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Thursday, 8 December 2022

Green hydrogen and NWFE are key for the private sector coming out of COP27

Demystifying two of the biggest opportunities to have come out of COP27 — green hydrogen and NWFE: Our inaugural Enterprise Climate X Forum kicked off earlier this week with a panel on green hydrogen and the government’s flagship Nexus on Water, Food and Energy (NWFE) program. The panel was a deep dive into how some of the biggest agreements out of COP27 could take shape over the coming years that brought together some of the biggest players in the global and local hydrogen industries, as well as one of the champions of NWFE, to discuss what needs to be done for hydrogen and renewable energy to take off over the coming decade, and the potential impact of the NWFE program on Egypt’s green transition and sustainability drive.

Joining us for the panel:

  • Jorgo Chatzimarkakis, CEO, Hydrogen Europe
  • Khalid Hamza, director and head of Egypt, European Bank for Reconstruction and Development (EBRD)
  • Khaled Nageib, CEO, Hydrogen Egypt

Refresher: Egypt signed framework agreements for c.USD 85 bn worth of green hydrogen projects during COP27, which will need some 40 GW of green energy to power them. We also locked in some USD 10.3 bn in funding for NWFE, which seeks to implement some USD 15 bn worth of projects to turbocharge the country’s green transition, including an energy project worth USD 10 bn and eight food security, agriculture, and irrigation and water projects.

Wait, what’s NWFE+? Where NWFE focuses on water, food and energy, NWFE+ adds transportation to the mix.

Those were two of our biggest achievements during COP27 — besides, of course, getting countries to agree to the landmark loss and damage fund (in our eyes, that last one makes Amb. Mohamed Nasr, our chief climate negotiator, a hero to emerging markets). It’s those agreements that allowed us to follow through with our commitment to move from “pledges” to “implementation,” helped the summit earn the title the hydrogen COP” from Hydrogen Europe’s Chatzimarkakis. Similarly, NWFE get plenty of honorable mentions among climate experts as a “pioneering model” for attracting investments to climate projects in emerging markets. But how can we ensure we can take these forward — and that the MoUs will translate into operational hydrogen plants?

Among the key takeaways from our discussion:


Major international players think Egypt will emerge as one of the key hubs of the global hydrogen economy, potentially just ahead of other big players including Saudi Arabia, Namibia and Chile.

Uh, what’s hydrogen, anyway? Boosters like Chatzimarkakis and Nageib think it’s the fuel of the future, and Europe is starting a wholesale adoption that will see it need to buy mns of tons per year to fuel industry and power generation.

Okay, but what can you do with it? In time, just about anything you can do with a fossil fuel. Hydrogen and derived “carrier molecules” such as ammonia and methanol can be used to power ships and cars, fire steel and other energy-intensive plants, maybe even power an airplane.

Yeah, but what can you do with it today? The technology is still maturing, but already the Swedish steel industry is switching entirely to hydrogen — and Chaztimarkakis drives to work each day in a zero-carbon-emissions hydrogen-powered car. He fills up at a growing network of hydrogen fueling stations. (The jury is still very much out on whether EVs or H2-powered cars will be the future).

So it replaces electricity? Nope. When it’s feasible, direct electrification wins just about 100% of the time. But the simple fact is that electricity accounts for just 20% of our global energy use. And with batteries being large, difficult to make, difficult to dispose of, and having limited lifespans, there’s an argument to be made that hydrogen is a critical part of our energy mix going forward.

How do we export it? Chatzimarkakis imagines we’ll be selling ammonia and methanol to Europe and sending it there by ship in the first phases, but ultimately wants to see a pipeline linking Egypt to Greece and Trieste. That pipeline could handle pure hydrogen or an oil-like carrier called LOHC, he says.

So, why Egypt? We get into that below, but essentially we’re one of the most affordable places in the world to make it — and we’re incredibly close to hydrogen-hungry Europe.


