Egypt's parliament approves law for green hydrogen incentives

Egypt's parliament on Tuesday gave the green light to a law introducing incentives for the production of green hydrogen and its derivatives as the country seeks to become a major producer and exporter of the clean fuel.

The law seeks to endorse incentives, exemptions, and guarantees to retain existing investors who have committed to green hydrogen production and its derivatives through memorandums of understanding and framework agreements.

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The nation has secured 29 Memorandums of Understanding (MoUs) for green hydrogen. Among these, following the hosting of COP27 in 2022, nine framework agreements have been signed for green hydrogen projects within the Suez Canal Economic Zone (SCZone), totalling investments amounting to USD 85 billion (EUR 77.58bn).

The goal is to establish an appealing investment environment that empowers these investors to accelerate the execution of their projects within Egypt, with the goal of positioning the country as a global hub for green hydrogen.

The incentives provided in the law apply to projects for the production of green hydrogen and its derivatives for which project agreements are concluded within a certain period, local media reported on Tuesday. Such projects should involve facilities for the production of green hydrogen and its derivatives, water desalination and renewable energy plants. Projects for the transportation, storage, or distribution of green hydrogen and its derivatives, and projects focused on manufacturing equipment for the production of green hydrogen and its derivatives are also in the scope of the law.

The value of the most significant incentive outlined in the legislation is equal to between 33% and 55% of the tax paid, with the tax being declared on the income generated from the direct activity in the project. In addition, the law provides an exemption from value-added tax for equipment, tools, machines, raw materials, and means of transportation, other than passenger cars.

Project expansions can be eligible for the incentive if their expansion agreements are concluded within seven years from the start of the plant's commercial operation.