Economic and technical analysis of hydrogen production and transport: a case study of Egypt

The analysis of transport and infrastructure costs for various hydrogen carriers reveals significant variability based on carrier type and transport distance. This section provides a detailed examination of these costs. Liquid Hydrogen (LH2) exhibits transport costs ranging from $0.084 to $0.345 USD/kg per 100 km. These costs increase notably with longer distances, such as those from France (3000 km). In contrast, Ammonia (NH3) presents a more economical alternative, with transport costs ranging from $0.042 to $0.1725 USD/kg. The Liquid Organic Hydrogen Carrier (LOHC) offers the lowest transport costs, ranging from $0.025 to $0.1035 USD/kg. Onshore pipeline transport costs vary from $0.215 to $0.885 USD/kg, while offshore pipelines are the most expensive, reaching up to $1.105 USD/kg. Methanol is noted for its cost-effectiveness, with transport costs ranging from $0.015 to $0.063 USD/kg. Infrastructure costs also show considerable variability. LOHC infrastructure is the most expensive, ranging from $1.617 to $3.685 USD/kg. In comparison, infrastructure costs for LH2 and NH3 are more moderate, with LH2 ranging from $1.06 to $2.47 USD/kg and NH3 from $1.111 to $3.080 USD/kg. Onshore pipeline infrastructure costs are significant, ranging from $1.298 to $3.806 USD/kg. Offshore pipeline infrastructure and methanol infrastructure are relatively less costly, with methanol being the least expensive at $0.0 to $0.605 USD/kg. For consistency in international comparisons and financial assessments, all calculations are presented in USD. These findings underscore the critical importance of considering both transport and infrastructure costs in hydrogen logistics planning. All analyses are illustrated in Figs. 23 and 24.

Hydrogen transport cost range.

Hydrogen infrastructure cost range.

Case study: Egypt

Focusing on Egypt, the country’s strategic position enhances its role as both a hydrogen importer and exporter. For transport, Liquid Hydrogen (LH2) is a viable option with costs ranging from $0.084 to $0.345 USD/kg per 100 km. Egypt’s proximity to key import partners, such as Italy (2300 km) and Saudi Arabia (1200 km), makes these costs competitive. Additionally, Egypt’s geographic advantage facilitates efficient hydrogen exports to neighboring countries like Libya (1000 km) and Tunisia (2200 km). Ammonia (NH3) and Methanol emerge as particularly cost-effective carriers for both import and export. NH3 transport costs range from $0.042 to $0.1725, while Methanol costs between $0.015 and $0.063. These carriers are well-suited for long-distance trade, including with suppliers such as France (3000 km), and for exporting hydrogen to European markets. The competitive transport costs associated with NH3 and Methanol strengthen Egypt’s position in the global hydrogen market. Strategic infrastructure investments are critical for optimizing Egypt’s hydrogen trade potential. Although LOHC infrastructure is the most costly, ranging from $1.617 to $3.685 USD/kg, its lower transport costs could justify the investment over time. LH2 and NH3 infrastructures offer a balance between transport and setup costs, with LH2 ranging from $1.06 to $2.47 and NH3 from $1.111 to $3.080. Onshore pipeline infrastructure, despite its significant costs (ranging from $1.298 to $3.806), provides a scalable solution for regional imports and exports, particularly with neighboring countries. Transportation costs in detail are shown in Fig. 25. Moreover, Fig. 26 presents the Levelized Supply Costs of Hydrogen (LSCOHWACC) and transport costs associated with hydrogen utilization in Egypt, depicted in two distinct plots for imports and exports. The analysis reveals that importing hydrogen from nearby countries, such as Saudi Arabia and Libya, incurs lower costs due to shorter transport distances, making it economically viable. Conversely, exporting hydrogen to regions like France and the UAE involves higher costs, attributed to longer distances and associated logistics. This differentiation highlights Egypt’s strategic advantage in regional hydrogen trade, emphasizing the need for focused infrastructure investments and efficient carrier selection to optimize trade benefits and reinforce its position in the global hydrogen market. In conclusion, Egypt’s strategic location and the cost-effectiveness of hydrogen carriers like NH3 and Methanol boost its competitive position in the global market. By focusing on these cost-effective carriers and investing in necessary infrastructure, Egypt can optimize its hydrogen import and export activities, enhancing economic growth and energy security.

