Egypt’s suite of green hydrogen tax incentives signed into law by president
Developers that meet local content and foreign financing requirements can access a credit of up to 55%
Egypt’s President Abdel Fattah El-Sisi has signed a suite of tax incentives for green hydrogen projects into law, including a credit of 33-55% off the tax paid on a project, in a bid to spur development.
The legislation also allows VAT exemptions on equipment, tools, machines, raw materials and transport — but not passenger cars — used for project development, as well as exports of renewable H2 and its derivatives.
Green hydrogen producers are also given the right to export products and import materials, including through an intermediary, without a licence or registration.
The legislation also provides developers with discounts of 30% on fees for the use of seaports, maritime transport and ship servicing, 25% on the value of industrial land rights for green hydrogen production, and 20% on the value of land rights for storage at ports, for up to ten years after signing project agreements with the government.
The Egyptian prime minister is also given the responsibility of approving these incentives for projects, which come with a number of conditions.
Developers must secure 70% of the investment cost of a project from financial institutions outside of Egypt and start operations within five years of concluding agreements.
These companies also have to commit to using locally-made components whenever they are available domestically, while meeting a minimum 20% local-content requirement.
And although green hydrogen producers will be free to employ foreign workers, for up to ten years after their project is approved, this is capped at 30% of the total workforce.
Egypt has reportedly built a pipeline of 32 projects worth a combined 5.4trn Egyptian pounds ($175bn), with the aim of producing 3.2 million tonnes of H2 a year by 2030 and 9.2 million tonnes by 2040.
However, many of these projects are still yet to reach a final investment decision or start construction.
Shipping through the Suez Canal, where a number of major hydrogen projects would be based, has also been disrupted since mid-December amid the risk of attacks from Yemen’s Houthi militant group on vessels transiting through the Red Sea.
It is unclear whether this crisis could delay final investment decisions this quarter or affect the import of equipment and materials to project sites.