The Financial Regulatory Authority (FRA) has fulfilled the necessary regulatory prerequisites for Egypt’s inaugural regulated market for voluntary carbon reduction certificates, in collaboration with the Ministry of Environment. This milestone represents a significant step in Egypt’s environmental and financial sectors. This market will enable the registration, issuance, and trading of voluntary carbon reduction certificates across Egypt and Africa, marking a significant step in the country’s efforts toward sustainable economic growth and environmental stewardship.
The new market allows project developers and financiers to issue carbon reduction certificates for projects registered with the FRA. These certificates can then be traded on platforms established by the Egyptian Exchange, attracting both local and international investors. This initiative aims to boost investment in carbon reduction projects, positioning Egypt as a leader in this field.
Mohamed Farid, Chairperson of the FRA, emphasized the importance of completing the regulatory framework for this market, which is the first of its kind in Egypt and Africa. He highlighted that this achievement demonstrates the capability of Egyptian institutions to collaborate effectively and keep pace with global developments, particularly in climate action and the pursuit of carbon neutrality.
Farid also noted that this regulated market would support Egypt’s efforts in international negotiations related to the carbon footprint requirements for exported goods, potentially aiding in their market access.
This development is part of Egypt’s broader strategy to advance organized markets, as initially announced during the COP27 conference, which included the commitment to establish voluntary carbon markets. The first steps toward creating this market were taken with the issuance of Prime Ministerial Decree No. 4664 of 2022, which amended certain provisions of the Capital Market Law No. 95 of 1992, recognizing carbon reduction certificates as financial instruments. This was followed by the establishment of a trading platform by the stock exchange and the formation of a supervisory committee led by the FRA, which includes representatives from the Ministry of Environment, the stock exchange, and experts in carbon markets.
To expedite the market’s activation, the FRA has issued a decision outlining the standards for accrediting verification and validation bodies for carbon reduction projects. The committee has since received and reviewed applications from several entities, resulting in the accreditation of three verification and validation bodies—two local and one international.
Additionally, the FRA has established rules for the listing and delisting of carbon reduction certificates on Egyptian exchanges, as well as standards for the approval of local voluntary carbon registries. These registries will serve as centralized electronic systems for the issuance, registration, and tracking of carbon reduction certificates, ensuring transparency and integrity in the market. The FRA has also approved the trading and settlement rules for these certificates after extensive consultations with relevant stakeholders.
