The green hydrogen hub dream is undergoing a reality check. For the past two years, the narrative has been dominated by the prospect of Egypt capturing 8% of the global hydrogen market, fueled by over 30 MoUs and visions of USD multi-bn export terminals. But as the global green premium proves too high for European buyers and regulatory delays stall international demand, a more pragmatic strategy is emerging.

The future of Egyptian green hydrogen — at least in the medium term — isn’t in massive, speculative greenfield export hubs. It’s in small-to-medium, brownfield retrofitting projects designed to save the domestic industrial base from an existential threat: the EU’s Carbon Border Adjustment Mechanism (CBAM).

Why it matters: Instead of chasing elusive European offtakers, there is movement to instead focus on its own heavy industries — steel, fertilizer, aluminum, and cement. While Egypt secured a preliminary exemption from CBAM until the end of 2027, that two-year window is a countdown, not a reprieve. After 2027, if these industries haven’t begun to decarbonize, they face punitive border tariffs that will make them uncompetitive in their primary export market.

Brownfield is the new greenfield

The strategic logic has shifted from building the new to fixing the old. The most viable projects in the current pipeline — such as Fertiglobe’s facility in Ain Sokhna and Mopco’s plant in Damietta — share a common DNA: they are brownfield retrofits.

Instead of building a USD 8 bn Neom-style plant from scratch, these projects adapt existing infrastructure. By integrating electrolyzers into established ammonia loops, operators avoid the astronomical capex and long lead times of greenfield developments.

It’s about bankability, Scatec Egypt Head of Business Development Mahmoud Shata tells EnterpriseAM. By focusing investment only on the new components — electrolyzers and renewable energy inputs — and leveraging proven facilities, these projects become significantly more attractive to financiers. For a retrofitted plant, capex is measured in the hundreds of mns, rather than the bns required for a ground-up build.

Small and beautiful

The second shift in the strategy is scale. The industry is beginning to realize that the chicken and egg problem — where financiers want offtakers and offtakers want final investment decisions — is best solved by starting small, H2Intelligence founder Osama Fawzy tells us. Rather than 200k-300k ton projects, we could start with capacities of 5k-10k tons for proof of concept, he added.

These smaller plants, costing between USD 50-60 mn, serve as a live example for the market. They prove that green hydrogen can be integrated into a domestic factory line without breaking the balance sheet.

And we wouldn’t be the first to follow this path, as Japan’s first large-scale foray was a 10 MW electrolyzer and China’s Sinopec began its hydrogen journey with a 20k-ton capacity plant. By scaling down, Egypt can move projects from the MoU phase to the operating phase years faster than the mega-projects currently gathering dust.

Momentum could pick up soon with our own carbon tax in the works

The government is currently preparing a standalone bill to introduce a domestic carbon tax, alongside legislative amendments to the Environmental Protection Law. As fossil fuel subsidies are phased out and carbon emissions are taxed locally, the math for green hydrogen changes. It stops being an expensive green alternative and starts being a necessary tool for cost-control. Under this framework, green hydrogen isn’t just a fuel, it’s a raw material that protects an Egyptian steel manufacturer’s margins from both local taxes and EU tariffs.

In the longer term, we may be able to be more ambitious

The dream of Egypt as a global hydrogen exporter isn’t dead, but it has been deferred. By focusing on small-scale, brownfield projects that serve domestic industry, Egypt can build a proof of concept economy that is bankable today. The goal is no longer to capture 8% of the global market by 2040, it’s to ensure that Egypt’s industrial giants are still standing in 2028.

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