Comparative analysis of hydrogen transport costs by carrier and distance.

Levelized supply costs and transportation costs for hydrogen utilization in Egypt.

Environmental and economic impact of renewable energy sources on hydrogen production

Following the detailed case study of Egypt, it is crucial to understand the broader environmental and economic impacts of renewable energy sources used for hydrogen production. This analysis provides insights into how different renewable energy technologies affect hydrogen production and the overall sustainability of the energy system.

The potential for significant reductions in carbon emissions when using photovoltaic (PV) and wind energy for hydrogen production underscores substantial environmental benefits. For instance, the use of PV in Saudi Arabia can reduce carbon emissions by up to 1500 kg CO\(_2\) per MWh compared to conventional fossil fuels, while wind energy in Libya can achieve a reduction of 1200 kg CO\(_2\) per MWh. These reductions highlight the environmental advantages of renewable energy for hydrogen production, emphasizing the potential for lower carbon footprints and enhanced sustainability (shown in Fig. 27).

A comprehensive lifecycle cost analysis, including both capital expenditures (CapEx) and operational expenditures (OpEx) for PV and wind systems, offers valuable insights into the financial implications of these energy sources. For example, in Egypt, CapEx for PV systems constitutes 25% of total expenses, with OpEx accounting for 24%. Similarly, in Tunisia, both CapEx and OpEx for PV systems are around 25%. This analysis reveals that while initial capital expenditures might be comparable, ongoing operational costs can vary significantly, impacting the overall cost-effectiveness of hydrogen production systems. Comparing these costs enables stakeholders to better understand the financial viability of using PV or wind energy for hydrogen production in the long term (Fig. 28). The results of this study provide a comparative analysis of Egypt’s potential for competitive hydrogen production in relation to a representative sample of existing literature. While the Levelized Cost of Hydrogen (LCOH) in Egypt aligns with ranges reported in studies such as Esily et al.²², this research advances the discussion by dynamically integrating Weighted Average Cost of Capital (WACC) and imputed interest rates (IIR) into the analysis, addressing a critical gap in studies that rely on static assumptions.

Transport costs, a significant factor in the Levelized Supply Costs of Hydrogen (LSCOH), were evaluated for key scenarios, such as exports to Europe and regional trade with Libya and Saudi Arabia. These findings align broadly with trends identified in the literature, such as Robles et al.³, but our study incorporates a holistic framework that links transport logistics with production costs for a more comprehensive evaluation. The analysis also highlights regional variations, with Saudi Arabia and the UAE achieving 10–15% lower LCOH due to more favorable financial conditions. This finding is consistent with the broader literature, including Frieden and Leker⁷, and emphasizes the importance of financial de-risking strategies to enhance Egypt’s competitiveness. Hybrid renewable energy systems demonstrate substantial efficiency, achieving approximately 20% cost reductions in LCOH compared to single-source systems. These results support conclusions by studies like Nasser et al.²³, while extending the discussion to include export scalability and regional implications. Environmentally, the study finds that renewable-based hydrogen production in Egypt reduces CO\(_2\) emissions by up to 85% compared to fossil fuel methods. While this mirrors findings in studies such as Rasul et al.¹⁵, the addition of region-specific emissions factors strengthens the evaluation’s precision and relevance. Table 7 summarizes the key comparisons and contributions of this study in relation to the literature:

Carbon Emissions reduction potential.

Factors contributing to Egypt’s competitive hydrogen production costs

Egypt’s ability to achieve a low hydrogen production cost of $4.5/kg is attributed to a synergistic combination of natural resources, technological advancements, and policy initiatives. High solar irradiance averaging 2100 kWh/m²/year and consistent wind speeds of approximately 6.5 m/s form the foundation of its renewable energy capabilities. These factors significantly lower the cost of electricity generation, which constitutes a major component of hydrogen production expenses. The adoption of hybrid renewable energy systems, integrating photovoltaic (PV) and wind technologies, further enhances efficiency. These systems reduce the Levelized Cost of Hydrogen (LCOH) by up to 20% compared to single-source systems, achieving annual yields of 3000 kWh/kWp. This optimization ensures consistent energy supply and reliability, critical for maintaining low production costs. Advancements in electrolyzer technology contribute to minimizing energy losses and improving the overall efficiency of hydrogen production. Coupled with Egypt’s proximity to major markets such as Europe and the MENA region, transport costs are effectively managed. Efficient carriers like ammonia (NH₃) and methanol provide scalable and cost-effective logistics solutions, with NH₃ transport costs ranging from $1.06 to $3.08/kg and methanol from $0.015 to $0.063/kg for regional and international trade. Policy support plays a crucial role in fostering investment in renewable energy infrastructure. Incentives such as subsidies and tax breaks reduce the financial burden on investors, encouraging the development of large-scale projects that benefit from economies of scale. These policy measures align with Egypt’s strategic goals to position itself as a global hydrogen leader.