We’re building, using and exporting a massive amount of renewables over the next decade: The outcome of Egypt’s hydrogen strategy, on which EBRD is working with the Madbouly government as the lead on energy pillar of NWFE, suggests that Egypt will need some 40 GW of renewable energy in place to power our hydrogen ambitions, Hamza said. For that, we also need to develop and expand the national grid to absorb this energy, which requires some USD 2-3 bn in additional investment, Hamza said. To put that in context, our total installed renewables capacity was at 3.4 GW at the end of last year — 1.6 GW of which came from the Benban solar power park. “That means we need about 30x more Benbans,” Hamza said.

How close are we to seeing NWFE turn into reality? The program should be implemented over five or six years, Hamza said. “Egypt was able to raise USD 10.3 bn in just three months,” he said, adding that this is just an indication of what the program can achieve. “As we work on implementation, building a steering committee for donors, and identifying projects with the government, and hopefully sign them at the beginning of next year, I think it is happening,” he said.


Is this the decade of hydrogen? “The 2000s were the decade of wind, the 2010s the decade of solar, and the 2020s will be the decade of hydrogen,” Chatzimarkasis said during the panel, stressing that, despite being an embryonic technology, the clean energy has massive potential for the climate industry.

Egypt is primed to become a global hydrogen hub: “We will see Egypt being the hub for hydrogen,” Chatzimarkakis said. “The country at the crossroads, with the biggest opportunities, is Egypt; it’s a prime partner for the EU next to Namibia, but Namibia is far away.” Egypt’s proximity to the EU and the GCC, as well as our low costs of producing renewable energy (which accounts for 60% of the cost of producing hydrogen), gives it this competitive advantage, he explains.

There is a huge market for hydrogen: Europe wants to import 10 mn tons of hydrogen annually by 2030 — and that’s just one potential export market for Egypt, Chatzimarkakis said. “Then there are the low hanging fruits: the chemical industries that are already using hydrogen,” he added.

But we need to expand infrastructure — and fast: Projects like the Egypt-Greece pipeline can allow Egypt to become a first mover in the industry and attract investments, he said. “This is the project we need to pursue and rush,” he added. The pipeline is currently expected to come online in 2024 or 2025.

We also need to provide the appropriate policy environment: Fuel subsidies must be scrapped if we want hydrogen to be competitive, said the EBRD’s Hamza, who heads up the energy component of NWFE. “You need to have subsidies for hydrogen just like solar and wind” to initially make it cost-attractive for the industry, he said. “You can't compete with an established industry that is also subsidized, so you need to take away that subsidy over time,” he added, saying that he expects the phase-out to happen eventually.

There are several ways to produce green hydrogen — and that unlocks even more potential for a “hydrogen economy,” Chatzimarkasis said. One way is through electrolysis — where hydrogen and oxygen are separated from water via an electric current — and another is pyrolysis, which produces what is more accurately termed “turquoise hydrogen” — because it sits comfortably between green and blue hydrogen. Pyrolysis uses biomethane as feedstock to produce hydrogen and carbon as outputs, but carbon comes out in solid form, which means it can be used in applications like soil improvement and manufacturing.

A hydrogen economy also means chances for industry: “There’s a lot of industrialization that can happen around this sector, because you have scale,” Hamza said. “When you’re talking about 30-40 GW of needed renewables over the next ten years, that's a huge amount of investments required, and it's going to clog your ports, use your transport system; all of that needs to be expanded to cater to that,” he explained. Localizing an industry for components for wind and solar plants could be a game-changer, he added.


Hydrogen Egypt and Hydrogen Europe signed an agreement during Climate X to work together on piloting small-scale hydrogen projects across Egypt. The companies will be working on pitching projects to the oil and transport Ministries on everything from transitioning tuktuks to hydro-powered alternatives, to greening the steel industry, Nageib said during the forum.

“Every authority in Egypt has a hydrogen unit and they’re thinking of plans to develop hydrogen,” Nageib said. The companies’ agreement will see them help bring B2B opportunities from the public and private sector in Egypt to European offtakers to support those plans, he added — in what Chatzimarkakis described as “matchmaking” between European and Egyptian companies in the sector.

** The Enterprise Climate X Forum is proud to be supported by USAID, HSBC, Mashreq, Attijariwafa Bank, Etisalat by e&, Hassan Allam Utilities, and Infinity.

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