Improvement of Air Quality in Egypt: The Role of Natural Gas

Egypt has had more than four decades of intensive natural gas exploration and development activities, which have become the main focus of the country’s hydrocarbon industry. Current natural gas reserves estimated at around 78 trillion cubic feet have developed to be far more abundant than those of oil and are continuing to increase steadily.[1] Since the early 1980s, the Government of Egypt recognized that utilizing Egypt’s abundant natural gas could, in addition to fostering economic growth, make a significant contribution toward improving air quality and protecting public health. Given its unique economic and environmental advantages, Egypt’s energy policy was developed to maximize switching to natural gas in various economic sectors. Strategies to achieve this policy included developing natural gas infrastructure, whereby the national gas pipeline grid has expanded from 1,000 to more than 17,000 km. Expanding the local gas market and developing domestic gas demand have been other strategies that proved to be effective. As a result, the share of natural gas in Egypt’s primary energy consumption has grown from about 24% in 1990 to nearly 45%.[2] The number of domestic gas consumers reached about 3.3 million and planned to grow to 5.5 million by 2015. Consuming about 60% of the total gas consumption, the electricity sector is the largest gas consumer, which plans to depend 100% on natural gas in the years to come.

In addition to switching to natural gas in the electricity generation, industry, and residential sectors, the Egyptian Government encouraged the private sector to commercialize natural gas vehicles (NGVs). In December 1994, the first company to convert gasoline vehicles to natural gas was formed. Currently, there are 6 operating compressed natural gas (CNG) companies, 119 CNG fuelling stations, and about 110,000 CNG vehicles in use, 75% of which are taxis, mainly in Cairo. A primary key to the NGV industry’s success in Egypt is a package of financial incentives offered by the Government including 5-year tax holidays for CNG companies, low-cost conversion charges for car owners, and attractive price differential between CNG and gasoline. At about $0.08 per cubic meter of CNG (equivalent in energy content to a litre of gasoline), it is less than a quarter of the local gasoline price of 1.75 Egyptian Pound (LE) per liter ($0.30). In addition, a typical vehicle conversion kit costs about $900. Owners of high fuel use vehicles, such as taxis, can recover their cost of vehicle conversion in as little as six months from fuel savings alone. This clearly explains why taxis have been the most converted fleet.

Another exciting development for Egypt’s CNG growth was the Joint Egypt/US-sponsored $63 million Cairo Air Improvement Project (CAIP). This initiative had focused on improving Cairo’s air quality through reducing harmful emissions from lead smelters and from vehicles’ exhausts. Part of this program included providing 50 dedicated CNG public transit buses to the Cairo public transport fleet. The bus bodies were locally manufactured, but the CNG engines and the rolling chasse were manufactured in the United States. Key challenges for the government have been replicating that initiative by funding the conversion of the some 5,000 public buses operating in Cairo and changing the price differential between CNG and diesel fuel, which is heavily subsidized. So far, the government has managed to increase the number of CNG buses to nearly 200. In parallel, another program is being implemented to convert government-owned vehicles to CNG. To date, more than 2,300 vehicles have been converted.[3]

Furthermore, the government is currently implementing an initiative aimed to swap a fleet of nearly 40,000 old polluting taxis with modern CNG-fuelled vehicles. The initiative started in Metropolitan Cairo, hosting 25% of Egypt’s population and about 60% of registered vehicles, and will be expanded to other governorates afterwards. Again, economic incentives are playing the major role behind the success of this initiative. In addition to concessional loans, new locally-assembled CNG vehicles are exempt from about 55% of customs and consumption taxes. In return, participating taxi owners have to scrap their old vehicles. The project will have significant impacts on the air quality of Cairo, a megacity suffering from a high level of air pollution. Egypt is now being recognized as having one of the top ten most successful CNG commercialization programs worldwide.

This policy of switching to natural gas has significantly impacted the improvement of air quality, especially in Cairo. Addressing the problem of air quality has been the focus of environmental policy in Egypt for many years. The national air quality management program includes a broad array of policies and measures to curb emissions of pollutants from both stationary and mobile sources.

Pollution sources in Cairo include industrial activities, power stations, and vehicles emissions. Industry is a major source of pollution in Cairo. There are about 36,000 industrial establishments scattered in the area; heavy-polluting industries such as cement, steel, and chemical exist north and south of the urban center. The total number of cars in Egypt increased from 2.1 million in 1992 to 4.3 million in 2008.[4] The number of current registered passenger cars in Cairo is nearly one million, 25% of which are 20-years-old or more.[5] Additionally, power stations are also a major source of air emissions as Cairo is home to seven thermal power stations having a total capacity equal to 4600 megawatts.[6]

Moreover, the climate in Cairo is always sunny and dry. Rain is rare (about 22 mm annually) and wind speed averages about five meters per second. These climate conditions enable air pollutants to accumulate and suspend in the air, leading to the smog phenomenon. When warm air stays near the ground instead of rising, a natural phenomenon known as thermal inversion, and when winds are calm, smog forms and may stay in place for days, leading to high concentrations of toxic gases that pose public health risks. The locally-named “Black Cloud,” a dense layer of smoke and fog over Cairo that occurs annually between October and November appeared for the first time in 1999, when it sparked widespread panic and heated debate. In addition to the sources of pollution discussed above, rice straw burning in the Delta and burning solid waste in Cairo were also named as causes of that pollution episode. According to a World Bank study, the annual cost of environmental degradation in Egypt was estimated to be 14.6 billion LE per year. It accounts for 4.5% of GDP and air pollution costs represent 44% of the total costs.[7]

Air quality in Egypt has been partially monitored since the early 1970s. An air quality monitoring network has been continuously updated with support from the Danish Government to reach a total of 87 stations covering different geographic locations. Typically, particulates (PM10) and lead are the most critical air quality problems, especially in Cairo. Ambient lead concentration used to be far beyond the World Health Organization (WHO) standards mainly due to informal secondary lead smelters scattered within the residential areas. Phasing out leaded gasoline, relocation of lead smelters, and switching to natural gas have largely contributed to reduction of lead pollution.

A recent state of the environment report of Egypt recorded a gradual improvement of air quality. The report indicated a steady improvement in concentrations of sulfur dioxide, lead and carbon monoxide over the period 2004–2008. On the other hand, the chronic problem of pollution by particulates is still unsolved. It should be noted that the overall average concentrations of nitrogen oxides during the last five years had exceeded the limit. This might be a side effect of excessive use of natural gas; an issue that remains to be tackled by environmental experts. It is worth noting that the natural gas switching policy in Egypt, although achieving several economic, social, and environmental objectives, is also considered a cornerstone in mitigating greenhouse emissions. Switching to low carbon fuels such as natural gas is eligible for credit under the Clean Development Mechanism (CDM) of the Kyoto Protocol. It is estimated that about one-third of the projected carbon credits earned by Egypt within the CDM would come from natural gas projects.