# Integrated Country ApproachEgypt

Egypt's rapidly expanding population and economic growth are driving an increasing demand for energy. To meet this need while advancing the decarbonization of a fossil fuel-based energy system, Egypt is committed to diversifying its energy mix with renewable electricity and enhancing energy security. Leveraging its abundant renewable resources, the country aims to catalyse significant investments to build new capacity, modernize its energy infrastructure, and expand access to electricity.  The International Renewable Energy Agency (IRENA) estimated annual investment requirements of USD 6.5 billion between 2014 and 2030 to realize this ambition. Since 2014 and building on decades of forward looking policymaking, the country has embarked on a strategic sequencing and packaging of reforms and initiatives. Egypt has set out to create an enabling environment for clean energy investment through a holistic approach that mobilizes multiple policy and regulatory levers, including clear planning, improved regulatory framework and governance, as well as leveraging partnerships, introducing diversified financial packages and de-risking tools.

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## Clear long-term goals and planification

Egypt formalized clear and ambitious objectives to coordinate efforts, allocate resources efficiently, and track progress.  In 2016, the government published the Sustainable Development Strategy - Egypt Vision 2030, which was updated later in 2023. To guide public and private actions, the strategy promoted the deployment of renewable energy capacity through a comprehensive development framework, which also included economic development, social equity, environmental sustainability, urban development, and governance. These priorities were further translated into targets in the Integrated & Sustainable Energy Strategy for 2035, which set the goal of reaching 42% of electricity production from renewable sources by 2035. Targets were detailed by technology (solar photovoltaic, wind, concentrating solar-thermal power, etc..). The document also set energy efficiency targets aimed at reducing energy demand by 18% by 2035.  In 2022, these targets were further consolidated with the country’s climate roadmap (i.e. the Low Emission Development Strategy from 2018) in the Egypt National Climate Change Strategy 2050, thus providing clean energy investors with clarity and transparency on the country’s integrated vision and future efforts. In 2023, the renewable energy targets were updated and strengthened as part of the Nationally Determined Contributions’ update, bringing forward the 42% renewable electricity generation target from 2035 to 2030. In 2024, Egypt released its National Low-Carbon Hydrogen Strategy, setting a target to capture 8% of the international hydrogen market by 2040.


## Policy incentives

The publication of various targets and roadmaps was accompanied by the development and clarification of the regulatory framework surrounding renewable energy project development and financing. In 2014, the Renewable Energy Law clarified rules for independent renewable power production (e.g., authorization of long-term power purchase agreements as well as Build Own Operate and Build Own Transfer models, guaranteed access to the grid for renewable projects, streamlined licenses and permits process, introduction of feed-in tariffs and associated bidding process). These mechanisms played a key role in expanding the deployment of renewable energy plants, facilitating private sector involvement in notable projects such as the Benban Solar Park (1,650 MW, operational since 2019) and the Gulf of Suez Wind Farm (260 MW, operational since 2019)

In 2022 and 2023, the Egyptian government laid the groundwork to facilitate the creation of a voluntary carbon credit market. A decree was issued to establish an administrative structure to support the national Monitoring, Reporting and Verification (MRV) System, allowing Egypt to collect data on GHG emissions, track progress on mitigation and support carbon market transactions. Building on these efforts, August 2024 marked an important milestone with the launch of the country's first voluntary carbon market to promote green energy.


## Energy sector governance and monitoring

To monitor progress and ensure appropriate coordination of the different reforms and initiatives, key governance bodies were created. In 2014, the government established the Supreme Council of Energy to formulate policies, coordinate between stakeholders, and oversee the implementation of the national energy strategy. By providing a centralized governance structure, the Supreme Council of Energy facilitated investment in renewable energy projects and streamlined regulatory processes. In 2019, the creation of the National Climate Change Council enriched governance by ensuring inter-ministerial coordination in climate policy development and implementation. In 2023, the government formed the National Council for Green Hydrogen to guide green investments, building Egypt’s strategic vision to position itself as a regional hub for green hydrogen.


