Chapter 4 presents a targeted package of solutions to operationalise Egypt’s National Low-Carbon Hydrogen Strategy by accelerating investment, closing the cost-competitiveness gap and enhancing project bankability. Priority financial instruments identified include CAPEX grants, concessional loans, FX risk guarantees and CfDs. The chapter also highlights critical enabling investment conditions – such as grid access reform, standardised wheeling charges, peer-to-peer electricity markets and CUI – to effectively mobilising private capital. In addition, the chapter outlines practical pathways for implementation, including the deployment of FX risk guarantee, stronger engagement of local banks, and a dual-auction CfD model designed to ensure offtake certainty while maintaining fiscal space. Collectively, these measures provide a coherent framework to translate Egypt’s green hydrogen ambition into bankable and investable projects.
Implementing the OECD Framework for Industry’s Net‑Zero Transition in Egypt
Abstract
The objective of this chapter is to support Egypt in translating its National Low-Carbon Hydrogen Strategy into more granular, action-oriented implementation measures. Building on the analysis presented in Chapters 2 and 3, this chapter discusses the financial solutions and enabling investment conditions needed to accelerate green hydrogen deployment in Egypt. It also reflects on ongoing policy discussions relevant to green hydrogen development, including electricity market regulatory reforms, strengthening domestic industrial capacity and government fiscal constraints. Each proposed solution is illustrated with real-world implementation case studies, including those from EMDEs where applicable.
Source: Results of the techno-economic assessment prepared by the OECD Secretariat.
4.2.1. Targeted use of CAPEX grants
As discussed in Chapter 3, the study identified CAPEX grants as the most effective instrument and foreign currency guarantee to close the competitiveness gap for green hydrogen, green ammonia, e-methanol and green iron. In Egypt’s context, where large-scale green hydrogen investments are nascent, such instruments can play a catalytic role in improving project bankability. The primary objective of CAPEX grants is to enhance project bankability and unlock CAPEX-intensive investments in electrolyser deployments by addressing the financial uncertainties associated with large-scale, multi-year operations, where stable performance track records beyond two years are still limited globally. This approach directly tackles the major CAPEX barrier, facilitating the deployment of electrolyser technology at scale and accelerating the transition to green hydrogen production.
Allocation of CAPEX grants could prioritise projects with strong technical feasibility and a credible pathway to long-term, stable operations, helping to mitigate the current uncertainty around large-scale project performance. Chile’s Green Hydrogen Facility (OECD, 2024[1]) offers a relevant benchmark for Egypt, as it proposes using CAPEX grants strategically to reduce the substantial upfront costs for electrolyser technologies, particularly for projects exceeding 100 MW in size. Additionally, the facility tailored sub‑loans to cover up to 40% of the capital expenditure for green hydrogen production projects across Chile’s key hydrogen valleys. These sub-loans design to help finance essential components – including electrolysers, storage systems and dispensing units – which typically account for 60-80% of overall project costs. In addition, Chile’s experience highlights the critical role of a government-hosted facility – such as Chile’s Concessional Credit Lines – in ensuring the effective deployment of concessional financing to green hydrogen project developers, particularly those struggling to access commercial finance. For Egypt, combining CAPEX grants with targeted risk mitigation instruments such as Debt Service Reserve Accounts (DSRA), Liquidity Reserve Accounts (LRA) or a first-loss guarantee mechanism linked to electrolyser performance indicators could provide a viable model to crowd in private capital.
Establishing Special Purpose Vehicles (SPVs) with government oversight could serve as a critical institutional mechanism to effectively operationalise CAPEX grant facility for large-scale green hydrogen projects in Egypt (OECD, 2024[1]). For instance, Oman’s strategic establishment of Hydrom, a dedicated subsidiary under Energy Development Oman (EDO), presents an effective model for mobilising private capital while minimising direct public expenditure in the burgeoning green hydrogen sector (OECD, 2024[2]). Functioning as a central orchestrator, Hydrom is tasked with master planning, regulatory co‑ordination and auction design, facilitating investor engagement and ensuring alignment with national energy objectives. Its role in enabling shared infrastructure development and regulatory clarity has been key to de-risking investments, enhancing bankability and reducing the need for large-scale public subsidies. This has contributed to the advancement of flagship projects such as HyDuqm toward FID. Egypt could adopt a similar model – potentially through a dedicated entity under a government-affiliated structure – to co-ordinate planning, manage auctions, and guide infrastructure roll-out, particularly in strategic zones such as the SCZone.