Table 8 highlights the interplay of natural, technological, and policy-driven factors that contribute to Egypt’s competitive hydrogen production costs. Renewable energy resources and hybrid systems provide the most significant reductions, emphasizing the importance of optimizing resource utilization. Policy frameworks and technological advancements add complementary advantages, ensuring that Egypt remains a competitive player in the global hydrogen market.

Environmental impacts of hydrogen production in Egypt

This study highlights the significant environmental advantages of hydrogen production in Egypt, driven by the integration of renewable energy sources such as photovoltaic (PV) and wind power. By utilizing these technologies, hydrogen production achieves a reduction in carbon emissions of up to 85% compared to conventional fossil fuel methods. For instance, photovoltaic energy systems in Saudi Arabia can reduce emissions by 1500 kg CO₂ per MWh, while wind energy in Libya achieves reductions of 1200 kg CO₂ per MWh. For Egypt, the integration of PV and wind systems aligns closely with these trends, offering substantial environmental benefits by capitalizing on its abundant renewable energy resources. Specifically, Egypt’s PV systems alone can achieve similar reductions, reducing CO₂ emissions by approximately 1400 kg per MWh, reflecting its high solar irradiance levels. In addition to emission reductions, a comprehensive lifecycle analysis reveals the financial and environmental sustainability of renewable-based hydrogen production. For example, in Egypt, capital expenditures (CapEx) for PV systems constitute 25% of total costs, with operational expenditures (OpEx) contributing 24%. Similar cost distributions are observed for wind systems in Tunisia, emphasizing the cost-effectiveness of renewable energy as a foundation for hydrogen production. By focusing on lifecycle efficiency, this study demonstrates the potential to optimize hydrogen production systems while minimizing environmental impacts. Moreover, hybrid systems combining PV and wind power in Egypt achieve a 20% reduction in the Levelized Cost of Hydrogen (LCOH) compared to single-source systems, further highlighting their efficiency. Transport costs also contribute significantly to the overall environmental footprint of hydrogen production and trade. By leveraging cost-effective carriers such as ammonia (NH₃) and methanol, Egypt can further enhance its environmental sustainability. For example, NH₃ transport costs range from $0.042 to $0.1725 per km, while methanol costs range between $0.015 and $0.063 per km. These carriers offer efficient and scalable solutions for regional and international trade, underscoring their role in reducing the carbon intensity of hydrogen logistics. Additionally, Egypt’s transport costs for NH₃ exports to Europe range from $1.111 to $3.08 per kg, demonstrating the feasibility of long-distance hydrogen trade with minimal environmental impact. Moreover, water resource management is a critical aspect of sustainable hydrogen production, particularly in arid regions like Egypt. Advanced strategies, such as desalination and wastewater reuse, can mitigate water scarcity challenges associated with electrolysis. These solutions can reduce freshwater dependency by up to 30%, ensuring that production processes remain both environmentally and economically viable, further reinforcing Egypt’s position as a leader in sustainable hydrogen production. Despite the significant environmental benefits, potential negative impacts also need to be considered. The environmental cost of large-scale renewable energy projects, such as land use for solar and wind farms, could lead to ecosystem disturbances and habitat disruption, especially in regions with sensitive wildlife. Additionally, while the desalination process reduces water dependency, it requires significant energy inputs, which could increase the carbon footprint if not sourced from renewable energy. Therefore, while Egypt’s renewable hydrogen production is highly sustainable, careful planning and resource management are crucial to mitigating these potential environmental impacts. By addressing these environmental dimensions, this study not only quantifies the carbon and cost benefits of renewable-based hydrogen production but also emphasizes the importance of strategic resource management. The findings contribute to a holistic understanding of hydrogen’s role in global energy transitions, offering actionable insights for policymakers and industry stakeholders aiming to align hydrogen strategies with sustainability goals.

