Green Hydrogen Law, It is time to take advantage of the potential of hydrogen to play a key role in facing critical energy challenges, as the main trend now in the global energy transition is the accelerated exploitation of carbon-free technology, and green hydrogen is the missing link to decarbonize all sectors, as it has the potential to become a molecular fuel capable of providing clean energy for all aspects of the global economy, so Egypt is trying to move with great strides towards the region’s leadership in the field of Green Hydrogen Law, as it has sought Previously leading the renewable energy sector, the government has developed policies and regulations by issuing Law No. 2 of 2024 on incentives for projects to produce green hydrogen and its derivatives, which aims to stimulate investment in that vital field.

The provisions of Law No. 2 of 2024 regarding incentives for projects to produce Green Hydrogen Law and its derivatives include an explanation of the rights and obligations of developers, in addition to the conditions of the scope of application of the provisions of this law, and here is an explanation of those items in the following points:

Scope of the Application of Law No. 2 of the Year 2024

Article 2 of this law specifies the scope of its application to projects for the production of green hydrogen and its derivatives that enter into agreements for their projects within five years from the effective date of the law. This is an exception to the provisions of the Law on Special Economic Zones issued by Law No. 83 of the year 2002 and the Investment Law issued by Law No. 72 of the year 2017. The exceptions encompass the following:

  1. Factories for the production of green hydrogen and its derivatives.
  2. Desalination plants that allocate a percentage of no less than 95% of their production for use in the production of green hydrogen and its derivatives.
  3. Power generation stations from renewable energy sources, dedicating a percentage of no less than 95% of their production to supply factories for the production of green hydrogen and its derivatives, as well as desalination plants.
  4. Projects limited to the transport, storage, or distribution of green hydrogen and its derivatives produced within the Arab Republic of Egypt.
  5. Projects directly involved in manufacturing the necessary supplies or inputs for the factories producing green hydrogen and its derivatives.

Developer Rights According to Law No. 2 of the Year 2024

This law specifies regulations for establishing the project company and it’s governing law. Furthermore, it offers various tax incentives for green hydrogen production projects and their expansions. The main points of these provisions are outlined as follows:

(1) The developer is responsible for establishing the project company, and they may establish one or more operational branches specializing in one or more activities of the company, in accordance with the regulations governing each activity.

(2) Green hydrogen production projects and their future expansions enjoy the incentives specified in this law throughout the duration of the project agreements, provided that agreements for expansion are concluded within seven years from the start of commercial operation of the project.

(3) Green Hydrogen Law production projects and their expansions, as per Article no. (4(, are entitled to the following incentives:

  1. Cash investment incentive called the “Green Hydrogen Incentive,” amounting to no less than 33% and not exceeding 55% of the value of the tax paid, with the acknowledgment of income tax generated directly from the project’s activities or expansions, as applicable. The Ministry of Finance commits to disburse this incentive within forty-five days from the end of the specified deadline for tax return submission. Otherwise, a delay penalty is incurred, calculated based on the credit and discount rate announced by the Central Bank as of the incentive due date.
  2. Except for passenger cars, equipment, tools, machinery, devices, raw materials, supplies, and necessary means of transportation for licensed green hydrogen production projects and their derivatives are exempt from value-added tax.
  3. Exports of green hydrogen production projects and their derivatives are subject to a zero percent value-added tax rate.
  4. The Minister, with the approval of the Cabinet, may exempt green hydrogen production projects and their derivatives from the following:
  • Property tax on constructed properties due on properties actively used in those projects.
  • Stamp duty, documentation fees, and the monthly fees due on contracts establishing companies and entities, credit facilities, and associated mortgages, as well as land registration contracts necessary for establishing those projects.
  • Customs duties on all imports necessary for establishing those projects, excluding passenger cars.

(4) In addition to the incentives specified in Article 4 of this law, green hydrogen production projects and their expansions are granted the following incentives:

  1. The project company is granted a single approval in accordance with the regulations outlined in the referenced Investment Law.
  2. Without violating the provisions of laws, regulations, and decisions regulating imports, the project company has the right to independently or through others import what it needs for its construction, expansion, or operation, including raw materials, production requirements, machinery, spare parts, and suitable transportation means for its activities, without the need for registration in the importers’ registry. It also has the right to export its products directly or indirectly without a license and without the need for registration in the exporters’ registry.
  3. The project company has the right to employ foreign workers within the limit of 30% of the total workforce during the first ten years from the date of signing project agreements.
  4. Permission to establish special customs offices for the project’s exports or imports in agreement with the Minister of Finance.
  5. The project company receives a 30% reduction in fees for utilizing maritime ports, maritime transport, services to ships, and facilities in Egyptian maritime ports. This reduction extends to fixed and floating installations owned by maritime port authorities and the Maritime Safety Authority. It also covers activities such as liquid pouring, ship provisioning, and electronic services offered by Egyptian maritime port administrations.
  6. The project company enjoys a 25% reduction in fees for using designated industrial land to establish a green hydrogen production plant, and a 20% reduction for using lands in port storage warehouses. These reductions do not affect annual increases in usage fees and licenses. Compliance with additional regulatory rules from the relevant land authority is also required.
  7. A grace period is granted for the payment of fees for the right to use industrial and storage lands allocated by the authorities having jurisdiction over the land for the project and its expansions. Payment begins from the date of commercial operation of the project, without calculating any interest or fines.
  8. The durations of the necessary licenses for the implementation of green hydrogen production projects and their derivatives correspond to the durations of the right to use the project’s lands.

Developer Commitments According to Law No. 2 of the Year 2024

(1) The implementation of the green hydrogen production project and its derivatives under the project agreements must comply with the regulations governing such projects.

(2) The execution of future expansions for this project under additional agreements attached to the project agreements requires the approval of the Cabinet and the consideration of the Minister responsible for electricity and renewable energy, as well as the opinion of the land jurisdiction.

(3) To qualify for the incentives specified under this law, Green Hydrogen Law production projects and their expansions must meet the following conditions:

  1. The commercial operation of the project must commence within five years from the date of signing the project agreements.
  2. The project or its expansions, as applicable, must secure at least 70% of its investment cost through foreign currency funding from abroad.
  3. The project must commit to using locally manufactured components whenever available in the local market, with a minimum of 20% of the project’s components being sourced locally.
  4. The project must contribute to the transfer and localization of modern and advanced technologies to Egypt, with a commitment to establishing and implementing training programs for the Egyptian workforce.
  5. The project company must develop a plan for the development of local areas where it operates through the implementation of corporate social responsibility rules in accordance with the provisions of Article 15 of the referenced Investment Law.

The competent minister or their authorized representative issues the necessary certificate for enjoying the incentives outlined in this law. This certificate is considered final and effective on its own, without the need for approval from other entities. All parties must adhere to and comply with the information provided in the certificate.

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