Mohamed Farid, Chairperson of the Financial Regulatory Authority (FRA), issued two resolutions No. 57 and 58 of 2023 regarding the formation of the Supervisory and Control Committee on Carbon Emissions Reduction Units and their terms of reference.
According to the decision, the committee is responsible for preparing rules for issuing carbon emission reduction certificates, preparing rules for supervising and controlling carbon emission reduction certificates, including requirements for continuous disclosure and transparency for carbon emission reduction projects and programmes, as well as preparing criteria for selecting verification and approval bodies for carbon emission reduction projects, and preparing special guiding rules with the standards of integrity and credibility of carbon emission reduction certificates.
In addition, it shall be tasked to preparing rules for avoiding conflicts of interest for parties involved in the process of issuing carbon emission reduction certificates, preparing rules for defining records of carbon emission reduction certificates whose certificates are valid for trading, and coordinating with the concerned authorities to establish the Egyptian registry for carbon emission reduction certificates, with a description of the types of certificates, reducing carbon emissions. The committee also undertakes any other tasks related to its work.
For his part, Mohamed Farid said that the formation of the committee comes in light of the joint work, coordination and integration of efforts with the relevant parties in order to accelerate the pace of activating the carbon emission reduction certificates trading market, which was announced by the Financial Regulatory Authority and the Egyptian Exchange during the activities of the 27th Climate Summit in the city of Sharm El-Sheikh in 2022, which aims to motivate companies to engage more in reducing carbon emissions in order to comply with international requirements and standards in this regard.
He added that the past period and in light of the preparation of the legislative framework regulating the new market, amendments have been made to the capital market law to allow the carbon emission reduction certificate to be considered a negotiable financial instrument, and all the necessary legislative and procedural requirements in this regard are being met, as the new market supports the state’s efforts aiming to achieve carbon neutrality in an effort to reduce global warming and boost financing for climate action.
He indicated that the decision stipulated that the committee meets at least once a month or whenever the need arises based on an invitation from the committee chairperson. The committee also has the right to invite whoever it deems appropriate to attend its meetings without having the right to vote on the committee’s decisions. The issuance of the committee’s decisions shall be by a majority of the members, provided that the rules obtained with the approval of the committee are approved by the Board of Directors of the Financial Regulatory Authority.
It is worth noting that the carbon emission reduction certificates trading market has been announced as an intention to launch it during the activities of Climate Summit No. 27 in Cairo by the end of 2023, as a platform to help economic entities operating in various productive activities in Egypt and Africa to engage in activities to reduce carbon emissions to achieve carbon neutrality and benefit from Issuing and selling reduction certificates for the benefit of other companies wishing to offset their carbon emissions that are difficult to reduce. Carbon markets also help companies recover part of their investment spending directed to reduce carbon emissions resulting from the exercise of their activities and reinvest these resources in achieving the larger goal of carbon neutrality that they seek to be achieved by all countries of the world.