4.2.2. Mitigating FX currency risk through participation of domestic banks
Effectively managing FX risk is essential for green hydrogen projects, as long-term capital intensity and reliance on foreign investment amplify exposure to currency volatility, which can erode project returns and deter investor participation. In Egypt, effectively managing currency-related risks requires a comprehensive and co-ordinated approach. A key challenge lies in the mismatch between revenue streams, often denominated in Egyptian pounds, and project costs and debt servicing obligations, which are typically in foreign currencies. This exposure to inconvertibility and FX volatility constitutes a major structural barrier, especially given developers’ reliance on international financing due to limited access to long-term local capital. Without adequate risk mitigation, FX mismatch can significantly undermine project bankability. Introducing targeted FX guarantee instruments – whether embedded in government-backed financing facilities or offered by development finance institutions – could play a pivotal role in protecting investors and lenders from currency-related shocks.
Moreover, to ensure a more balanced and resilient financing structure, the engagement of local banks should be strengthened, particularly for financing the EGP-denominated components of green hydrogen projects. Under Egypt’s green hydrogen incentive law, a portion of project financing may be required to come from the local financial sector, particularly when foreign investment accounts for at least 70% of the project’s capital. This makes addressing FX risks even more critical. Currently, while 20-30% of hydrogen project costs are typically incurred in EGP, domestic financial institutions have only limited participation, as discussed in Chapter 1. Expanding local bank involvement in financing EGP-denominated portions would allow developers to hedge part of their currency exposure, thereby enhancing overall financial resilience and reducing project vulnerability to exchange rate fluctuations. Coupling such local currency financing with an FX guarantee mechanism – whether structured as a partial credit guarantee or a hedging product tied to foreign debt repayments – could further enhance bankability, especially for large-scale anchor projects.
Building on successful models such as the EBRD’s Green Economy Financing Facility (GEFF) in Egypt (Cordonnier and Saygin, 2023[3]), which channels financing through local banks to support SMEs, a similar structure could be adapted for hydrogen infrastructure projects. Within this facility, FX guarantees could be integrated as part of a broader blended finance package – alongside CAPEX grants and EGP‑denominated sub-loans – to improve project-level risk-return profiles. In addition, prioritising export‑oriented hydrogen projects – which generate revenues in hard currencies – can serve as a natural hedge against FX volatility. This approach would not only improve project bankability but also strengthen incentives for local banks to engage more actively in the sector’s financing ecosystem (Figure 4.1).
Source: Schematic representation prepared by the OECD Secretariat.
4.2.3. Addressing offtake risk: contract-for-difference
The survey conducted in Chapter 3 identified offtake risk as a critical challenge. Despite strong global aspirations for hydrogen, its widespread adoption is hindered by several obstacles. The absence of clear pricing, a liquid trading market and consistent legal frameworks creates uncertainty, deterring investors and resulting in a supply-demand deadlock (Lee and Saygin, 2023[4]) (Lee and Saygin, 2023[4]). To overcome this and reach a critical turning point, the green hydrogen market needs support mechanisms to stimulate market demand. These include secure investment environments, clearly established long-term purchase contracts, financial mechanisms to address the cost gap between green and fossil fuel-based hydrogen and a structured competitive landscape that generates transparent price signals and encourages efficiency improvements.
CfD is a financial agreement where two parties exchange the difference between the asset’s market value and a pre-agreed strike price over the life of the contract. In the energy sector, particularly for renewables, CfDs have been vital for incentivising investment by offering long-term price stability through a guaranteed strike price (Mohd Safuan, Ahmad and Mat Zain, 2022[5]). This protects generators from market volatility and provides consumers with price certainty. Current discussions focus on optimising CfD design for greater cost-effectiveness, stronger market integration and adaptation to emerging technologies such as green hydrogen production (Chaton and Metta-Versmessen, 2024[6]).