Implications and challenges for Egypt’s hydrogen economy

This study highlights Egypt’s significant potential in the hydrogen economy, driven by its competitive hydrogen production costs ($4.5/kg) and abundant renewable energy resources. These advantages position Egypt as a key player in the global hydrogen market, with dual opportunities to meet domestic demand and expand exports. The Levelized Supply Cost of Hydrogen (LSCOH) for Egypt demonstrates its competitiveness, particularly when leveraging cost-effective carriers such as ammonia (NH3) and methanol. However, achieving this potential requires strategic investments in transport infrastructure and policy frameworks. Table 9 provides a comparative analysis of key factors influencing hydrogen production and trade across selected countries.

The table illustrates Egypt’s competitive position, with production costs significantly lower than those in European countries like France and Italy ($6.5–$7.0/kg). While Egypt benefits from high renewable energy potential, its infrastructure readiness is rated as moderate, highlighting the need for investments in transport networks, such as hydrogen pipelines and shipping terminals, to fully realize its export potential. By contrast, countries like Saudi Arabia and the UAE demonstrate higher infrastructure readiness, enabling them to capitalize on their renewable resources more effectively. Egypt’s transport costs, particularly for NH3 and LOHC carriers, are competitive for regional trade with countries like Libya and Saudi Arabia but face higher costs for exports to Europe due to longer distances. This underscores the importance of carrier selection and optimized logistics for reducing LSCOH and enhancing trade competitiveness. For example, while LOHC infrastructure incurs higher initial costs ($1.617–$3.685/kg), its lower transport costs over long distances could justify the investment in the long term. Despite these opportunities, challenges remain. Key barriers include gaps in transport infrastructure, financial risks associated with large-scale projects, and water resource constraints in arid regions. Addressing these challenges requires strategic public-private partnerships, innovative financial instruments like government-backed guarantees, and investments in advanced water resource management solutions, such as desalination and wastewater reuse. By addressing these challenges and capitalizing on its strengths, Egypt can solidify its role as a leader in the global hydrogen economy. Policymakers should focus on creating supportive frameworks, such as subsidies for renewable energy projects, tax incentives, and streamlined permitting processes, to attract investment and accelerate infrastructure development. These measures will enable Egypt to transition from a regional player to a global hub for hydrogen production and trade, contributing to sustainable energy transitions worldwide.

Geopolitical implications and strategic risks in Egypt’s hydrogen economy

Egypt’s strategic geographic location and abundant renewable energy resources position it as a key player in the global hydrogen economy. Proximity to Europe, access to the Suez Canal, and low hydrogen production costs ($4.5/kg) underscore its potential to meet domestic demand and expand exports. Efficient transport carriers like ammonia (NH₃) and methanol provide cost-effective options for trade, with NH₃ transport costs ranging from $1.06 to $3.08/kg and methanol transport costs between $0.015 and $0.063/kg for regional and international markets. These advantages highlight Egypt’s potential to become a leading hydrogen exporter to Europe and the MENA region. Despite these opportunities, Egypt faces significant geopolitical and strategic risks. Political instability in the MENA region and high Weighted Average Cost of Capital (WACC) ($7–$8%) may deter investments, while gaps in transport infrastructure, including pipelines and port facilities, constrain scalability. Variability in renewable energy generation and water resource scarcity pose additional challenges, particularly for electrolysis-based hydrogen production. Table 10 summarizes the key opportunities and risks shaping Egypt’s hydrogen economy.

Strategic investments are essential to mitigate these challenges and capitalize on Egypt’s strengths. Public-private partnerships can drive infrastructure development, while innovative financial instruments, such as government-backed guarantees and tax incentives, can attract foreign investments. Selecting cost-effective carriers like NH₃ and methanol for long-distance trade will further optimize Egypt’s Levelized Supply Cost of Hydrogen (LSCOH) and enhance its competitiveness. Environmental sustainability measures, including the integration of desalination and wastewater reuse, can address water scarcity challenges. Additionally, regional collaboration to harmonize energy policies and standards will reduce trade barriers and foster cross-border synergies, strengthening Egypt’s position as a hydrogen export hub. By addressing these risks and leveraging its strategic advantages, Egypt can transition from a regional player to a global leader in the hydrogen economy, contributing to global energy transitions and enhancing its geopolitical influence.

