August 13, 2024: The Financial Regulatory Authority (FRA) has made a significant stride in environmental finance by launching Africa’s first voluntary carbon market (VCM). This landmark initiative, announced by FRA Chairman Mohamed Farid, marks a pivotal moment for both the continent and the broader global carbon trading landscape. The establishment of this market represents a strategic effort to enhance Africa’s participation in global carbon markets, providing a platform for the issuance, registration, and trading of carbon emissions reduction certificates.
The new VCM will operate through the Egyptian Stock Exchange, which has been equipped to handle the complexities of carbon credit trading. This integration aims to streamline the process of carbon emissions reduction and create a structured environment for market participants. By facilitating the trading of carbon credits, the FRA’s initiative is expected to boost investment in sustainable projects across Africa, as businesses and organizations can now trade carbon credits as a means to offset their carbon footprints.
The launch of Africa’s inaugural VCM reflects a growing recognition of the need for robust mechanisms to combat climate change and foster environmental sustainability. It provides a valuable tool for companies and countries to meet their emission reduction targets and contribute to global climate goals. Through this platform, Africa can leverage its vast natural resources and burgeoning green projects to attract international investments and foster a culture of environmental responsibility.
Trading started today, August 13th, with oversight provided by financial authorities in Egypt and across Africa.
Taking place at the FRA headquarters, the launch ceremony was attended by several key figures, including the Ministers of Planning, International Cooperation, Environment, Investment, Agriculture, and Land Reclamation, as well as the Chairman of the Egyptian Stock Exchange.
Farid presented the regulatory framework for registering carbon reduction projects, outlining the rules and procedures that will govern the market.
Minister of Environment Yasmine Fouad highlighted the significance of the voluntary carbon market in the context of global climate discussions. She emphasized that Egypt faces a challenging task at the upcoming COP29 climate conference, where it will represent developing countries in negotiating a global target for climate financing.
Fouad stressed the importance of ensuring that developing nations have access to fair financing mechanisms and are not burdened with the climate costs typically borne by larger, industrialized countries. She underscored that the new market aligns with Egypt’s commitment to advocating for effective climate finance solutions that support the green transition.
Hassan El-Khatib, Minister of Investment and Foreign Trade, praised the launch of the regulated carbon trading market as a strategic move to enhance Egypt’s attractiveness to both direct and foreign investments. He noted that the market’s establishment would bolster investments in environmentally sustainable sectors and industries that are committed to reducing carbon emissions.
El-Khatib highlighted the market’s potential to drive economic growth through attracting capital to green projects and fostering environmentally responsible practices.
Minister of Planning, Economic Development, and International Cooperation Rania Al-Mashat expressed that the launch of Egypt’s first organized voluntary carbon market represents a crucial step towards achieving both economic and environmental sustainability.
Al-Mashat praised the market as a tool that not only supports emission reductions but also facilitates green transformation by providing a platform for trading carbon credits, and will position Egypt as a regional leader in the green economy, offering a model for other countries to follow.
On August 11th, the FRA, in partnership with the Ministry of Environment, finalized all necessary regulatory and procedural requirements for the carbon market’s launch.
The FRA issued requirements for brokerage firms intending to trade carbon emission reduction certificates on July 23rd, and it released standards for the verification and certification of carbon credits for both local and international entities back in 2023.
