A voluntary carbon market committee is to be created as Egypt aims to establish itself as the go-to destination for carbon credit trading in Africa.
Egypt’s Financial Regulation Authority is creating a new body to oversee the country’s voluntary carbon market. The move, announced on April 13, will see the launch of a Supervisory and Control Committee on Carbon Emissions Reduction Units to develop rules around the issuance of certificates and establish benchmarks for the selection of verification and approval bodies for emissions reduction projects, among other functions.
In a public statement, FRA chair Mohamed Farid Saleh said: “The formation of the committee [will allow for the co-ordination and integration] of efforts to accelerate the pace of activating the market for trading carbon emission reduction certificates.”
The FRA’s announcement forms part of a wider push to develop Egypt’s carbon market, which was first unveiled at COP27 in Sharm El-Sheikh. A prime ministerial decree signed in December 2022 has paved the way for the development of a carbon trading platform on the country’s stock exchange (EGX), which is expected to be fully operational by the middle of the year.
As such, the new supervisory committee will include representatives from the EGX, the environment ministry, the FRA and other “experienced” professionals operating in the carbon market space.
For now, the market is awaiting the committee’s formation and its deliberations over carbon emissions reduction certificate rules and the standards it will apply to external verification bodies.
Early signs, however, point to at least one verification entity being admitted under Egypt’s new carbon market regime: Qatar’s Global Carbon Council. In late March, the EGX signed a memorandum of understanding with the GCC, which is the Middle East and North Africa region’s first VCM offsetting programme, to “scale up” and “accelerate” regional climate action. Under this arrangement, GCC carbon credits will be listed on the EGX carbon trading platform.
Beyond this, it is unclear which other verification and approval bodies may also meet the new committee’s standards. But as Egypt looks to position itself as the go-to destination for carbon credit trading in Africa, the country may adopt a set of rules and benchmarks that will help to build its profile and connections with fast-growing markets to its south.
The FRA’s move to provide centralised oversight of Egypt’s VCM has been generally welcomed by market participants. In a statement, Abu Dhabi Commercial Bank Egypt head of sustainability Merham Yousri praised the FRA’s approach for “introducing stronger governance” with respect to the implementation of the new carbon market.