Egypt's parliament granted approval on Tuesday for a law designed to incentivize the production of green hydrogen and its derivatives, marking a strategic move for the nation to emerge as a major player and exporter of the environmentally friendly fuel.
The legislation aims to endorse a spectrum of incentives, exemptions, and guarantees, strategically crafted to retain existing investors committed to green hydrogen production and its derivatives. This commitment is evident through previously established memorandums of understanding and framework agreements.
With a considerable achievement of securing 29 Memorandums of Understanding (MoUs) for green hydrogen, Egypt, especially within the Suez Canal Economic Zone (SCZone), has signed nine framework agreements following the hosting of COP27 in 2022. These agreements translate into substantial investments totaling USD 85 billion (EUR 77.58bn).
The overarching goal is to create an attractive investment climate that catalyzes the swift implementation of green hydrogen projects within Egypt, positioning the nation as a pivotal global hub for green hydrogen.
According to local media reports on Tuesday, the law's incentives encompass projects related to the production of green hydrogen and its derivatives. This includes facilities for green hydrogen and derivative production, water desalination, and renewable energy plants. Additionally, projects focusing on the transportation, storage, or distribution of green hydrogen and its derivatives, as well as those involved in manufacturing equipment for production, fall within the scope of the law.
Key incentives within the legislation offer significant value, ranging between 33% and 55% of the tax paid on income generated directly from the project's activities. The law also grants an exemption from value-added tax for various essentials such as equipment, tools, machines, raw materials, and transportation means (excluding passenger cars).
Notably, expansion projects can qualify for incentives if their expansion agreements are finalized within seven years from the commencement of the plant's commercial operation.