{"id":653410,"date":"2024-10-16T00:00:00","date_gmt":"2024-10-16T00:00:00","guid":{"rendered":"https:\/\/enterpriseam.com\/egypt\/hardhats\/could-mixing-green-hydrogen-into-the-countrys-existing-natural-gas-pipelines-play-an-important-part-in-the-countrys-energy-transition\/"},"modified":"2024-10-16T00:00:00","modified_gmt":"2024-10-16T00:00:00","slug":"could-mixing-green-hydrogen-into-the-countrys-existing-natural-gas-pipelines-play-an-important-part-in-the-countrys-energy-transition","status":"publish","type":"hardhat","link":"https:\/\/enterpriseam.com\/egypt\/hardhats\/could-mixing-green-hydrogen-into-the-countrys-existing-natural-gas-pipelines-play-an-important-part-in-the-countrys-energy-transition\/","title":{"rendered":"Could mixing green hydrogen into the country\u2019s existing natural gas pipelines play an important part in the country\u2019s energy transition?"},"content":{"rendered":"

Green hydrogen blending to the rescue? <\/strong>Egypt\u2019s energy needs and import bill are growing, while its renewable energy targets are fast approaching. Big-ticket solar, wind, and hydro projects are in the works to help address these issues, but some are also pointing towards green hydrogen blending as a potentially important part of our energy transition \u2014 with some important advantages.<\/p>\n

(Tap or click the headline above to read this story with all of the links <\/strong>to our background as well as external sources.)<\/p>\n

But first of all, what is blending exactly? <\/strong>Green hydrogen blending involves mixing hydrogen produced from clean energy sources \u2014 think wind, power, and hydro \u2014 with natural gas in existing natural gas pipes. It presents an attractive way to diversify and greenify a country\u2019s energy mix that is both gradual and with little up-front costs as it makes use of existing infrastructure. As a clean fuel source, the more green hydrogen sent through the pipes means less emissions as it reduces the amount of natural gas in the mix.<\/p>\n

Green hydrogen blending is a relatively new idea that only a few countries have <\/strong>experimented with: <\/strong>Germany and Norway five years ago achieved a green hydrogen blending ratio of around 28% in their respective gas networks \u2014 a ratio that it has since maintained. More recently, the UK announced that it has succeeded in implementing green hydrogen into their existing natural gas grid, with green hydrogen comprising around 20% \u2014 a figure they eventually want to bring up to 100%, Osama Fawzy, founder of hydrogen market intelligence platform H2lligence<\/a>, told EnterpriseAM. <\/p>\n

Egypt is a good candidate for blending, with a boatload of green hydrogen projects in the <\/strong>works: <\/strong>It\u2019s almost a rarity nowadays if any investment conference in Egypt passes without the mention of green hydrogen. June\u2019s Egypt-EU Investment conference inked EUR 63.8 bn worth of green hydrogen and ammonia investments<\/a> out of a total EUR 67.7 bn worth of investments over the course of the conference. It\u2019s not just our European and Gulf neighbors that are interested, with even China\u2019s state-owned China Energy inking a framework agreement<\/a> with the SCZone to set up a USD 6.75 bn green hydrogen plant.<\/p>\n

And the government is hoping this is only the beginning: <\/strong>Egypt\u2019s National Low Carbon<\/a>Hydrogen Strategy (pdf)<\/a> lays out the country\u2019s ambitious goals to potentially capture between 5-8% of the global hydrogen market by 2040. To achieve this, t he goal is to produce<\/a> 3.2 mn tons of green hydrogen a year by 2030 and 9.2 mn tons by 2040. To achieve these goals \u2014 or even a fraction of them \u2014 we\u2019re going to need to see USD bns worth of projects implemented over the next few years.<\/p>\n

Remember: <\/strong>Green hydrogen is only one party of the puzzle, with the government planning to <\/a>generate 42%<\/a> of its electricity from renewable sources by 2030, with the latest target being <\/a>adding 28 GW<\/a> of renewable energy to the country's energy mix over the next five to seven years<\/p>\n

Our existing and extensive natural gas network is also a good match: <\/strong>Egypt\u2019s natural gas network extends over around 100k kilometers, and delivers natural gas to over 14 mn homes, 25k commercial units, and 3k industrial units across the country, according to data from Wood Mackenzie. The total volume of natural gas transported through the national gas network amounted to 68 bn cbm in 2023, according to the Oil Ministry<\/a>. <\/p>\n

The priority should be to provide hydrogen-blended gas supplies to the industrial sector <\/strong>\u2014 <\/strong>particularly for energy-intensive industries such as fertilizers, petrochemicals, iron and steel, and cement. In addition to needing a lot of energy, these industries are also hard to abate as it is difficult \u2014 or at least very costly \u2014 to run these operations with just electricity and not hydrocarbons.<\/p>\n

This especially important with the EU\u2019s impending carbon tax fast approaching:<\/strong> The EU\u2019s Carbon Border Adjustment Mechanism (CBAM) \u2014 which is set to be fully implemented by 2026<\/a> \u2014 could significantly impact Egyptian exports, particularly those of energy-intensive industries. To avoid the carbon border tax and keep their products competitive, it is important that these industries look to things like green hydrogen blending to keep their carbon footprint \u2014 and in turn their carbon tax bill \u2014 as low as they can.<\/p>\n

These industries are also particularly important to the national economy: <\/strong>Manufacturing, oil and gas, construction, and transportation are a big part of Egypt\u2019s overall economic output, contributing up to 37% of GDP and representing about 28% of overall national employment, according to a report (pdf)<\/a> from the National Bank of Kuwait. However, heavy industries currently consume 2.95 bn cf\/d of natural gas, 17% less than the 3.54 bn cf\/d required to operate them at 80-85% of capacity. Total gas production would need to rise to at least 6.8 bn cf\/d for these factories to operate at higher levels without risking energy bottlenecks across the economy.<\/p>\n

Green hydrogen blending would be good for the environment \u2014 and the public purse: <\/strong>Especially given Egypt\u2019s rising natural gas needs in the summer, which have caused an increase in costly gas imports amid declining local production, blending could help keep the lights on and FX reserves intact, Fawzy told EnterpriseAM. <\/p>\n

A big plus is that blending is a gradual process:<\/strong> Egypt could gradually start mixing green hydrogen into the existing natural gas grid until reaching the permitted rate based on the efficiency of the current natural gas pipeline network, Fawzy told Enterprise. <\/p>\n

Work is already underway to implement green hydrogen into existing factories:<\/strong> Abu Qir Fertilizers intends to partially replace its existing factories to operate using green hydrogen instead of natural gas, Abu Qir Fertilizers Chairman Abed Ezz El Regal said<\/a> previously, adding that the firm is in the final stages of signing an agreement with the companies that will carry out the replacement process.<\/p>\n

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