The Voluntary Trading of Carbon Certificates And Bonds Kicks Off: Investment Minister

Minister of Investment and Foreign Trade Hassan ElKhatib announced during the Financial Regulatory Authority Conference (FINRA) on Tuesday that the voluntary trading of carbon certificates and bonds will start today.

This trading will create in the future a compulsory market with an increasing depth of demand and supply, according to the minister.

The Minister of Planning, Economic Development and International Cooperation Rania Al-Mashat also stated during the conference that the inauguration of the first voluntary organized market for the registration, issuance, and trading of carbon reduction certificates is one of Egypt's steps towards achieving economic and environmental sustainability and the adoption of innovative policies that contribute in limiting climatic changes.

Al-Mashat also stated that carbon credit trading might lower the cost of executing national targeted contributions by more than half, reaching $250 billion by 2030 globally.

Within this framework, the launch of the carbon market will enable Egypt to increase the contribution of the green economy to the gross domestic product (GDP), which increases green investments and achieves the required percentages in different sectors of the green economy.

Furthermore, she stated that the financing of the developmental policies programme that was executed by the ministry in cooperation with The World Bank promoted the ingratiation of this market through reinforcing structural reforms and providing the financial regulatory authority with the technical support to issue three decisions regarding local carbon markets.

These decisions include the registration requirements for accreditation and verification bodies, the authorization requirements for private carbon credit registrations, and the authorization requirements for private carbon credit registrations related to commercial matters.

Al-Mashat noted that the energy sector projects under the NWFE program represent one of the state’s avenues, which achieve national strategic goals for climate change by reducing carbon emissions by around 17 million tons annually.

On this matter, the ministry is cooperating with the Transformative Carbon Asset Facility (TCAF) which belongs to the World Bank and targets decreasing carbon emissions.

She also stated that this market represents a positive step towards the involvement of the private sector in climate action and the encouragement of Egyptian companies to invest in mitigation projects.

Moreover, the minister declared that the planning ministry will continue the ongoing collaboration with the World Bank Group relating to the Joint Capital Market Program (J-CAP) to support the financial regulatory authority, the ministry of environment, and many national entities to enhance the infrastructure, attract private capital in Egypt, and strengthen the liquidity in financial markets.

She explained that this would occur through developing the required bases of the local environmental system to create a regional hub for carbon markets.

The ministry is coordinating with the European Union to execute many projects under the Technical Assistance and Information Exchange (TAIEX) instrument to provide technical assistance for the Carbon Border Adjustment Mechanism (CBAM).

On a similar note, Egypt’s Financial Regulatory Authority (FRA) announced the completion of the regulatory requirements needed for a well-established market by supervisory authorities for voluntary carbon emissions reduction.