Risks and uncertainties affecting Egypt’s hydrogen production and export

Several risks and uncertainties could affect the scalability and viability of Egypt’s hydrogen production and export potential. These risks are multifaceted, encompassing economic, political, technical, and infrastructural challenges that could hinder Egypt’s ability to become a global hydrogen leader. Market Risks: Fluctuations in global energy prices, particularly those related to natural gas and oil, could impact the competitiveness of hydrogen relative to conventional fuels. Hydrogen, while an attractive alternative due to its environmental benefits, must remain cost-competitive with fossil fuels, particularly in the face of price volatility. Additionally, the uncertainty surrounding global hydrogen demand-driven by shifts in international policies, technological advancements, and broader economic trends-adds a layer of complexity. As the green hydrogen market continues to evolve, projections of future demand remain speculative, making it difficult to forecast long-term market stability. Political and Geopolitical Risks: Egypt, located in the Middle East and North Africa (MENA) region, faces political instability risks that could disrupt energy supply chains, deter investments, and delay the development of critical hydrogen infrastructure. Regulatory and policy uncertainties compound this risk, as Egypt’s renewable energy policies are still evolving. The lack of a consistent and long-term regulatory framework could discourage investment, especially given the competition from other MENA countries like Saudi Arabia and the UAE, which are also pursuing ambitious hydrogen export strategies. Technical Risks: The success of hydrogen production through electrolysis is highly dependent on continued technological advancements in electrolysis efficiency and cost reduction. Any delays or failures in improving these technologies could raise production costs, undermining Egypt’s competitive edge in the global market. Additionally, hydrogen storage and transportation-especially over long distances-pose significant technical challenges. While ammonia (NH₃) and methanol offer promising solutions, the infrastructure needed to support large-scale hydrogen transportation, including pipelines and storage facilities, is still underdeveloped. Infrastructure Risks: While Egypt has substantial renewable energy resources, the country lacks the necessary infrastructure for large-scale hydrogen production, storage, and transportation. Significant investments in electrolyzers, pipelines, and port facilities are needed to scale up hydrogen production and meet export demands. Furthermore, integrating large-scale renewable energy systems with the electricity grid poses additional challenges, particularly during periods of high renewable generation when grid stability may be compromised. Environmental Risks: Water is a critical resource for hydrogen production through electrolysis. Egypt, with its arid climate and limited freshwater resources, faces a significant challenge in ensuring sustainable water use for hydrogen production. While desalination and wastewater reuse offer potential solutions, these processes require significant energy inputs, which could increase the carbon footprint of hydrogen production if not sourced from renewable energy. Additionally, large-scale renewable energy projects, such as solar and wind farms, may have localized environmental impacts, including land use changes that could disrupt ecosystems and biodiversity. By strategically investing in infrastructure, establishing clear regulatory frameworks, and fostering technological advancements, Egypt can overcome these challenges and solidify its position as a global leader in hydrogen production. This study provides the foundational insights necessary to guide these efforts, ultimately enabling Egypt to harness its renewable energy potential and influence the future of the global hydrogen market.

Policy and technological trends in hydrogen production and demand

To understand the evolving dynamics of the energy sector and its future trajectory, we analyze projected trends in decentralization and automation technologies. Decentralization refers to the shift towards localized and self-sufficient energy systems, allowing for greater flexibility and resilience. Automation involves the integration of advanced technologies to streamline operations and enhance efficiency. Figure 29 illustrates these trends, highlighting the anticipated developments from 2024 to 2050. The growing emphasis on decentralized energy systems indicates a shift towards more localized and self-sufficient energy solutions. This trend reflects an increasing preference for resilience and adaptability within energy infrastructure, enabling systems to be more responsive to local demands and conditions. As energy systems become more decentralized, they offer greater flexibility and enhance overall system reliability. Simultaneously, the trend towards increased automation technologies highlights a significant rise in efficiency and cost reduction across the sector. Automation technologies streamline operations, minimize human error, and lower operational costs, contributing to a more efficient and effective energy sector. This trend aligns with broader goals of enhancing productivity and sustainability. To further delve into the complexities of this research, we simulate various policy scenarios to assess their influence on hydrogen production, focusing on how these policies affect investment levels and technological adoption across different countries. This approach enables us to understand the nuances of policy impacts and their implications for advancing hydrogen technologies globally. The scenarios included projections of economic growth, energy policies, technological advancements in hydrogen production, and transportation infrastructure developments. Key factors such as historical data, current hydrogen consumption rates, expected adoption of hydrogen technologies, and international energy agreements were adjusted to reflect realistic future trends. Figure 30 illustrates the impact of three distinct policies-Policy A, Policy B, and Policy C-on investment and technological adoption in the energy sector:

• Policy A is characterized by substantial support for renewable energy projects and provides significant tax incentives for investments in green technologies. This policy stands out with the highest impact scores across both investment and technological adoption categories. The extensive support and incentives offered by Policy A encourage considerable growth and innovation within the sector. This effectiveness is evident in its ability to drive substantial advancements and investments, underscoring its role as a powerful tool for promoting sector development and accelerating the transition towards more sustainable energy solutions.

• Policy B includes moderate support measures and regulations aimed at improving efficiency and increasing the use of renewable energy. Although it does not provide the extensive incentives seen with Policy A, it still offers some level of encouragement for technological adoption and investment. Consequently, Policy B’s impact on investment is lower than that of Policy A. While Policy B contributes to some degree of technological advancement, it does not achieve the same level of influence as Policy A. This suggests that while Policy B is beneficial, it is less effective in catalyzing significant sector-wide changes and innovations.

• Policy C represents minimal government intervention with limited incentives or regulations affecting the energy sector. The data shows that Policy C has the lowest impact scores for both investment and technological adoption. This reflects its relatively weak influence on driving sector changes and highlights its insufficient role in fostering growth and innovation. The limited support and minimal intervention under Policy C result in a less dynamic response from the sector, illustrating that without robust policy frameworks, the rate of advancement and investment in the energy sector is considerably constrained.

To effectively advance hydrogen production, countries should consider adopting policies similar to Policy A, which provides substantial support and incentives. This approach aligns well with the ambitious goals of scaling up hydrogen technology and infrastructure. While Policy B offers moderate benefits and can still foster development, Policy C’s limited impact makes it less suitable for driving significant progress in hydrogen production. Adopting a policy with robust support and incentives is crucial for countries aiming to establish themselves as leaders in the hydrogen economy and achieve substantial advancements in hydrogen technology.

The projected hydrogen demand for various countries from 2024 to 2050 was formulated by running a series of MATLAB simulations that incorporated various scenarios and factors. These scenarios included projections of economic growth, energy policies, technological advancements in hydrogen production, and transportation infrastructure developments. Key factors such as historical data, current hydrogen consumption rates, expected adoption of hydrogen technologies, and international energy agreements were adjusted to reflect realistic future trends. Figure 31 illustrates the projected hydrogen demand for various countries from 2024 to 2050. France shows the highest projected hydrogen demand, increasing from 1.0 million tons in 2024 to 9.5 million tons by 2050. Italy follows closely, with a rise from 0.8 million tons to 8.0 million tons over the same period. Saudi Arabia and Egypt exhibit similar growth trends, with Saudi Arabia having slightly higher demand than Egypt in the later years. The UAE also shows substantial growth, with demand rising from 0.5 million tons in 2024 to 6.0 million tons by 2050. Libya and Jordan have lower demand projections, starting at 0.4 and 0.3 million tons, respectively, and growing to 5.5 and 4.8 million tons by 2050.

Given this analysis of demand, Egypt is well-positioned to either import or export hydrogen. The country’s growing hydrogen demand indicates a potential need for imports to meet domestic needs. Conversely, with the right investments in hydrogen production infrastructure, Egypt could also become a significant exporter of hydrogen, capitalizing on its strategic location and energy resources. This dual potential highlights Egypt’s versatile role in the future hydrogen economy, balancing between satisfying its own energy needs and supplying hydrogen to other countries.The analysis of policy and technological trends underscores the significant role of robust policy frameworks and technological advancements in advancing the hydrogen economy. Tables 11 and 12 summarize the hydrogen production costs across various countries and the comparative impacts of different policies on investment and technological adoption. These tables provide a detailed breakdown of regional differences, highlighting Egypt’s competitive position and the significance of robust policy frameworks for advancing hydrogen technologies. Building on these insights, this section outlines specific policy implications necessary to overcome identified barriers and realize the potential of hydrogen production and trade.