## Financial packages

The Egyptian government also deployed various financial packages to catalyse investments and promote market competitiveness. In 2014, the Electricity Tariff Reform Program organized a gradual reduction of government fuel subsidies for electricity supply to achieve fiscal savings, reduce dependency on fossil fuels and increase energy efficiency. In 2017, the government adopted the Egypt Renewable Energy Financing Framework in partnership with the European Bank for Reconstruction and Development (EBRD) and the Green Climate Fund (GCF). The Framework raised USD 1 billion, including USD 250 million from the private sector. Furthermore, the government also raised funds by issuing 5-year sovereign green bonds worth USD 550 million in 2022, to finance projects in mitigation and adaptation, in addition to a USD 60 million debt swap agreement with Germany dedicated to renewable energy and power grid upgrade.


## Country platform

To accelerate the mobilization of private investment and ensure alignment between national priorities and international investment, Egypt announced in 2022 the creation of Egypt's Country Platform for the Nexus of Water, Food and Energy (NWFE نُوَفِّــي). The Platform embodies the just financing principles of country ownership outlined in the Sharm El Sheikh Guidebook for Just Financing. In line with the National Climate Strategy, it aims to move from pledges to implementation through the design, structuring, and preparation of concrete and implementable climate action projects. The platform identifies a set of 9 high priority projects that balance adaptation, resilience and mitigation, bundled around three main pillars: Water, Food, and Energy.  By leveraging technical cooperation and financing from over 30 stakeholders, the platform taps into diverse capital sources and de-risking measures, encompassing debt swaps, guarantees, concessional loans, grants, and private investments. On the Energy pillar front, the platform aims to mobilise USD 10 billion investment for the energy sector with the support of USD 500 million concessional finance, anchored around 3 components: (1) decommissioning of 5GW of Fossil Fuel Plants securing grants based on performance incentive payment, (2) installing 10GW wind and solar capacities through partnerships and private sector investments and (3) the rehabilitation of the National electricity grid including the development of storage facilities.  To further accelerate its ambitious targets, the Egyptian government has allocated land in the East Nile, West Nile and Southern Egypt areas for private developers, enabling the construction of wind and solar capacity for private-to-private (P2P) projects.


## Impact/Outcomes

Between 2014 and 2021, Egypt’s electricity generated from Wind and Solar have been multiplied by respectively 4 and 19. In 2023, only a year after its launch, the NWFE نُوَفِّــي platform had mobilised $2.18 billion of private sector investments, to finance solar and wind energy projects, with 4 renewable projects reaching financial close for 1.7GW.


## Additional Sources

Presentation from Ministry of International Cooperation during 18 April WEF Network virtual eventAl-Mashat, R. (2023). Climate Financing That Puts People First. Finance & Development. International Monetary Fund, USA  https://www.imf.org/en/Publications/fandd/issues/2023/09/POV-climate-financing-that-puts-people-first-rania-al-mashatMinistry of Environment, Egypt National Climate Change Strategy 2050, 2022, https://www.eeaa.gov.eg/Uploads/Topics/Files/20221206130720583.pdfMiddle East Library For Economic Services, Presidential Decree-Law No. 203/2014 Regarding the Stimulation of Producing Electricity from Renewable Energy Sources, 2014, https://cdn.climatepolicyradar.org/navigator/EGY/2014/egypt-renewable-energy-law-decree-no-203-2014_a94ecbc39e0166b267cf9fa507b08090.pdfFinancial Regulatory Authority, Carbon Market,  https://fra.gov.eg/en/%D8%B3%D9%88%D9%82-%D8%A7%D9%84%D9%83%D9%88%D8%A8%D9%88%D9%86/Ministry of International Cooperation, NWFE Progress Report – N°.1, November 2023,  https://mmd-moic.s3.eu-west-1.amazonaws.com/files/English%20Spread%20-%20NWFE%20Report%202023.pdf


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