In the context of green hydrogen, CfDs are increasingly being explored as a tool to stabilise project revenues by mitigating OPEX risks, particularly those arising from volatile electricity and input costs (Ason and Dal Poz, 2024[7]). When CfDs are linked specifically to carbon prices – commonly referred to as Carbon Contracts for Difference (CCfDs) – they aim to hedge against carbon price volatility to support low-carbon hydrogen production. However, implementing CCfDs requires the existence of a functioning carbon market, bringing additional considerations related to carbon pricing mechanisms and market maturity. While challenges such as the high upfront costs of green hydrogen and infrastructure needs remain, CfDs offer a pathway to de-risk investments, lower financing costs and accelerate the scaling of clean hydrogen technologies.
In the UK Hydrogen Business Model, CfDs are a central pillar, with the government proposing a strike price based on the cost of green hydrogen production, aiming to make it competitive with fossil fuel equivalents for industrial users (Oxford Institute for Energy Studies, 2024[8]). The design of this UK CfD mechanism involves a competitive allocation process and a variable premium model, where the generator receives the difference between the strike price and a reference price. The UK’s first Hydrogen Allocation Round (HAR1) awarded CfDs to eleven green hydrogen projects with a total capacity of 125 MW and an average strike price of GBP 241/MWh (2022 prices), backed by over GBP 2 billion in revenue support and GBP 90 million in capital grants, targeting operation by 2025 (Department of Energy Security and Net Zero, 2023[9]) (Department of Energy Security and Net Zero, 2023[9]).
Japan introduced a CfD subsidy programme in 2023 to support low-carbon hydrogen production, aiming to bridge the cost gap between low-carbon hydrogen and fossil fuel-based equivalents (OECD, 2024[10]). The scheme will fund both domestic and imported low-carbon hydrogen, including green and blue hydrogen, with JPY 3 trillion (~USD 20.86 billion) allocated over 15 years (GH2, 2024[11]). Payments will be based on a reference price, currently tied to LNG for hydrogen and coal for ammonia, with producers receiving top-up payments if their costs exceed the reference price or paying the government if their costs are lower (Parkes, 2024[12]).
The H2Global instrument (Cordonnier and Saygin, 2023[3]) is used by the governments of Australia, Canada, Germany and the Netherlands to provide certainty in hydrogen supply and demand through a dual auction system. Developers bid for 10-year contracts, while HintCo organises a separate auction for off-takers, typically with 1-year contracts. Government-backed grants de-risk the market for early movers. Unlike standard CfD models, H2Global uses a decreasing price gap approach, assuming increased market willingness over time, reducing reliance on public subsidies and enhancing long-term sustainability (Bollerhey et al., 2023[13]). The first auction results included a project in Egypt’s SCZone, cleared at EUR 811/tonne, with a maximum contracted volume of 400 000 tonnes/year, with expected delivery by 2027 (Pearce, 2024[14]).
Drawing upon the potential effectiveness of CfDs in relevant markets, the following paragraphs proposes a tailored implementation strategy (Figure 4.2). Considering Egypt’s prevailing fiscal environment, CfD with double auction mechanism presents a pragmatic approach to stimulate the clean hydrogen and ammonia sectors while minimising the reliance on substantial public expenditure. The strategic deployment of concessional loans from IFIs would greatly enhance viability of the mechanism.
Note: The model assumes a minimum project size of EUR 500 million per lot, ensuring sufficient scale to justify long-term offtake agreements and attract international investment. The proposed auction model tailored to Egypt assumes no direct fiscal subsidy from the national budget.
Source: H2Global and its replicability in Egypt, H2Global at OECD Egypt Low carbon hydrogen stakeholder workshop, April 2025.
