Egypt continues to pursue its target of achieving 42 percent of its electricity generation from renewable sources by 2030. However, Prime Minister Mostafa Madbouly cautioned during his address at the COP29 conference that this objective is at risk without increased international support. As of July 2024, solar, wind, and hydropower contribute a mere 11.5 percent to Egypt’s electricity generation, according to a government report.
Reliance on natural gas
In recent years, the country has leaned heavily on natural gas, which it defended as a “transitional fuel” during the COP27 conference in 2022, particularly while it was a net exporter of gas. However, last year, Egypt experienced extended power outages due to challenges in natural gas production caused by financial constraints and decreasing local extraction rates. This situation prompted the government to seek foreign investment in renewable energy projects while also increasing fossil fuel exploration.
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Adjustments to renewable energy targets
Last year, the government reaffirmed its goal to have renewable energy comprise 42 percent of its electricity generation mix by 2030. In June of this year, then-Electricity Minister Mohamed Shaker proposed a plan to elevate that share to 58 percent by 2040. Shortly thereafter, however, Egypt’s petroleum ministry adjusted the renewable target to 40 percent by 2040, indicating continued reliance on natural gas.
Challenges in climate goals
During his COP29 speech, Madbouly reiterated the original 42 percent objective but emphasized the obstacles Egypt faces in achieving its climate goals, primarily due to inadequate international backing. “Without the necessary support, vital infrastructure advancements are unattainable, putting our targets in jeopardy,” he stated.
Call for international support
Madbouly urged developed nations to honor their climate finance commitments, warning that otherwise, the pledges from developing countries would remain nothing more than “ink on paper.”
Plans for oil and gas production recovery
In August 2024, Egypt announced plans to restore oil and gas production to pre-pandemic levels starting in 2025, with the assistance of international partners. The North African nation aims to establish itself as a regional hub for liquefied natural gas (LNG), bolstered by recent discoveries such as the vast Zohr offshore gas field, which is estimated to contain 30 trillion cubic feet of gas.
Financial challenges and debt
However, these ambitions have been hampered by a foreign currency shortage, leading to outstanding debts owed to international companies involved in petroleum projects. Madbouly outlined a strategic approach to revive oil and gas production levels in collaboration with foreign partners and to enhance output in the near term.
Payment plans for foreign companies
In March, the government announced the initiation of payments to settle debts owed to foreign companies in the petroleum sector. A payment plan for 20 percent of the arrears has begun, with a structured schedule for clearing the remaining balance. During the summer months, Egypt resorted to load-shedding to maintain its power grid, indicating a need to import approximately $1.18 billion worth of natural gas and mazut fuel oil to mitigate ongoing electricity shortages. As reported by Reuters, a significant portion of Egypt’s electricity generation relies on natural gas.
Current production levels and investments
According to the state news agency, Egypt’s petroleum ministry reported gas production levels at 5.7 billion cubic feet per day as of July. Additionally, the ministry signed two agreements with international companies in July, collectively investing $340 million to enhance oil and gas production in the Mediterranean and Gulf of Suez regions.
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