Sharm El-Sheikh hosted in November the 27th Conference of the Parties on Climate change (COP27). The summit achieved multiple political and economic gains for the Egyptian economy. Egypt’s hosting of this global event is an international testament to its security and stability.
COP27 has had a positive impact on the tourism sector, which benefited from hosting nearly 40,000 visitors. Other gains also include trade agreements and climate policies-related decisions that would contribute to enhancing Africa’s share of climate compensation. In this article, we shed light on the multiple gains Egypt made by hosting COP27.
Climate change is unquestionably a major concern for people and policy-makers. Ergo, Egypt’s hosting of COP27, after a year full of thorough preparations for its sessions with the participation of stakeholders, comes as a culmination of Egypt’s climate efforts, being one of the first 29 countries to formulate a climate strategy, i.e. Egypt National Climate Change Strategy 2050, and develop a vision to enable the Egyptian economy’s green transition to achieve sustainability, identifying many climate-related targets. This culminated in Egypt’s expansion in many projects that serve climate goals, including canal lining and the transition to renewable energy through the establishment of the Benban solar plant, considered the third largest solar power plant in the world and on track to become the largest worldwide upon completion of the upcoming phases.
Hence, the nomination of Egypt to host COP27 as a representative of Africa was a tribute to Egypt’s climate efforts, being an example to be followed by African countries in setting and implementing climate goals.
Gains made by Egypt from hosting COP27 are multiple. First, the infrastructure of Sharm El-Sheikh has been developed, rendering it a green city which promotes green tourism and Egypt’s future tourism gains. Additionally, the hotels, where COP27 participants were supposed to reside for the duration of the conference (i.e. around 15 days), made significant gains. Data indicates that Egypt’s COP27 guests amounted to 40,000 from 197 countries and they were housed in 161 hotels, with a total of 51,000 rooms. According to Booking.com, the room rate in these hotels during COP27 for a 12-day period averaged EGP 35,000 at least. This means a revenue of EGP 1.4 billion or $57.1 million for hotels. This figure could even double if some visitors opted for a premium service, which could cost EGP 61,000, causing the total revenue to jump to EGP 2.44 billion or $99.5 million. As such, South Sinai governorate, where Sharm el-Sheikh is located, managed, during COP27, to attract hard currency ranging between $57.1 and $99.5 million (i.e. EGP 1.4-2.4 billion). Beyond the hotels, there is the revenue earned by the Egyptian companies and shops operating in Sharm El-Sheikh participating in the conference and offering their products to guests, let alone the various tourism activities. While it is not possible to determine precisely the revenues generated by those stores at the present time, due to the divergent spending rate among tourists, which varies significantly according to their nationalities. For example, the daily spending of a German tourist exceeds that of a Russian tourist. Accordingly, COP27 will likely cause a revival in tourism in South Sinai in the last quarter of 2022, a recovery that would compensate for the decline the tourism experienced over the second quarter due to the Ukraine war.
Nevertheless, this positive impact will likely go far beyond the duration of COP27. Sharm El-Sheikh could turn into a destination for tourists to spend their vacations. Tourists could also talk about their experience to others, which would prove more effective in promoting tourism than the promotion campaigns, having guests themselves promoting the place. This positive picture couldn’t have been made without efforts made to transform this city into a green one. Sharm El-Sheikh also houses a museum with many Pharaonic artifacts, which increase the likeability of guests visiting other Egyptian cities, in Cairo, Luxor, or Aswan, to find out more about the Egyptian civilization.
Commercial Agreements
Furthermore, several memoranda of understanding (MoU) were signed between the Egyptian government and companies taking part in Cop27. The energy sector stood as one of the biggest beneficiaries of these memoranda, where a memorandum of understanding was signed between the Saudi company ACWA Power and the New and Renewable Energy Authority (NREA) and Egyptian Electricity Transmission Company (EETC) to establish a stupendous 10-gigawatts wind plant in Egypt. This agreement would place Masdar and ACWA Power plants second to the 20-gigawatts Jansu Power Plant Project of China. The planned plant is to be established through collaboration between Masdar, Infinity, and Hassan Allam Holding at an estimated cost of about $10-12 billion, and it will come to actual operation after approximately 5 years. The project will contribute to avoiding carbon emissions of about 23.8 million tons of, i.e. 9 percent of the total emissions produced by Egypt.
However, this wasn’t the only MoU negotiated. During COP27, both the Saudi and Egyptian governments signed a MoU for cooperation in several areas, including the production and export of electricity from renewable energy, hydrogen transportation, electrical interconnection, promoting digital transformation, innovation, the use of cybersecurity and artificial intelligence, developing qualitative partnerships between the two countries, and localization of products, services, supply chains, and technologies.
The Norwegian company Scatec also had a share of these agreements. Scatec seeks to create new projects to produce wind energy in Egypt, with a total capacity of 5 gigawatts. In this vein, it signed a MoU with the EETC and the NREA to develop a feasibility study for the project. On the other hand, the Oman Investment Authority signed a deal worth $150 million that will enable it to acquire a 10 percent stake in the wind farm being implemented by ACWA Power and Hassan Allam Holding in the Gulf of Suez, with a generating capacity estimated at about 1.1 gigawatts.
Additionally, the consortium of investors, comprising Orascom Construction, Kahrabel FZE, and Toyota Tsusho Corporation, signed a MoU with the EETC and NREA to implement a project to produce electric power from wind. This MoU aims at implementing a project to produce electricity from wind, at a capacity of 3 gigawatts. Pursuant to this agreement, a company will be set up for the purpose of the project, after conducting the required studies before embarking on implementation.
Combined, these MoU on power production adds about 25 gigawatts of power, i.e. half the current power generation capacity of Egypt (Egypt is currently producing 59.5 gigawatts) and seven times the overall renewable capacity (which amounted to 3.4 gigawatts at the end of last year). These projects contribute to saving $5 billion annually for Egypt, by exporting the natural gas used in generating that energy or the electricity generated from renewable energy sources through interconnection lines between Egypt and neighboring countries, especially in light of the European energy crisis and Europe’s search for alternative sources to overcome the shortage brought about by the drop in supplies and the disruption of Russian gas supplies.
While the energy sector got the lion’s share of these MoUs, being the primary source of greenhouse gas emissions, the health care sector also had a share. In this vein, AstraZeneca Egypt signed a MoU with the General Authority for Health Care, according to which Egypt obtains technical support to promote Green health facilities, by helping health care institutions to switch to clean energy or using medical drugs with less carbon footprint. Further, several bilateral talks took place between President Sisi and a number of world leaders, including the British Prime Minister, focusing on trade relations between the two countries, cooperation avenues in the green hydrogen field, and promoting the role of private sector companies in investing in Egypt.
Overall, these investments are part of much greater gains that were obtained by Egypt from hosting COP27. Beyond the economic gains, Egypt has become a leading player in formulating climate policies and an active soft power in the region, capable of negotiating on issues of African countries and contributing to shaping green transformation policies of neighboring countries, which comes within the framework of the President Al-Sisi’s “Go Green” initiative, contributes to achieving sustainable development in Egypt, and fulfills Egypt’s strategy for sustainable development, set out in Egypt’s Vision 2030 and the National Climate Change Strategy 2050.
