Despite the almost deafening enthusiasm surrounding green hydrogen over the last few years, it seems like the momentum has come to an abrupt halt. The Green Hydrogen Organization (GH2) argues in a new report that this is not due to a lack of ambition, generous incentives, or international partners, but rather a lack of demand for the fuel source, the high costs of borrowing in Egypt, and insufficient power grid infrastructure.

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Despite the bn’s earmarked for green hydrogen projects in Egypt, these for the most part remain just ink on paper, with “fewer than five projects” having moved beyond the feasibility stage, GH2 notes. As of June last year, Egypt had signed 32 MoUs amounting to some USD 175 bn worth of investments, but the “challenge is turning those promises into projects.”

But it’s not only an Egypt problem, with just 4% of green hydrogen and ammonia projects worldwide reaching either construction or final investment decision, and 13% having secured binding offtake contracts, according to the International Energy Agency. At least 50 clean hydrogen projects have been publicly cancelled in the 18-month period ending September 2026, representing 4 mn tons per annum (mtpa) of capacity, according to the Hydrogen Council’s Global Hydrogen Compass 2025 report (pdf).

And the rest of the world also now shares a less optimistic outlook on the emerging technology, with the Hydrogen Council’s best-case scenario seeing some 20 to 30% of the world’s announced clean hydrogen projects — representing 9-14 mn mtpa — securing a final investment decision by 2030. “Today, green hydrogen is under pressure, and the market is shrinking. A lot of people who went into this venture are out,” UAE-based renewables giant Masdar CEO Mohamed Jameel Al Ramahi said earlier this year.

Nonetheless, there is still “a market and use is steadily increasing,” despite not living up to the level of hype around the technology in recent years, UK Department for Business and Trade Country Director for Egypt and Libya Charlie Garnett told EnterpriseAM. With the “relative cooling in the sector,” now is a good time to “take stock of its green hydrogen plans, and how it wants to develop them,” Garnett added.

Central to the success of any business venture — and by extension its failure — is demand, with the expected uptick in green hydrogen customers yet to materialize. Creating demand in the near term globally and in Egypt is difficult. Investors are cautious to commit without assured customers, while customers are reluctant to commit to future offtake agreements without knowing in advance the cost-competitiveness of the supply and that the necessary infrastructure will be in place.

Also weighing on demand is the cost gap between the emerging green fuel and fossil fuels, which supporters of green hydrogen say could be addressed with government subsidies and regulations. Demand for green hydrogen could also grow if the International Maritime Organization votes in the coming days to formally adopt its Net Zero Framework — aiming for a 20% reduction in emissions by 2030 and net-zero by 2050 through a set of emission reduction mandates and penalties.

“Demand side policies such as quotas and contracts for difference can have an important role” in addressing this, Garnett told us. This is where the government can play an important role by taking “some risk of their own to back the industry” with initiatives like government-backed offtake protections to really quicken the development of the sector.

Borrowing costs are also eating into Egypt’s green hydrogen competitiveness, with borrowing rates of 16-18%, well above the 4-6% range in OECD countries, GH2 notes. High borrowing costs often overrun any savings from Egypt’s competitively priced solar and wind power.

Also complicating our green hydrogen ambitions is the lack of sufficient infrastructure, with the 36 GW capacity of the grid falling well below the 180 GW capacity of land allocated for renewables projects, according to GH2. Investors also have little clarity that these issues will be resolved, with upgrades “uncertain and frameworks incomplete.”

But what isn’t lacking is ambition, with the country’s National Low Carbon Hydrogen Strategy(pdf) looking to capture between 5-8% of the global hydrogen market by 2040. The state has also sought to encourage investment with the golden license system to do away with red-tape complications, the promise of 45% tax rebates, and other incentives.

Still, “improvements in the business environment could make a big difference to Egypt’s attractiveness generally,” and that applies to the green hydrogen sector too, Garnett said. “We see Egypt lose out to regional competitors on a fairly regular basis,” because of long decision processes, delayed VAT rebates, a lack of intellectual property enforcements, and other issues, he added.

Renewables potential and location are also in our favor, especially with the Suez Canal Economic Zone hosting the bulk of proposed green hydrogen projects due to its proximity to some 12% of global trade passing through the Suez Canal. Egypt can take advantage of this and make itself a “refuelling and bunkering hub for the maritime industry,” Garnett said. Testament to this is Fertiglobe’s EUR 397 mn contract with H2Global subsidiary HINT.CO to supply green ammonia from its facilities in the zone to the European Union.

Green hydrogen also makes sense for Egypt, given the strong local presence of energy-intensive industries — especially with the launch of the Carbon Border Adjustment Mechanism (CBAM) at the start of next year. Instead of just focusing on exports, locally produced green hydrogen can feed the fertilizers, cement, aluminum, and steel industries and help them avoid hefty fines designed to put a “fair price” on emissions.

Your top green economy stories for the week:

• Egypt and Slovakia inked a technical cooperation MoU on environmental protection and climate change, according to an Environment Ministry statement. The agreement covers areas including climate mitigation and adaptation, environmental planning, biodiversity protection, and knowledge and technology exchange.
• President Abdel Fattah El Sisi kicked off day one of Cairo Water Week with a speech describing water security as an “existential issue” facing the country, given that 98% of the population relies on “a single source that originates outside its borders: the Nile.”