State-perspective, simulation
Note: The net present value (NPV) of the funding instrument reaches approximately USD 390 million, based on a 50/50 domestic and export offtake split. The simulation assumes total domestic sales of USD 4.2 billion, export revenues of USD 3.9 billion and a total investment of USD 1.6 billion. Ammonia sales prices are assumed to range between USD 600 and 750 per tonne. Tax revenues from newly created projects exceed total and annual funding demand in this simulation.
Source: H2Global and its replicability in Egypt, H2Global at OECD Egypt Low carbon hydrogen stakeholder workshop, April 2025.
The proposed framework for establishing a renewable ammonia production sector in Egypt comprises several key stages (Figure 4.2):
Initially, a competitive tendering process (supply auction) will be initiated to identify and select viable projects to produce renewable ammonia within Egypt.
Successful bidders will proceed to the final investment decision phase, culminating in the operationalisation of their production facilities.
Subsequently, operational projects will be granted long-term purchase agreements through a designated Egyptian government intermediary. During the initial phase, operational responsibilities could be temporarily delegated to an experienced intermediary such as HintCo, which possesses the technical capacity for implementation and can support institutional strengthening through capacity-building for government officials.
These agreements aim to ensure stable pricing and make the projects more financially viable. A key feature of the contract could be potentially considering the 50/50 Offtake Model, which ensures that half of the produced ammonia is reserved for domestic use, helping Egypt meet its industrial decarbonisation goals. The remaining 50% will be directed towards export markets, serving to generate foreign currency revenue. The ratio can be adjusted over time to reflect Egypt’s evolving strategic objectives in line with the targets of its hydrogen strategy.
The offtake allocation ratio can be flexibly adjusted over time in line with the government’s evolving priorities and the targets outlined in Egypt’s national hydrogen strategy. For example, in the initial phase, an 80/20 offtake model – with 80% directed to export markets and 20% for domestic use – could be applied to maximise foreign exchange earnings while market readiness develops.
Under this structure, Government of Egypt retains no exposure to direct price risk. Instead, it benefits from increased tax revenues generated by the domestic hydrogen project – revenues which, according to fiscal simulations, exceed both annual and total repayment obligations (Figure 4.3). This model supports a fiscally neutral or even revenue-positive pathway to de-risk early hydrogen investment, while maintaining Egypt’s fiscal space and leveraging concessional international finance.
Establishing a dedicated institution to govern the implementation mechanism is crucial for success. To ensure effective management, it is essential that the overseeing institution has the technical and financial expertise to evaluate all aspects of project viability. Capital expenditure for these projects could be facilitated through concessional loans sourced from IFIs, rather than through direct grants or public funding. These loans could be featuring favourable terms, including extended tenors, grace periods and reduced interest rates, and will be disbursed linearly over a ten-year period. This structured disbursement schedule aims to ensure manageable repayment obligations for project developers and mitigate initial capital constraints. This integrated model strategically leverages blended finance mechanisms to mitigate risks of early-stage hydrogen initiatives, thereby establishing a robust foundation for a self-sustaining hydrogen economy within Egypt.
4.2.4. Power sector reform as a foundation for green hydrogen investment
As discussed in previous chapters, Egypt’s 2024 National Strategy for Low-Carbon Hydrogen and the subsequent Green Hydrogen Incentives Law signal growing political commitment. However, the implementation of concrete regulatory and operational frameworks remains incomplete. The scale and speed of investment deployment depends significantly on investors’ expectations regarding the persistence of supportive policies and clarity on relevant regulations over time (Nemet et al., 2017[15]). To unlock the country’s potential as a green hydrogen hub, reforms in the power sector are particularly critical. Without such enabling investment conditions, investor uncertainty will continue to hamper the scale-up of green hydrogen projects. Moreover, all de-risking and economic instruments identified in this report such as concessional loans, CAPEX grants and CfDs cannot be effective unless underpinned by a coherent, stable and supportive regulatory and policy environment.
