Egypt’s SCZone signs agreement with H2 Industries for $4bn waste-to-hydrogen plant

The green project is one of seven agreed upon by the Suez Canal Economic Zone and international companies this year ahead of Cop27

About 80 per cent of the announced green hydrogen projects in Egypt are planned for the Suez Canal Economic Zone. Photo: Reuters
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Egypt’s Suez Canal Economic Zone signed an agreement with US company H2 Industries to build a waste-to-hydrogen plant in East Port Said, as the country seeks to become a regional green energy centre before Cop27 in November.

SCZone chairman Yehia Zaki and H2 Industries chief executive Michael Stusch signed an agreement on the sidelines of the Egypt Can industrial conference in Cairo’s New Administrative Capital on Tuesday.

The estimated cost of the project is $4 billion, including the power plant itself, the supply of waste, and the storage and transport of hydrogen.

The facility, which will convert four million tonnes of municipal solid waste into 300,000 tonnes of green hydrogen annually, won preliminary approval this year.

“The next step will now be to work together with SCZone on confirming some of the key assumptions and to detail the pre-feasibility study further,” Mr Stusch told The National.

The company is hoping to sign final implementation agreements “in time for Cop27”, subject to approval from the SCZone, he said.

Egypt has raised its green hydrogen ambitions in recent months as it prepares to host the UN’s Cop27 climate summit in Sharm El Sheikh.

The country is aiming to increase renewable energy sources to 42 per cent by 2035 and will release a $40bn national hydrogen plan in the coming months.

Hydrogen is projected to account for 12 per cent of global energy use and 10 per cent of carbon dioxide emissions reductions by 2050, driven by climate change urgency and countries’ commitments to net zero, according to the International Renewable Energy Agency.

Current annual hydrogen sales represent a market value of about $174bn — which already exceeds the value of annual trade in liquefied natural gas — and could grow to $600bn by 2050.

Egypt’s pipeline for green hydrogen projects stands at 11.62 gigawatts, equivalent to more than 1.57 million tonnes of green hydrogen, according to a research note from Rystad Energy last month.

That ranks the country in the world's top three green hydrogen pipelines, after Australia and on par with Mauritania, the Oslo-based energy research and business intelligence company said. About 80 per cent of the projects are planned for the SCZone.

Favourable factors include Egypt’s location, natural gas infrastructure, liquefaction facilities, bunkering market, marine ports and high solar and wind potential.

“Egypt has all the prerequisites to become a green hydrogen giant — fantastic renewable potential, space for mega projects and construction expertise,” said Minh Khoi Le, head of hydrogen at Rystad Energy.

“Sitting between three continents and with the Suez Canal carrying approximately 12 per cent of all the seaborne freight in the world, Egypt can supply renewable energy near and far.”

The SCZone has signed seven agreements worth more than $14bn since March, with international companies for green hydrogen and green ammonia projects in its 460-kilometre area.

Norway’s Scatec plans to develop a $5bn green hydrogen and ammonia facility in Ain Sokhna on the Red Sea, capable of producing 1 million tonnes of green ammonia annually and potentially up to 3 million tonnes.

The green ammonia will mainly be exported to European and Asian markets, where it is in high demand.

Danish shipping giant Maersk is looking into producing 480,000 tonnes of green hydrogen annually, according to the SCZone.

In April, the zone signed a $3bn deal with a consortium led by French firm EDF Renewables and Egyptian company Zero Waste to produce 350,000 tonnes of green fuel annually for ships passing through the Suez Canal.

The UAE’s AMEA Power, which is affiliated with Al Nowais Group, has a project in the works to produce 390,000 tonnes of green ammonia a year in Ain Sokhna for export purposes.

Abu Dhabi’s renewable energy company Masdar and Hassan Allam Utilities also signed agreements to develop electrolyser facilities with a capacity of 4 gigawatts in the Suez Canal and on the Mediterranean to produce up to 480,000 tonnes of green hydrogen annually by 2030.

Finally, last month, the zone signed an agreement with an alliance that includes France's Total Eren and Egyptian venture capital firm Enara Capital for a green ammonia plant that will produce 300,000 tonnes annually and eventually have a capacity to produce up to 1.5 million tonnes.

Updated: May 18, 2023, 11:59 AM