H2Global: Hydrogen and Green Ammonia from Egypt

Ammonia (NH₃) is a chemical compound consisting of one nitrogen and three hydrogen atoms. (AI generated)

Germany has great ambitions: By 2030, the Federal Republic needs between 95 and 130 terawatt hours of hydrogen and its derivatives – of which 50 to 70 percent must be imported, the Federal Ministry for Economic Affairs and Climate Action (BMWK) projected in 2024. In the import strategy published in July 2024, the federal government did not yet name specific partner countries, but large import volumes from North Africa, Australia, and South America are very likely. With the successful first H2Global auction last year, Egypt moved further into focus as an export nation. With ambitious infrastructure projects, the North African country aims to position itself as a strategic partner for Europe's energy transition.

Hydrogen Imports in the Form of Ammonia

Although there are considerations to connect North African countries to the European hydrogen core network (European Hydrogen Backbone, EHB for short), hydrogen imports by ship are inevitable. This is where hydrogen derivatives come into play, which make international trade economically viable in the first place due to their transport properties. This is primarily because the derivatives are liquid and less volatile under more moderate conditions and they also have a higher energy density. The use of ammonia seems particularly popular. Ammonia (NH₃) can be liquefied at -33°C – in comparison, pure hydrogen is only liquid at -253°C. Since ammonia is one of the most produced and traded chemicals worldwide, there is already an existing infrastructure that can be utilized. Ammonia can be used directly as fuel or as a chemical feedstock, or it can be cracked to recover pure hydrogen.

The duration and volume of hydrogen and ammonia imports planned by H2Global (© H2Global)

Egyptian Hydrogen Strategy

The Egyptian hydrogen strategy pursues the ambitious goal of developing the country into a leading global location for green hydrogen and its derivatives. By 2040, the North African country aims to build capacities for the production of 9.2 million tons of green hydrogen annually.

With these production volumes, Egypt is targeting a global market share of around eight percent. To be competitive in the world market, the country is aiming for a production price of 1.7 US dollars per kilogram of green hydrogen.

To support the implementation of the strategy, the Egyptian government introduced a new law at the beginning of 2024 to promote green hydrogen projects, which is intended to facilitate investments and offer tax advantages. The support measures include:

Qualified projects receive up to 55 percent tax refunds and are exempt from value-added tax
Companies can benefit from a 30 percent subsidy for foreign workers
Simplified approval procedures for large projects
Long-term land use rights in special economic zones

These regulatory simplifications make Egypt particularly attractive to international investors and significantly accelerate project implementation.

Around 30 hydrogen projects with an investment volume of over 100 billion US dollars are currently planned in Egypt. These projects usually integrate the construction of wind and solar farms as well as the further processing of hydrogen into ammonia and other derivatives.

The Fertiglobe facility in Ain Sokhna on the Red Sea. (© Fertiglobe)

H2Global

H2Global is a funding instrument of the federal government for building a global hydrogen market. For this purpose, the Hamburg-based H2Global Foundation was established in 2021. The funding instrument consists of a double auction model that compensates for the difference between purchase and sale prices through time-limited federal grants.

The funding program is intended to provide the necessary investment security for the participating market participants during the market introduction phase and advance the market ramp-up of green hydrogen. The H2Global award process is a global bidding procedure for the purchase of hydrogen and its derivatives.

First Auction: Milestone for German-Egyptian Cooperation

The pilot auction of H2Global started in December 2022. In July 2024, the foundation announced the result of its first tender: The Emirati-Dutch consortium Fertiglobe had received the contract and thus emerged as the sole winner from the auction. As a result, almost 400 of the total 900 million euros flow to the fertilizer manufacturer. With the help of the funding, Fertiglobe aims to deliver up to 80,000 tons of green ammonia to Europe annually from 2027. Production is to take place at the existing facility in Ain Sokhna on the Red Sea, approximately 150 km from Cairo. The production price is 811 euros per ton of ammonia, which corresponds to a hydrogen price of less than 4.50 euros per kilogram. This pricing significantly undercuts current market estimates and makes the Egyptian offer one of the most cost-effective worldwide.

Specialized tanker for ammonia transport between Egypt and Europe. (© Negro Elkha- stock.adobe.com)

Egyptian Hydrogen Projects

The hydrogen project selected by H2Global is among the most prominent projects of the North African country. The Fertiglobe project has an electrolysis capacity of 100 MW and a production capacity of up to 15,000 tons of green hydrogen annually. This hydrogen is to be used for the production of green ammonia.

In addition to the Fertiglobe project, the Egyptian government has signed seven memoranda of understanding with international developers to establish further hydrogen projects in the Suez Canal economic zone. The country aims to develop itself into a major hydrogen hub with these projects and several billion-dollar investments.

Examples of planned projects:

Scatec consortium "Egypt Green Hydrogen": The production capacity is initially to be 1 million tons of green hydrogen per year and later grow to 3 million tons. The project is designed to deliver up to 15,000 tons of green hydrogen as raw material for the production of up to 90,000 tons of green ammonia per year.

Fortescue Future Industries (FFI) mega project: The Australian company FFI has received exclusive land rights for a 7.6 GW hydrogen project. The planned hydrogen and ammonia production complex is to be supplied by 9.2 GW of wind and solar capacity.

Pilot plant in Ain Sokhna: As a preliminary stage for the large plants, a 100 MW electrolyzer for the production of green ammonia is to be realized in Ain Sokhna. The pilot plant serves as a test run for the planned large plants and is intended to provide important experience for scaling up.

Projects for green hydrogen and green ammonia benefit from Egypt's geographical advantages: optimal solar irradiation, available areas, and the strategic location between Europe and the Middle East. Egypt's plan to become a regional center for green hydrogen production is part of a comprehensive plan for developing green energy resources that was decided in 2015 at COP21 in Paris.

Developments Since the H2Global Auction

The German government has recognized the importance of the partnership: The planned imports correspond to more than ten percent of annual German ammonia production. This makes Egypt a strategically important energy partner for Germany.

In February 2025, H2Global already started the second auction with a volume of 2.5 billion euros. This expansion shows the necessity to quickly scale up import capacities.

Future Perspective: Foundation for the Energy Transition

By 2030, Egypt could develop into one of the leading hydrogen exporters worldwide, while Germany aims to diversify its import dependency and strengthen energy security. The now initiated German-Egyptian hydrogen partnership stands at the beginning of a possible long-term energy partnership.

The successful implementation of the first projects in Egypt will be crucial for further scaling. The first deliveries of sustainable hydrogen derivatives to Europe are planned for 2027.

In the long term, the partnership could become a model for similar cooperations with other North African countries. The combination of favorable production costs and strategic location makes the region a key area for Europe's hydrogen imports.

Sources:

Bundesministerium für Wirtschaft und Klimaschutz

State Information Service - Your Gateway to Egypt

H2Global

Germany Trade & Invest