Egypt has signed a debt swap agreement with Germany that exempts Egypt from repaying €54 million in debt enabling it use this to fund its transition to green energy.
The debt swap agreement, signed in Cairo in June, is part of Germany’s commitment to support Egypt’s climate goals. At the COP27 climate conference in November 2022, Germany pledged €250 million to Egypt in support of its climate change mitigation and adaptation efforts.
Under the agreement, Egypt will use the funds to develop two wind farms and two substations. The wind farms will have a combined capacity of 1,000 megawatts while the substations will connect the wind farms to the national power grid. The aim is to help Egypt to achieve the goal of producing 42% of power from renewable sources by 2030.
In a press release, the German Ambassador to Egypt, Frank Hartmann, stated:
“We are happy to support Egypt on its way to energy transition through this debt swap. It will allow new investments in energy infrastructure and pave the way toward a green, livable future for all Egyptians”.
Mostafa El-Sherbiny, Ambassador of the European Climate Charter, noted that Egypt is a dry environment that is affected by any climatic changes such as the current heatwave which will cause a significant increase in crop prices within weeks due to the destruction of a large portion of the crops by the heat.
El-Sherbiny explained that although Egypt’s carbon emissions are very low, its plan to reach zero carbon by 2050 will be a difficult and expensive journey. Developed countries that contribute a large share of carbon emissions must shoulder their responsibilities and support developing countries by dropping debt, he added.
According to Dr. Wafiq Nusair, a member of the World Parliament for the Environment, Egypt faces numerous challenges in its transition to green energy, the most prominent of which are a lack of investment in renewable energy and its high cost and a reliance on fossil fuels to generate energy. Furthermore, population growth increases energy demand and creates legislative and regulatory barriers to renewable energy development.
Last week, the Egyptian government announced the development of a wind energy project in Sohag, southern Egypt, with a capacity of 10 gigawatts, or almost a quarter of Egypt’s total electricity production.
