Egypt’s Cabinet approved a draft law aimed at developing green hydrogen projects and associated endeavors on Wednesday. Prime Minister Mostafa Madbouly presided over the meeting.
According to a press release issued by the Cabinet, the legislation, designed to incentivize environmentally friendly initiatives, applies to projects involved in the production of green hydrogen and its various byproducts, provided that agreements are reached within five years of the law’s implementation.
The law encompasses a wide range of initiatives, including the establishment of green hydrogen production plants, desalination plants that devote a portion of their output to green hydrogen, renewable energy facilities that devote at least 95 percent of their output to green hydrogen, and desalination plants, and projects focused on green hydrogen transportation, storage, and distribution. It also includes businesses that produce raw materials for green hydrogen plants.
Furthermore, the law expands its application to include future expansions of current projects, with “expansion” referring to any addition resulting in greater production capacity. Developers must form a project business and adhere to project agreements for a maximum of 50 years as part of the regulation.
Under the new law, projects and their expansions will benefit from a range of incentives throughout the duration of their project agreements. Expansion agreements, concluded within seven years of the project’s commercial operation, will also be eligible for these incentives.
The incentives offered include a cash investment incentive equivalent to 33 percent to 55 percent of the tax paid on income generated from the project. Additionally, equipment and materials will be exempt from value-added tax (VAT), and taxes and fees on contracts and land registration will be waived. Moreover, projects will enjoy a customs tax exemption on imported goods related to the venture.
To further encourage green hydrogen initiatives, the law grants additional incentives such as a streamlined approval process under the Investment Law and the freedom to import and export goods without registration.
However, certain conditions must be met to qualify for these incentives. These include commencing commercial operation within five years, relying on foreign financing (with at least 70 percent of financing coming from abroad), using domestically manufactured components to a minimum of 20 percent, transferring advanced technology, implementing training programs, and demonstrating social responsibility.
The Council of Ministers will issue a decision outlining the necessary controls to verify compliance with these conditions.
Egypt’s SCZONE has signed nine framework agreements with major international companies to establish projects for green hydrogen industries within the Sokhna zone.