First, Egypt could accelerate the development of a clear and co-ordinated regulatory and technical framework for grid connection to support the timely deployment of large-scale green hydrogen projects. As discussed in Chapter 2, relying solely on dedicated renewable energy supply risks oversizing generation capacity and inflating the LCOH, making a hybrid model involving both dedicated and grid connected renewables more cost effective. Realising this requires well defined technical standards, clear connection timelines and a delineation of responsibilities between project developers and the EETC. While current regulations formally allow developers to construct dedicated transmission lines, implementation has been limited. Contractual constraints, particularly those inherited from legacy power purchase agreements, as well as the dominant role of the state-owned grid operator, have hindered progress. No developers have yet built independent transmission infrastructure due to high upfront investment costs, fragmented permitting processes and the absence of a comprehensive grid planning and cost sharing framework.
Complementing this, it is critical to accelerate the unbundling of the transmission sector and establish a fully independent Transmission System Operator (TSO) to ensure non-discriminatory grid access. Building on the need for a hybrid model, even projects with dedicated renewable supply will require interaction with the national grid – for reliability, balancing or scalability. However, Egypt currently lacks clear operational and regulatory protocols for managing such hybrid configurations. This regulatory gap, combined with the absence of an independent TSO, creates significant uncertainty, undermining investor confidence and slowing infrastructure rollout. The gradual unbundling of EETC offers a strategic opportunity to address these issues, but progress remains delayed due to the lack of detailed implementing regulations. Without decisive action to operationalise the unbundling process and upgrade the national transmission network, Egypt risks missing its renewable energy targets. Meeting the estimated 160 GW of renewable capacity required for green hydrogen production will necessitate substantial and timely investments in high-voltage transmission infrastructure. Advancing regulatory reform, grid planning and institutional restructuring is therefore essential to position Egypt as a credible and competitive green hydrogen hub.
In parallel, Egypt could establish a transparent and standardised wheeling charge framework to support green hydrogen developers that depend on access to the national grid. Wheeling charges are particularly relevant for projects that cannot construct fully dedicated transmission lines and must use existing infrastructure. Currently, EETC applies a flat 7% charge on electricity revenues for grid access, raising concerns about added costs and financial uncertainty. The absence of clear, predictable methodologies – accounting for factors such as distance, voltage level and grid congestion – further complicates project planning. Moreover, limited public information exists on tariff structures tailored specifically to green hydrogen. Introducing a consistent and transparent wheeling charge mechanism would complement the broader grid access reforms, enhance cost visibility, reduce investor risk and accelerate grid-based hydrogen project development in Egypt (Denis, 2026[16]).
To further enable renewable energy market flexibility, Egypt could consider implementing a structured pooling and trading mechanism in future phases of its Private-2-Private1 framework. Egypt is currently piloting the first phase of its P2P PPA framework, overseen by EgyptERA. This framework allows direct electricity transactions between private producers and consumers, promoting a more competitive and efficient electricity market. Although still in its early stages, the P2P initiative marks a practical step toward attracting private investment, improving grid efficiency and accelerating the deployment of renewable energy – all of which can contribute to lowering production costs for green hydrogen, as discussed in Chapter 2. The framework outlines a structured process: eligible producers and consumers must register with EgyptERA; new renewable energy facilities (wind or solar) are permitted, each capped at 100 MW; and projects must comply with predefined contractual rules. The pilot phase targets a total generation capacity of 500 MW. Under this scheme, producers may engage with up to three consumers, with any surplus electricity allowed to be sold to EETC. EgyptERA evaluates applications through a scoring system that assigns base points to new facilities and consumption sites, while incorporating modifiers based on factors such as grid connection status, geographical proximity, inclusion of desalination or green hydrogen production and timeliness of implementation.
The effective implementation of P2P would allow multiple renewable energy generators to aggregate their output into a common pool, from which green hydrogen producers could procure electricity under standardised and traceable agreements. Such a system would ensure that only newly added renewable capacity is used, aligning with certification requirements under global standards like the EU Renewable Energy Directive (RED II/III) (European Commission, 2018[17]) and voluntary schemes such as CertifHy. The pooled market could be supported by shared infrastructure investments – such as central substations, transmission corridors, and storage facilities – which could lower system costs by up to 30% compared to a decentralised approach (IRENA and Methanol Institute, 2021[18]). An independent green electricity pool operator could oversee renewable generation verification, supply allocation and settlement, while enabling auctions or bilateral trading among hydrogen producers. Over time, this system could evolve into a broader market platform, helping Egypt meet international green hydrogen certification standards and enhancing export competitiveness (Figure 4.4).
