COP27: EU and Egypt step up cooperation on clean energy transition

Brussels, 16 November 2022

At COP27 in Sharm El-Sheikh, today, the EU and Egypt have taken a further step to boost their long-term cooperation on the clean energy transition by establishing a strategic partnership on renewable hydrogen and preparing the ground for a just energy transition in Egypt. The European Commission, represented by Executive Vice-President Timmermans and Commissioner Simson, signed a bilateral Memorandum of Understanding (MoU) on a strategic partnership on renewable hydrogen with Egypt’s Minister for Petroleum Tarek El Molla and Minister for Electricity and Renewable Energy Mohammed Shaker El-Markabi. They also signed a Joint Statement with the European Bank for Reconstruction and Development (EBRD) and the Egyptian Minister of International Cooperation, Rania El Mashat, announcing the Commission’s contribution of up to €35 million in support of Egypt’s Energy Wealth Initiative.

A strategic partnership on renewable hydrogen

The MoU signature today follows the Joint Statement issued by President von der Leyen and President El-Sisi last week at COP27. It is a key energy partnership for the EU and it will serve as a central block in building an EU-Mediterranean Renewable Hydrogen Partnership. Both parties view renewable hydrogen as a key contributor to reducing emissions and ensuring energy security, while representing an opportunity for industrial cooperation, sustainable economic growth and job creation.

The MoU will serve as a framework to support long-term conditions for the development of a renewable hydrogen industry and trade across the EU and Egypt, including infrastructure and financing. It will support the EU’s ambition of reaching 20 million tonnes of renewable hydrogen consumption in 2030, as outlined in the REPowerEU plan, and therefore help reduce dependency on Russian fossil fuels. The MoU will also facilitate investment in renewables and boost the decarbonisation process in Egypt. More broadly, it will contribute to the establishment of a framework for a global rules-based market for hydrogen-based solutions, including harmonised safety and environmental standards. Its implementation will be led by an EU-Egypt Hydrogen Coordination Group and involve a Business Forum with representatives from industry, regulators, financial institutions and experts.

A just energy transition in Egypt

The Energy Wealth Initiative was launched by the Egyptian government and the EBRD to implement the energy pillar of the Nexus Water, Food and Energy Initiative designed to accelerate implementation of the country’s new climate change strategy for 2050 launched in May 2022. The energy initiative aims to shut down 5,000 MW of existing and inefficient gas-based power generation capacity (equivalent to around 5% of Egypt total electricity supply) and facilitate investments to support the installation of 10,000 MW of new renewable energy capacity. As Egypt is seeking international partners to support grid infrastructure investments, the retirement and decommissioning of existing assets, supply chain development and measures to ensure a just transition, today, the Commission has announced its intention to contribute through a €35 million grant for this initiative to the EBRD under the EU’s Economic and Investment Plan for the Southern Neighbourhood.

Background

The EU and Egypt have been strengthening their energy and climate cooperation over the past years. They are united by their determination to combat climate change and environmental degradation while fostering sustainable development, energy security and a balanced and just green transition. They are both committed to meet the goals of the Paris Agreement and keep a 1.5 degrees Celsius limit on temperature rise within reach.

Today’s signatures at COP27 mark concrete steps in the ongoing EU-Egypt cooperation on the green transition, in line with the EU-Egypt Association Agreement, the EU Global Gateway, the EU Agenda for the Mediterranean and its Economic and Investment Plan, and the EU-Egypt Partnership Priorities. They also follow the joint statement on climate, energy and the green transition issued by European Commission President Ursula von der Leyen and President of the Arab Republic of Egypt, Abdel-Fattah El-Sisi earlier this year.

This MoU will help the EU to replace hydrogen produced using natural gas and to increase the direct use of hydrogen as an industry feedstock and energy source, thus lowering emissions. The EU currently consumes around 8 million tonnes of hydrogen per year, 98% of which is derived from natural gas. Under the REPowerEU plan, the EU has set an ambitious target to reach domestic EU production of 10 million tonnes (mt) of renewable hydrogen and to import another 10 mt by 2030. In terms of security of supply, this is aimed at reducing EU dependence on imports of Russian gas. It is estimated that this could substitute 27 billion cubic metres (bcm) of imported Russian natural gas, 4.7 bcm of imported Russian oil, and 156 kT of coking coal imports.

Today’s signature of the MoU on hydrogen in the margins of COP27 follows the signature of the EU-Namibia MoU on raw materials and renewable hydrogen and the EU-Kazakhstan MoU relating to sustainable raw materials, batteries and renewable hydrogen last week.

For more information

EU-Egypt Memorandum of Understanding on a Strategic Partnership on renewable hydrogen

EU, Egypt, EBRD Joint Statement on the Nexus of Water, Food and Energy

Quote

This first-of-its-kind agreement on renewable hydrogen with Egypt shows that the EU is leading the work on establishing a framework for a global hydrogen economy. Together with reliable energy partners, like Egypt, we will establish a secure and competitive renewable hydrogen supply chain. We also need to make sure our partners are well equipped to grasp the opportunities inherent in the green transition, while ensuring a fair transition to their citizens. This is why our contribution to Egypt’s Energy Wealth Initiative, coming in the middle of COP27, is so important.

Frans Timmermans, Executive Vice-President for the European Green Deal – 16/11/2022

Source – EU Commission

“Check against delivery”

Executive Vice-President Timmermans

Your Excellencies, Ladies and Gentlemen,

I am really glad to see that we are giving a new extra momentum our energy cooperation. I have been looking forward to this for a long time. We have agreed with the Egyptian authorities this should land during the COP meetings this week and here we are.

