The Egyptian government seeks the World Bank’s expertise to establish a mandatory market for carbon certificates, sources have disclosed. The World Bank is anticipated to contribute to the setup and provide the necessary know-how for the market’s creation, as well as advice on the legislative framework.
In such markets, companies must purchase carbon credits if their emissions surpass a set limit, similar to the European Emissions Trading System. Conversely, entities with emissions below the threshold can sell their excess certificates, helping others avoid government penalties.
The government is in the process of setting up a registration office under the Ministry of Environment to oversee the country-specific projects.
A technical committee is being formed to oversee the carbon market, alongside the adoption of standardized carbon certification procedures, including the verification and validation of national carbon emissions certificates.
The government aims to bolster the voluntary market expected to arise next year, aligning with the Paris Climate Agreement and leveraging the incentives of a mandatory carbon market. This strategy is intended to draw investments to Egypt by selling surplus certificates internationally.
Initially, the mandatory market will encompass sectors outlined in Egypt’s “Nationally Determined Contributions” report, which sets annual carbon footprint reduction targets for specific industries.
Carbon markets are instrumental in resource mobilization and cost reduction, aiding countries and companies in transitioning to a low-carbon economy. Trading carbon credits could potentially halve the costs of national climate change mitigation efforts, saving up to $250bn by 2030. As nations progress towards net-zero emissions, the necessity for carbon markets is expected to diminish.