Note: REC: renewable energy certification.
Source: Results of the techno-economic assessment prepared by the OECD Secretariat.
4.2.5. Prioritise investment in common user infrastructure, ensuring both accessibility and high quality
Common user infrastructure (CUI) plays a critical enabling role in the development of green hydrogen projects by offering multiple advantages that support cost-efficiency and scalability. As discussed in Chapter 3, shared infrastructure significantly reduces production costs by creating economies of scale, allowing multiple projects to access the same facilities and thereby lowering overall capital expenditure. Key components such as pipelines, storage systems and export terminals help avoid duplication of assets and optimise resource utilisation, resulting in substantial cost savings. In addition to cost benefits, CUI accelerates project timelines, as developers are not required to build all infrastructure independently. This in turn enhances project bankability by reducing upfront investment needs and mitigating development risks, making green hydrogen ventures more attractive to investors.
In the Egyptian context, the projects within the industrial zone or special economic zone (i.e. SCZone) exemplify the importance of CUI, with plans to establish a hub where producers can leverage common export facilities, pipelines and renewable energy sources. Egypt aims to allocate a portion of its substantial green hydrogen sector investments to develop this CUI, including extensive port facilities in the SCZone. Large-scale projects, such as the Egypt-France collaboration (FCW, 2025[19]) near Ras Shokeir, also underscore the need for shared resources like new port facilities and transmission corridors. Key CUI components include pipeline networks for hydrogen transport, dedicated export terminals, transmission lines and substations for renewable energy integration and large-scale, centralised electrolyser plants. A notable example in the SCZone is the planned seawater desalination plant, a public-private partnership that will supply water to green hydrogen producers could help reducing their capital expenditure, ensuring a reliable water supply and promoting cost-effective desalination.
Many countries with green hydrogen ambitions are advancing the development of CUI to enable cost-effective scale-up. For instance, in Namibia, Hyphen is developing a CUI comprising desalination facilities, pipelines, transmission lines and storage and export terminals to support its project and future developments within the Southern Corridor Development Initiative (SCDI). By enabling open, transparent access for subsequent projects, the CUI creates economies of scale, reduces project-specific infrastructure burdens and supports Namibia’s goal of producing up to 3 million tonnes of green hydrogen annually. This integrated approach not only enhances investment appeal but also reinforces Namibia’s potential as a regional hub for green hydrogen production (OECD, 2024[20]). Egypt could draw from this model to design CUI – particularly in the Suez Canal Economic Zone – to reduce duplication, enhance infrastructure bankability and support the development of a competitive hydrogen export platform.
Egypt can also benefit from these insights by aligning hydrogen hub planning with port development strategies, leveraging existing industrial zones to integrate production, storage and export infrastructure under cohesive regulatory and investment frameworks. In Brazil, green hydrogen hubs are under development within Export Processing Zones (ZPEs) strategically located near major ports, including the Pecém Industrial and Port Complex (CIPP) in Ceará and the Port of Suape in Pernambuco (OECD, 2024[21]). These hubs integrate hydrogen production, transportation infrastructure and downstream or export facilities within a single operational zone. Successful implementation relies on the development of large-scale production assets, conversion facilities, pipelines and storage systems to enable efficient distribution and export of clean hydrogen and ammonia. The shared use of port infrastructure helps reduce CAPEX concentration, mitigate operational risks and enhance the probability of reaching FID. Stable policy environments, clear regulatory frameworks, targeted incentives, and strong PPPs are critical to ensuring industrial competitiveness, operational excellence and mobilising investment at scale.