I believe it is of extreme importance. The world is changing fast. The challenges are only increasing. If we want to do what we have promised in Glasgow, and that is to still have a shot at the 1.5 degrees, we need to rapidly decarbonise our societies and our economies. But we don’t want to do that by de-industrialising.

We want to give our industry new momentum and to do that electricity is very important, but electricity is not enough. We will need green hydrogen to make that happen. That is the context within which we work. There will be a rapidly increasing market for green hydrogen and the challenge we face together is whether we can ramp up the production of green hydrogen in sync with the demand of green hydrogen.

I believe Egypt is ideally placed because I believe this development will take place in the wider Mediterranean area. I want to include Africa on that but it is the wider Mediterranean area. If you also look at the natural circumstances Egypt is blessed with you have unlimited potential for solar and wind energy. Potential that goes way beyond your own needs in terms of electricity, which means that that potential can be used to make green hydrogen that can be a huge part of your own sustainable industrialisation but also make you part of a new global market for green hydrogen.

I am really excited that the European Union is part of this development. We will see so many benefits for Egypt but for both of us coming out of this. But we need to crack a couple of nuts and the most important one is how do we ramp up this production fast enough to meet demand. The rest of the world is not sitting stone, there is also developing these things.

We need standards. We need agreement on how we develop these standards. We need also to unleash the financing that is necessary for this and the public authorities need to create the right circumstances for private finances to be able to come in. This is everything we are doing now.

In Europe we will be increasing our need of renewable hydrogen up to 20 Mt by 2030. That is quite a lot. 10Mt we hope to be able to produce ourselves – so that is already a market – plus an import of 10Mt renewable hydrogen coming from elsewhere. Also because of the proximity of Egypt to Europe. Transporting the hydrogen over long distances is still technically complicated but we are not talking about long distances when we talk about Egypt. Egypt again is ideally placed for that.

Before you think that I am trying to oversell this. I truly believe in this and I really want to thank the Ministers who are on the podium with me for their vision, for their leadership and the attention they are given to this. I also know that President al-Sissi is very much on board for this development, which offers us the possibility for even stronger cooperation.

We are also signing a Tripartite Declaration of Support to Egypt’s Energy Wealth Initiative. I really like this vision of an integrated approach to how you can bring your country to the next level and leave no one behind. That is the essential element of your approach.

We have huge challenges to address on adaptation and on increasing the resilience and it is very important to take into account the full water-energy nexus. I now understand that if you are faced with water issues such as Egypt is, you need to make sure that through new technologies, new developments you have enough fresh water to cater to the needs of your nation. Again, renewable energy will be play a huge role in this because it will allow you to desalinate at a much lower cost and make it more accessible. That will also lead to huge benefits in combination with irrigation for Egypt’s agricultural production.

I just wanted to transmit my strong feelings about this initiative. We have a strong interest in reinforcing cooperation to achieve our shared goals. It will do many things. It will help us decarbonise, show the world that the 1.5 is within reach and at the same time it will give our economies and our industries a new leash of life in a sustainable way for better and new jobs for the people that needs jobs, and for a stronger position in the global economy.

Thank you very much.

“Check against delivery”

Commissioner Simson

Good morning, Ladies and Gentlemen,

Thank you, Ministers, Executive Vice-President, Ambassadors.

After my visit in Cairo in June, it is great to be back in Egypt for COP27. Today we are here to reinforce the EU’s increasingly strong cooperation with Egypt, a reliable partner in the energy field.

And I want to thank Minister El Molla for his support to the EU as we have been struggling with a difficult security of supply situation in Europe.

In the EU, we are completely transforming our energy system, based on the climate objectives as agreed in Paris and translated into our Green Deal strategy. Also, as a response to Russia’s war of aggression in Ukraine, we have taken the irreversible decision to end our dependence on Russian fossil fuels. Renewable hydrogen will contribute to these efforts.

The EU is set to become a leading producer and consumer of renewable hydrogen but we will not be able to meet this demand with domestic production only, we will also need to import hydrogen from trustworthy partners.

Egypt has significant untapped potential in renewable energy. Its abundant solar and wind energy resources will allow it to decarbonise its own economy, as well as become a clean energy exporter. Not only of hydrogen, but also of other products like ammonia and synthetic fuels.

Announcing this important step at the COP27 with the host country is a sign of the importance we attach to this partnership and to its potential to boost our respective energy transitions.

Egypt is one of the first partners with whom we are concluding such a partnership. And we hope that this will mark the first step towards an EU-Mediterranean Renewable Hydrogen Partnership, setting a good example for many others to come.

Our work together will look at the hydrogen infrastructure and financing needs, transport solutions, as well as regulatory issues. And it will contribute to setting up a global framework for a rules-based market for hydrogen, including harmonised safety and environmental standards.

While we look ahead to the energy system of the future, we should not lose sight of the essential need to make the clean energy transition just for all.

I am therefore especially glad that we have also agreed the EU’s financial support to the energy leg of Egypt’s new climate change strategy, the Nexus Water, Food and Energy. Through the Energy Wealth Initiative, Egypt aims to phase out 5,000 MW of gas-based power generation capacity and, instead, support 10,000 MW of new renewable electricity capacity. This is a big step towards net zero.

We will contribute to this inspiring program with up to €35 million, providing support for grid infrastructure investments, assets decommissioning, supply chain developments and measures to ensure a just transition.

This initiative will benefit both the environment and the economy.

So this is a day of finding win-win solutions to our common challenges. I am looking forward to seeing these solutions in action.

Thank you.