FRA, NPI collaborate to boost voluntary carbon market

Daily News Egypt
5 Min Read

The Regional Center for Sustainable Finance (RCSF), which is affiliated with the Financial Regulatory Authority (FRA), organized a workshop in cooperation with the National Planning Institute (NPI) on how the non-banking financial sector can enhance the voluntary carbon market.

According to an FRA statement, the workshop discussed the ways to raise awareness of the importance of the voluntary carbon market and to foster innovation in sustainable finance by introducing and developing financial instruments and markets that are relevant to sustainable finance, especially the voluntary carbon market. This is in line with the memorandum of understanding that aims to strengthen cooperation and exchange of expertise to promote sustainability practices and applications, and to support the Egyptian government’s efforts to achieve the sustainable development goals.

Ashraf El-Araby, the President of NPI, said that the Egyptian state and its institutions are keen on exploring the opportunities of the voluntary carbon market as a means to facilitate the transition to a low-carbon economy, and to provide innovative financing solutions to mitigate the climate change risks for all countries, especially the developing ones.

El-Araby added that the voluntary carbon market is a powerful force that can help accelerate the transition to a net-zero emissions economy and that organizing the workshop is the first step in implementing the memorandum of understanding between NPI and FRA, represented by RCSF.

Ahmed Rashdi, the Executive Director of RCSF, said that FRA is working to achieve the sustainable development goals by enhancing the capacities of companies under its supervision to apply the principles of sustainable finance and insurance, and by supporting the development and introduction of green financial products and enabling green finance in all non-banking financial sectors.

Rashdi also stressed the importance of activating the emissions trading market certificates to help companies recover some of their investment costs aimed at reducing carbon emissions from their activities and reinvesting these resources in achieving the ultimate goal of carbon neutrality. He mentioned that the launch of the carbon market was announced during the COP27 Climate Summit, and highlighted FRA’s efforts to activate the voluntary carbon market by establishing regulatory and incentive controls for trading operations under the decision issued by Prime Minister Mostafa Madbouly, which amended the executive regulations of the Capital Market Law, and classified carbon emission reduction certificates as tradable financial instruments that are issued after obtaining approval from the relevant authorities.

The discussion aimed to explore how to activate the voluntary carbon emissions trading market, which is an innovative financing mechanism to mitigate the negative impacts of climate change, according to Nagla Harb, Director of the Center for International Economic Relations at the National Planning Institute. She stressed the need for governance and joint efforts in light of the growing commitments of countries to address climate change and the emerging challenges and geopolitical effects of crises such as energy shortages, food crises, the COVID-19 pandemic, and others. She also praised the efforts of the Financial Regulatory Authority and the Egyptian Exchange in this regard.

Katiana Garthia, a finance specialist at the World Bank, highlighted the challenges facing the voluntary carbon market, such as the limited impact of financial sector policies and climate policies of major financial institutions on this market. She emphasized the need for structural reforms and strong mandatory climate policies, as well as well-designed supportive aids to provide sufficient financial space. She also called for the cooperation of governments in this voluntary market, instead of relying on international organizations and having local companies that adhere to international standards.

Sherif El-Deewany pointed out that many companies are investing in carbon markets, especially as energy prices increase, which reduces their carbon emissions by improving their energy efficiency. He also viewed these certificates as investment certificates that can generate financial returns. Moreover, he noted the consumer interest in low-carbon products and the integration of carbon certificates in the risk management plan for these companies. He also highlighted the efforts of the Egyptian state to reduce carbon emissions, especially in the transportation, waste, and tourism sectors.

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