Developing CUI must also prioritise environmental and social sustainability. While green hydrogen presents a significant opportunity for decarbonisation and economic growth, it introduces distinct environmental, social and governance (ESG) risks that must be proactively managed to ensure project bankability and long-term sustainability. From an environmental perspective, green hydrogen production is highly resource-intensive: producing one kilogramme of green hydrogen requires theoretically nine litres of purified water (Kumar et al., 2024[22]). Large-scale facilities place further strain local water resources, particularly in arid regions like most of Egypt. Additionally, the renewable energy infrastructure needed to power electrolysers demands significant land use, potentially disrupting ecosystems and biodiversity. Without comprehensive environmental impact assessments and mitigation plans, cumulative impacts could undermine local resilience.
As desalination is used to meet water demand, energy consumption and brine disposal must be carefully managed through clear water governance frameworks to avoid secondary social effects and environmental harms. Poorly planned green hydrogen projects can lead to land use conflicts, involuntary resettlement and occupational safety risks due to the high flammability and storage pressures of hydrogen gas. Data from the ILO shows that hydrogen-related industrial activities could introduce new occupational hazards, necessitating specialised safety standards and workforce training. On the governance side, regulatory uncertainty remains a major barrier; for example, less than 30% of countries with hydrogen roadmaps currently have enforceable standards for production, transportation and certification (IRENA, 2023[23]). The absence of standardised ESG reporting frameworks across emerging hydrogen markets further complicates investor risk assessments. Implementing internationally recognised standards such as ISO/TC 197 for hydrogen technologies will be vital to ensuring safety, enhancing transparency and improving access to sustainable finance instruments like green bonds and sustainability-linked loans.
Embedding ESG considerations from the earliest stages is essential not only to attract initial investment but also to ensure long-term financial viability and alignment with the expectations of global institutional investors, who increasingly prioritise resilient, low-carbon infrastructure. Egypt could benefit from adopting a similar approach to that of Oman’s Sohar Port, where the early integration of ESG principles and sustainability reporting has helped strengthen investor confidence and improve access to international sustainable finance for green hydrogen and industrial projects (OECD, 2024[24]).
The Blue Dot Network (BDN) is the first global certification framework aligned with the G20 Principles for Quality Infrastructure Investment. It provides a structured approach to evaluating infrastructure projects against ten comprehensive criteria, including economic efficiency, debt transparency, environmental and social safeguards, transparent procurement, anti-corruption, skills transfer, gender equality, climate risk management, open access and the promotion of inclusive economic development.
It offers multiple strategic advantages:
Improved transparency and investor confidence through enhanced disclosure and governance standards;
Reduced due diligence costs and transaction inefficiencies by aligning with internationally recognised benchmarks;
Enhanced access to finance, particularly in global capital markets where investors increasingly prioritise ESG-aligned assets.
Moody’s and the World Bank report that sovereign and sub-sovereign entities implementing strong ESG practices, such as those embedded in the BDN framework, can access green bond markets at interest spreads 30-70 basis points lower than conventional bonds, resulting in significant financing cost savings.
In Egypt, where the state plays a central role in green hydrogen and infrastructure development, embedding an internationally recognised certification framework such as the BDN into procurement processes or investment incentive schemes can significantly enhance project credibility. These frameworks promote alignment with international environmental, social, financial and economic standards, thereby streamlining project preparation, strengthening investor confidence and facilitating access to finance from both public and private sources.
Moreover, such a certification can optimise the broader environmental and social benefits of infrastructure projects at the national level. For example, El Dorado International Airport in Colombia, a BDN-certified project, achieves a 73% reduction in Scope 1 and 3 emissions compared to its 2018 baseline, enhances biodiversity outcomes, supports over 35 000 direct and indirect jobs, and enhances the value of the asset through strengthened ESG alignment and risk mitigation, ultimately boosting investor confidence.
Source: (Blue Dot Network, 2024[25]).
4.2.6. Strengthen the skillset and domestic industry
Building strong local capacity is critical for Egypt’s ambition to become a global hub for green hydrogen production and export. Green hydrogen offers Egypt a transformational opportunity to stimulate both upstream and downstream industrial activity. On the upstream side, there is potential to expand manufacturing capabilities for critical components such as electrolysers, pipelines and desalination technologies, while downstream industries such as fertiliser and steel production are poised to become major domestic off-takers.