Projected trends in decentralization and automation technologies from 2024 to 2050.

Impact of policies on investment and technological adoption in the energy sector.

Projected hydrogen demand for various countries from 2024 to 2050.

The hydrogen economy is shaped by policies and regional dynamics that influence investment, technological adoption, and production costs. Globally, robust policies like Policy A, which include tax incentives and direct funding, significantly drive investment and technological adoption. Such frameworks, increasingly adopted in regions like the EU and MENA countries, align with goals for rapid sectoral growth and innovation. Moderate policies like Policy B, often adopted by emerging markets, provide some support but lack the transformational impact of Policy A. Minimal intervention policies like Policy C, observed in regions with limited renewable energy priorities, highlight the risks of slow adoption and missed opportunities for leadership. Egypt stands out as a competitive player in the hydrogen economy due to its abundant renewable resources, strategic location, and evolving policies. With production costs of $4.5/kg, Egypt rivals renewable-rich nations like Saudi Arabia and the UAE, outperforming European countries like France and Italy, which face higher costs due to energy imports and infrastructure challenges. Its solar irradiance ( 2100 kWh/m²/year) and wind speeds ( 6.5 m/s) place it among global leaders in renewable potential. However, Egypt’s infrastructure, including electrolyzer capacity and transport networks, lags behind Europe’s advanced hydrogen pipelines and export facilities. Despite this, its proximity to Europe and the Suez Canal offers significant logistical advantages for hydrogen exports, positioning it as a natural hub. Egypt’s policy framework is evolving, with growing support for renewable projects and collaborations with Europe, but it requires more robust incentives and regulatory clarity to compete with the EU’s aggressive policies and the proactive investments of Middle Eastern leaders. Key challenges such as higher Weighted Average Cost of Capital (WACC), infrastructure gaps, and water scarcity constrain Egypt’s hydrogen scalability. Addressing these issues through strategic investments, de-risking measures, and robust policies akin to Policy A would enable Egypt to unlock its full potential as a major global hydrogen producer and exporter.

Policy implications

Addressing financial, logistical, and environmental challenges in hydrogen production and trade requires a comprehensive policy framework. Egypt, despite its competitive potential, faces high Weighted Average Cost of Capital (WACC), infrastructure gaps, and limited water access for electrolysis. Reducing WACC through financial incentives like subsidies, tax credits, and low-interest loans can de-risk investments and attract private sector participation. Streamlining regulations and harmonizing international standards will eliminate bottlenecks, accelerate permitting, and enhance cross-border trade.

Infrastructure development is key to reducing hydrogen supply costs and boosting trade competitiveness. Egypt lags in transport infrastructure, necessitating investments in pipelines, shipping terminals, and multimodal logistics hubs. International agreements standardizing hydrogen carriers like liquid hydrogen (LH2) and ammonia (NH3) can further lower transport costs and improve trade efficiency. Leveraging its strategic location and abundant renewables, Egypt can establish itself as a regional hydrogen hub by integrating renewable energy parks with dedicated hydrogen production facilities. Innovation must be central to hydrogen policy, with R&D investments in electrolyzer efficiency, advanced storage materials, and renewable energy integration. Collaborating with international research institutions can accelerate technology adoption and best practices. Regional partnerships, particularly within MENA and with European importers, can optimize resources, scale production, and expand export markets. Sustainability should underpin all hydrogen policies. Mandating renewable energy use in hydrogen production, implementing carbon pricing, and conducting environmental impact assessments will ensure long-term viability. Addressing water scarcity through desalination and water reuse can enhance electrolysis feasibility in arid regions. A national hydrogen strategy is crucial to scaling production, building infrastructure, and fostering trade while addressing local challenges like grid limitations and water scarcity. Aligning with global market trends and prioritizing local job creation and technical skill development will ensure a sustainable industrial base. By adopting these measures, Egypt can solidify its role as a global hydrogen leader, supporting the energy transition and a resilient hydrogen economy.