Latest / The Emerging Markets Podcast with Fexingo: Developing Economies, Growth, and Investment / How Egypt Is Becoming Africa's Green Hydrogen Hub
Transcript
- Lucas: So Egypt wants to produce 10 percent of the world's green hydrogen by 2040. That is a huge ambition for a country that currently has almost no hydrogen output. But here's the thing — they're actually building the infrastructure right now. Luna: I've seen headlines about a big hydrogen project in the Suez Canal zone. Is that the one you're thinking of? Lucas: Exactly. There's an eight billion dollar project called Egypt Green Hydrogen — a joint venture between Norway's Scatec and two Egyptian companies, Fertiglobe and the Sovereign Fund. The first phase will produce 100,000 tonnes of green ammonia per year, starting by 2028. Luna: And they're using ammonia as the carrier, right? Because pure hydrogen is really hard to ship. Lucas: Right. Ammonia is much easier to transport. You can convert it back to hydrogen at the destination, or use it directly as fertilizer — which Fertiglobe already does. So the project has a built-in buyer and existing logistics. Luna: That seems smarter than starting from scratch. But why Egypt, specifically? There are plenty of sunny places in the world. Lucas: Three advantages. First, the sun. Egypt's solar irradiance is among the highest globally — more than double Germany's. Second, land. The Suez Canal Economic Zone has vast, cheap desert land near a major shipping route. Third, existing gas infrastructure from Egypt's LNG terminals, which can be retrofitted for hydrogen. Luna: And proximity to Europe doesn't hurt either. The EU is desperate for clean hydrogen imports, and they've set a target of 10 million tonnes by 2030. Lucas: That's exactly the demand side. European buyers are already signing offtake agreements. Egypt could become the closest large-scale supplier to Southern Europe, beating out competitors like Chile or Australia on shipping costs alone. Luna: But the cost question is huge. Green hydrogen today is something like four to six dollars per kilogram. To compete with grey hydrogen from natural gas, it needs to drop below two dollars. Is Egypt on track for that? Lucas: The International Renewable Energy Agency estimates Egypt's levelized cost could hit two dollars by 2030. That's because of cheap solar — they're building massive solar farms at under three cents per kilowatt-hour. Combine that with electrolyzer costs falling rapidly, and the math starts to work. Luna: So the economics are plausible. But this is still a huge bet for a country with a lot of competing priorities — debt, inflation, a large population. Can Egypt actually execute? Lucas: Execution risk is real. Egypt has a history of delayed mega-projects. But this one has strong international backing — the European Bank for Reconstruction and Development, the US International Development Finance Corporation, and sovereign wealth funds from the Gulf. They've already committed financing for phase one. Luna: And there's a geopolitical angle too. With tensions in the Middle East — the recent us iran deal could push oil prices lower, but it also highlights the risk of relying on fossil fuels. Egypt is positioning itself as a stable energy hub. Lucas: Exactly. If the hydrogen economy takes off, Egypt could leapfrog the fossil fuel stage. They have natural gas now, but that's finite. Hydrogen is a long-term play. And unlike oil, hydrogen doesn't come with the same geopolitical baggage. Luna: So for investors, how do you get exposure? Are there listed companies tied to this? Lucas: Fertiglobe is publicly traded on the Abu Dhabi Securities Exchange. Scatec is listed in Oslo. There's also the Egyptian Exchange, where companies like Elsewedy Electric — which builds solar plants — could benefit. But pure-play hydrogen ETFs are still thin. Luna: And for the broader emerging market investor, this is a reminder that the green transition isn't just about China and India. Smaller EMs with good resources are making big moves. Lucas: Right. Countries like Morocco, Chile, and Namibia are all racing to become hydrogen hubs. Egypt might have the best combination of sun, location, and existing infrastructure. If they pull this off, it could transform their economy. Luna: And if they don't? The downside is stranded assets and more debt. But given the global push for decarbonization, it's a bet worth watching. Lucas: Speaking of supporting the kind of analysis we're doing here — if you find these deep dives into emerging market trends useful, you can help keep the show ad-free. Just visit buy me a coffee dot com slash fexingo. No pressure, but it really helps us keep doing episodes like this. Luna: Yeah, and we don't run sponsors, so listener support is what makes this possible. Thanks to anyone who chips in. Lucas: So what's next for Egypt? The big milestone will be the first ammonia production in 2028. If that hits cost targets, expect a wave of follow-on projects. And other EMs will be watching closely. Luna: For now, it's a fascinating case study in how a country with the right assets can try to jump to the front of a new industry. We'll keep tracking it. Lucas: That's it for this episode of The Emerging Markets Podcast. I'm Lucas. Luna: And I'm Luna. See you next time.