subsidies, the North African nation in recent years has embarked on a drive to build a green hydrogen industry. The electricity and renewable energy minister called 2022 “the year of green hydrogen”. 

But what is green hydrogen, how is it produced, and can Egypt become a global producer? 

What is green hydrogen? 

Hydrogen is a colourless, odourless, and highly flammable gas that is generated through a chemical process known as electrolysis. Electricity is used to break down water molecules (H2O) into oxygen (O2) and hydrogen (H2).

There are many types of hydrogen and they are categorised in colours. Green hydrogen is generated through renewable energy that does not emit carbon dioxide or residue in the atmosphere. Thus, it helps decarbonise the planet, which sees 830 million tonnes of CO2 emitted annually.

Hydrogen can be used in multiple industries, including energy-intensive ones such as the production of steel and iron, cement, paper, and aluminium. It can also be used as a clean fuel for vehicles, airships, and spaceships. 

Downsides

The main traits of green hydrogen make it a favourable alternative fuel, yet it has a set of drawbacks. 

  • Though less flammable than fuel, hydrogen remains volatile and flammable. It is also odourless, which makes it difficult to detect leaks. 
  • Energy generated from renewable sources is normally more expensive than traditional fossil fuels, and green hydrogen is no exception. It even got costlier as the ongoing war in Ukraine has sent energy prices soaring. According to S&P Global Commodity Insights, the cost of electrolytic hydrogen almost tripled in late July 2022.  
  • Introducing hydrogen to replace other forms of fuel is also quite costly and time-consuming as it would require the installation of new industrial processes, equipment, and supply chains; a whole new infrastructure base will have to be built from scratch.  

Will Egypt be a global green hydrogen hub?

Egypt, the host of COP27, has signed dozens of deals with foreign companies to build green hydrogen plants in the Suez Canal Economic Zone (SCZone). The companies include Norwegian company Scatec, Danish shipping firm Maersk, France’s EDF Renewables, and Emirati renewable energy company Masdar.

More recently, the Qatar Investment Authority (QIA) said it is considering investing in a green hydrogen and ammonia project in SCZone, according to media reports.

Some of Egypt’s green hydrogen preliminary agreements are expected to turn into binding deals during COP27. The Egyptian government is also poised to announce a National Hydrogen Strategy during the conference. 

Egyptian President Abdel Fattah al-Sisi first ordered the drafting of the strategy in 2021. Since then, the SCZone, the ministries of Petroleum and Electricity and Renewable Energy, and the Sovereign Fund of Egypt have been cooperating to establish this new industry in Egypt. 

The European Bank for Reconstruction and Development (EBRD) has worked with the government to draft the strategy, which “will pave the way for Egypt to become one of the global leaders in the low-carbon hydrogen economy, acquiring an 8% market share of globally traded hydrogen”.

What will Egypt do with green hydrogen?

Egypt’s production of green hydrogen will open a myriad of export opportunities amid increasing global demand, a tempting prospect for the most populous Arab nation that ran a current account deficit of $16.6bn in the last fiscal year ending 30 June.

According to the Egypt cabinet, the new strategy will see green hydrogen contribute between $10-$18 billion to Egypt’s GDP by 2025.

By then, green hydrogen’s production cost in the third largest Arab economy would be $2.7/km, which will be slashed to a more competitive $1.7/km in 2050.  

The strategy will add 100,000 jobs and decrease the country’s reliance on hydrocarbons, the cabinet says.   

What gives Egypt an edge?

Egypt has demonstrated qualities that could help it achieve its green hydrogen aspirations, including the overflowing and cheap cost of solar and wind power, in addition to its location on the Mediterranean. 

…will pave the way for Egypt to become one of the global leaders in the low-carbon hydrogen economy.”

“The African continent is very rich and diversified in terms of resources. All countries have their competitive features and development potential. When it comes to Egypt, the local authorities have shown strong will and determination to act against climate change,” EDF Renewables said in a statement sent to The Africa Report via email.

“Egypt has abundant renewable energy sources generated from wind and solar resources, in addition to its robust transmission network and a unique geographical location.

“Egypt has strong positioning and shares the common values of global climate action. By hosting COP27, Egypt is affirming its ambitions for becoming an unavoidable turning point in international climate efforts.”

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