Commodities

German Group Agrees to Buy Hydrogen From Egypt as of 2027

A storage tank at the Cleanergy Solutions green hydrogen plant outside Walvis Bay, Namibia, on Wednesday, May 1, 2024. Cleanergy, a venture between Antwerp-based shipping company Compagnie Maritime Belge SA (CMB) and local firm Ohlthaver & List Group, will be Namibia's first commercial green hydrogen plant, built at a cost of $30 million, as CMB intends to raise $3.5 billion to build an ammonia plant that would connect to a new storage and export facility planned by the Port of Antwerp-Bruges. Photographer: Waldo Swiegers/Bloomberg

(Bloomberg) -- A German government-backed foundation has agreed to import green ammonia from Egypt in the coming years in a bid to accelerate Europe’s energy transition.

H2Global will buy at least 259,000 tons of the carrier for hydrogen in the period from 2027 to 2033, from a production site in Egypt owned by the UAE’s Fertiglobe Plc. It will then sell it at cheaper prices to companies in the European Union, according to a statement from Germany’s economy ministry. 

The move is seen as a first step toward creating a hydrogen market for the region, which wants to use the clean energy source to wean off fossil fuels in the coming decades. There are currently few buyers for the gas as it’s expensive to produce and requires infrastructure investments to make its use more viable.

“What we are doing is providing liquidity by sending price signals to the market,” said H2Global co-founder Timo Bollerhey. “There are a lot of projects and hardly any of them have taken off because they are faced with a very high uncertainty.”

Germany, which is one of the biggest polluters in Europe, has provided grants to offset the difference between the buying and the selling price for hydrogen products under H2Global. The import auction project has also received backing from the Netherlands and Canada. 

Under the pilot auction, the production price for a ton of green ammonia came in at €811 ($882), and corresponds to a cost of €4.5 per kilogram of green hydrogen, the economy ministry said, adding that this is cheaper than current estimates for hydrogen products.

©2024 Bloomberg L.P.

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