The global cleantech sector, encompassing renewable energy, smart water solutions, energy efficiency, and climate-resilient innovation, is gaining momentum as one of the most crucial and competitive industries worldwide. 

“Cleantech energy supply investments, including renewable power generation, green hydrogen production, and carbon capture and storage (CCS), will reach $670 billion in 2025, marking the first time these investments will outpace projected upstream oil and gas spending,” said Edurne Zoco, executive director for clean energy technology at S&P Global Commodity Insights, in January.

The global clean tech boom is driving manufacturing investments as countries aim to boost energy security and competitiveness, and cut emissions. “Clean energy transitions present a major economic opportunity, as we have shown, and countries are rightly seeking to capitalize on that,” IEA (International Energy Agency) Executive Director Fatih Birol said in October. “However, governments should strive to develop measures that also foster continued competition, innovation, and cost reductions, as well as progress towards their energy and climate goals.”

Middle East countries are taking serious steps to enhance their cleantech infrastructure. “In 2024 alone, infrastructure finance in the Middle East and Africa (MEA) reached $152.3 billion, with clean energy investments making up over $21.5 billion of that total,” according to Entlaq’s 2025 CleanTech & Energy in Egypt report. Entlaq is an Egyptian think tank and consultancy that specializes in building high-impact entrepreneurial ecosystems. 

When it comes to the growth of the cleantech sector, Egypt faces challenges such as intersecting climate vulnerabilities, industrial energy inefficiencies, and escalating water stress, according to the report.

Climate risks 

According to a March article by the Carnegie Endowment for International Peace, “Egypt’s vulnerability to climate change is being compounded by its economic struggles, creating a set of threat multipliers that make it difficult to adequately fund climate resilience and sustainability efforts.” 

In Egypt, climate-related damage could cost the country up to $5 billion annually by 2050 if no mitigation strategy is adopted, the report noted. “In agriculture alone, climate disruptions could reduce staple crop yields by 20%-30%, intensifying food insecurity and import dependency.”

As per Entlaq’s report, Egypt faces a convergence of environmental shocks that threaten its water security, food systems, public health, and industrial productivity. It emphasized that Egypt’s per capita renewable freshwater availability fell below the international water poverty threshold of 1,000 cubic meters per year, dropping to 480 cubic meters in 2023 as demand rises due to rapid population growth and traditional irrigation methods. 

Water scarcity risks are accompanied by rising sea levels and Nile Delta vulnerability. Egypt could lose as much as 19% of its arable land if sea levels rise an additional 0.5 meters, the report warns. 

Another threat is increasing heat. According to the report, the steady rise in Egypt’s average annual temperature over the past six decades, with a projected 1.5° Celsius increase, underscores the nation’s growing exposure to heat-induced climate stress with significant implications for labor-intensive industries such as agriculture and construction. 

Other sectors, such as tourism, productivity, and worker safety, are increasingly at risk.  “Egypt’s tourism economy faces seasonal volatility, as rising temperatures narrow the windows for peak outdoor travel,” the report says.

In addition, Egypt’s urban air pollution ranks among the highest in the region. The report showed that in Greater Cairo, fine particulate (PM2.5) concentration routinely exceeds WHO guidelines by more than 400%, resulting in more than 22,000 premature deaths annually and causing as much as $2.4 billion in lost productivity and healthcare expenses.

The report suggests accelerating urban emissions mitigation through “renewable energy integration, electrification of transport and industrial emissions control, which clean-tech can help support in filling the gaps.”

Current ecosystem

Despite the risks, Egypt has the potential to lead the region in cleantech innovation, the report says. However, “systemic bottlenecks have prevented it from capitalizing on this advantage.”

The nation’s renewable energy potential is key to the development of cleantech. “Egypt’s technical solar capacity exceeds 60 gigawatts and its wind potential along the Gulf of Suez surpasses 30 gigawatts, positioning it among the top three renewable energy markets in Africa,” says the report. 

Another key asset is a young, STEM-educated population. ”Egypt graduates over 200,000 engineers and science professionals per year, a figure unmatched in the Arab world,” the report says. 

The country is encouraged to capitalize on such a potential, as the report notes, “less than 7% of these graduates enter cleantech or climate-adjacent industries, pointing to a misalignment between human capital and market demand.” It adds that Egypt still lacks a target strategy for utilizing its vast human capital in cleantech sectors.

The existing gap is also widened by “the absence of climate-specific career orientation in university curricula, limited job market visibility for climate roles, and weak linkages between academia, startups, and state-led industrial strategies.”

Without effective policy action, Egypt’s reliance on imported technologies and foreign expertise might worsen, the report said, while leaving its young technical workforce underutilized.

