Egypt launches at least one new project for the production of environmentally friendly electricity, trying to maintain access to one of its key export markets - the European Union.
Like other countries seeking to export their products to Europe, Egypt will have to comply with the prepared legislation of the EU, which will tax the import of some goods with a high level of carbon emissions.
The mechanism of regulation of the border emissions of the EU carbon (CBAM), which is currently at the transitional stage and will go to the final phase from January 1, 2026, forced manufacturers of certain goods to reconsider the energy costs necessary for their production.
Minister of the State Business Sector Mohamed Shimi said that the construction of 1 GW of new environmentally friendly electricity sources for the aluminum production sector will need $ 750 million for three years. He stated this during a panel discussion at the Egypes conference in Cairo on February 18.
Egypt is also working on the addition of renewable energy sources as a way to stabilize its network and fulfill its global obligations to switch to environmentally friendly energy.
Diagoning of electricity
In the summer, interruptions in the country were observed with the supply of electricity, in some cases due to increasing the load by 7–18%, the Minister of Energy Mahmoud Esmat said, adding that an increase in the supply of renewable energy is the first step to increase the stability of the network.
Increasing internal gas production and its connection to the networks of neighboring countries, including Saudi Arabia, also are crucial for satisfying internal demand for electricity.
It is expected that the Saudi-Egypt Saudi project will be fully launched in 2025 and will allow to supply up to 3 GW of electricity to Egypt along the high-voltage directory (HVDC) with a length of 1350 km.
“We have completed almost 60% of this project,” Esmat said.
Esmat also said that a project for the potential export of renewable energy to Greece is being studied.
power supply of the power line will be carried out by Saudi Electricity Co., which expands its international network connections outside the Middle East and diversify its energy balance, using more renewable energy sources and gas power plants due to the expected increase in demand and efforts to reduce emissions.
Egypt set a goal in the next decade to provide 42% of its electricity due to renewable energy sources and called on international investors to help achieve this goal. As of July 2024, solar, wind and hydropower will be only 11.5% of the electricity produced by Egypt.
According to Irena, the total installed power of renewable energy sources in Egypt is about 3.7 GW. It is expected that it will increase to 49.5 GW and 62.6 GW in 2030 and 2035, respectively.
According to the EU for trade, the EU is the largest trading partner of Egypt: in 2023, 28.1% of the exports of this North African country was a share.
Compliance with future CBAM rules will be crucial for the export economy of Egypt.
cbam
Importers that are subject to CBAM should report on the number of imported goods, direct and indirect emissions included in them, and any price of carbon to pay for these emissions. CBAM certificates will then need to be purchased by 2.5% of emissions in 2026, and by 2034 their number will increase to 100%.
in the framework of the CBAM transition phase, which began on October 31, 2023, traders should only report on emissions included in their imports without paying any financial adjustment. But this mechanism should be in stages from 2026 to 2034 in accordance with the gradual abandonment of free quotas in the EU emissions system.
The goal of CBAM is to create equal conditions for companies from the EU, since in most exporting countries the prices for carbon emissions are not as high as in the EU emissions system, or there are no at all.