In this context, UNIDO has led efforts on skills development and workforce readiness. This work was also informed by insights from the OECD’s analysis captured in this report. Recognising that industrial transformation cannot occur without human capital, UNIDO’s work is systematically assessing existing skillsets and identifying gaps across the entire hydrogen value chain, in alignment with the ILO International Standard Classification of Occupations. Targeted workforce training programmes are being developed to ensure that Egyptian workers are equipped to meet the evolving technical demands of green hydrogen production, transportation and application sectors. By investing in local manufacturing capabilities and human capital, Egypt can reduce project costs, lower reliance on imported technologies, boost domestic value addition, and secure a more resilient, competitive position in the emerging global green hydrogen economy (ILO/IRENA, 2021[26]). Currently, local supply chain development – particularly in the manufacturing of electrolysers and storage tanks – remains underdeveloped and strategically underexplored. Hydrogen projects rely heavily on imported components, which exposes Egypt to global supply chain disruptions and limits domestic value creation. Untapped opportunities in local manufacturing and related socio-economic benefits merit further analysis to better understand Egypt’s industrial potential, technology gaps and strategic entry points for value chain development.
While the report is focusing on priorities to unlock green hydrogen projects in Egypt, maturing green hydrogen also requires significant international co-operation. These initiatives focus on research and development, risk mitigation, financial assistance, capacity-building, policy support and co-ordination (OECD/The World Bank, 2024[27]). Given the strategic importance of green hydrogen, international co‑operation and co-ordination efforts are rapidly expanding. For Egypt to sustain and accelerate its current momentum in the green hydrogen sector, it will be essential not only to continue strengthening domestic enabling investment conditions but also to actively engage with and leverage ongoing international initiatives.
Beyond production, Egypt has significant potential to become a green shipping gateway, leveraging its location along the Suez Canal to serve as a refuelling and export hub for hydrogen-based fuels like ammonia and methanol. Yet, competition from other regional players underscores the need for Egypt to accelerate infrastructure development to fully capitalise on its geographic and energy advantages. An assessment of the existing port infrastructure that could be used or repurposed for hydrogen exports would significantly strengthen the analysis of Egypt’s export readiness and strategic positioning in global hydrogen markets.
Many of the outcomes presented in this report are closely aligned with Egypt’s current policy priorities and the evolving green hydrogen market landscape. The report particularly focuses on outlining actionable steps over the next years to help align with the 2030 target of the National Low-Carbon Hydrogen Strategy that was considered throughout the report. To ensure the strategy is accessible and actionable for a wide range of stakeholders across the green hydrogen sector, it will be important to consolidate these efforts into a clear and transparent action plan, structured in a phased and manageable approach.
A number of issues, such as the development of local supply chains and the analysis of environmental impacts – especially water scarcity and the impact of brine disposal2 – require further analysis. Similarly, it is important to deepen the assessment of the socio-economic impact of Egypt’s green hydrogen sector, particularly on jobs across its value chain, including infrastructure development. This includes identifying opportunities for local employment in manufacturing, construction, operation and maintenance as well as mapping the skills gap and designing targeted training programmes to equip workers with the technical and safety competencies required for hydrogen technologies. A more detailed and integrated analysis would help ensure that green hydrogen production contributes meaningfully to inclusive economic development, workforce resilience and social equity. These topics were not covered in this report and merit further attention in future assessments.
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← 1. Egypt is currently developing a regulatory framework for smart mini-grid to enhance renewable energy integration and support green hydrogen production using surplus solar PV generation. While the ongoing consultations consider frameworks for green hydrogen-dedicated mini-grids, the current discussions focus on systems slightly above 50 MW in capacity, thus excluding larger-scale green hydrogen projects from the immediate regulatory scope.
← 2. This topic was raised during the OECD workshop organised in April 2025 and deserves further attention. While initial analysis suggests that brine disposal may have a limited effect on overall hydrogen production costs, specific cases indicate that it could significantly increase operational expenses and pose environmental risks, particularly in coastal areas. Negative environmental impacts are also highlighted in the OECD Green Growth Policy Review of Egypt (OECD, 2024[28]).