Egypt’s massive green hydrogen projects further contribute to its potential as a leader in Africa. “With an announced pipeline of 18 million tonnes per annum (mtpa) — the highest on the continent — Egypt has positioned itself as Africa’s most ambitious hydrogen developer,” says the report.

The capacity is distributed across 38 memoranda of understanding (MoUs) signed by the government, with the Suez Canal Economic Zone getting most of the projects. This is mainly because the zone’s “policy alignment, port infrastructure and access to Europe-Asia shipping lanes offer significant competitive advantages,” notes the report.

Comparatively, the report shows that Egypt’s hydrogen ambitions outpace those of Morocco (10 mtpa), Namibia (12 mtpa), and Mauritania (12.5 mtpa) — each pursuing export-oriented hydrogen strategies supported by Gulf, European, and Chinese investors. 

Egypt’s peers have effectively tied their plans to concrete project phases, off-take agreements, or dedicated financing mechanisms. Despite its ambitions, “Egypt’s pipeline remains largely pre-commercial, with most MoUs yet to reach final investment decision,” the report says.  

Finally, the report highlights Egypt’s competitive edge. “Egypt’s location at the intersection of three continents makes it a logical hub for clean energy exports, logistics, and climate diplomacy. It’s hosting of COP27 in 2022 elevated its regional visibility, and its inclusion in the Nexus on Water, Food, and Energy (NWFE) platform links cleantech to water, energy, and food policy in a comprehensive strategy.”  

Financing constraints

On a positive note, international development partners have shown a strong appetite for Egypt’s cleantech sector, according to the report. “The EBRD, World Bank, and Green Climate Fund have collectively pledged more than $1.3 billion toward renewable energy projects, and Egypt issued MENA’s first sovereign green bond in 2020, raising $750 million, part of which was allocated to solar infrastructure.”

Domestically, however, Egypt’s clean energy financing ecosystem remains underdeveloped, with private sector participation accounting for only 20% of total investment in 2024, significantly lower than in Morocco (38%) and South Africa (45%), according to the report.

The report also notes that access to capital for SMEs and independent power producers (IPPs) is hindered by high commercial lending rates hovering around 18% as of early 2024 and a lack of targeted green financing products.

Currently, according to the CBE data, commercial lending rates stand at 23% as of September, which further complicates SMEs’ access to capital. 

That said, Egypt is advised to adopt a broader suite of de-risking instruments, including sustainability-linked bonds, concessional loan facilities, loan guarantees, and green equity co-investment platforms, the report highlighted. These tools are “being deployed by peer economies with greater investor uptake.” 

While Egypt has made significant moves to bolster green finance, including the Sovereign Green Bond established in 2020, the report shows “the country’s financing landscape remains skewed toward concessional international funding and public-led investment.”

The report explains that early-stage startups, SMEs, and mid-sized IPPs encounter prohibitively high interest rates and complex regulatory barriers. Moreover, there are a few customized green finance solutions, such as blended finance, venture debt, and catalytic guarantees, which are essential for scaling innovation and manufacturing.

Meanwhile, startups and SMEs in the cleantech sector show promising early momentum. The report cites data from the 2024 MSMEDA Green MSME Registry, showing that Egypt is home to more than 3,000 officially registered green and environmental startups. “The country also has a growing network of Technical and Vocational Education and Training institutions (TVET), research centers, and digital platforms with the potential to pivot toward cleantech,” Entlaq notes.

Urgent reform 

To bolster startup growth, Entlaq’s report says Egypt should reform and address its regulatory fragmentation. “Egypt lacks a unified legal framework for cleantech ventures. Licensing bottlenecks, delayed industrial registration, and inconsistent net metering policies create systemic hurdles to entry and scale-up.”

It added that Egypt remains underrepresented in regional green finance flows. “In 2024, less than 17% of Africa’s VC (venture capital) funding went to climate ventures, and only 24% supported women-led or gender-diverse startups.” This reflects missed economic opportunities, the report notes, given that international evidence confirms that returns are higher from investment in women-founded cleantech startups.

Another key limitation to cleantech development is infrastructure gaps. For instance, the report explains that entrepreneurs face significant challenges in accessing specialized testing laboratories, integrating with the national grid, and securing industrial zones designed for energy and water tech applications.

The report also emphasizes the need to raise awareness about the significance. “Adoption of cleantech technologies is hindered by a lack of awareness, behavioral resistance, and limited public procurement incentives. Without national demonstration programs and mass-market education, adoption will remain niche and elite-driven.”

Despite its comparative advantage, Egypt has yet to unlock its full potential, the report says. “The country has an exceptional technical labor force, a growing policy infrastructure, and export positioning.”  

Because smaller ecosystems like Kenya, Rwanda, and Tunisia have the potential to grow more than Egypt because of their agility, the report stresses the need for integrated reforms across regulation, capital, infrastructure, and talent to accelerate Egypt’s cleantech progress.