Back to the complete issue
Thursday, 10 November 2022

EGX announces Africa carbon market

The EGX yesterday announced it would set up Africa’s first voluntary carbon market on the sidelines of COP27. The market will allow companies in Egypt and Africa working on emissions-reducing projects to sell certified carbon credits, which can then be bought by other companies wanting to offset their emissions, the bourse said in a statement (pdf).

SOUND SMART- There are two primary types of carbon markets: compliance (which are created as part of a policy or regulatory requirement) and voluntary (where carbon credits are issued, bought, and sold on a voluntary basis).

The structure and regs are still pending: The EGX and Financial Regulatory Authority are still working on the framework, business model, and structure of the VCM. Among the key issues will be governance of certificate creation and registration. Look for an announcement later from Egypt’s prime minister, the statement says, without specifying a timeline.

What we still don’t know: The statement didn’t tell us whether participation in the VCM would be limited to specific industries and — if so — how eligibility would be determined. Also TBD is guidance on the pricing, size or time for first issuances and how the EGX sees marketing to buyers (local, regional or global) unfolding. The EGX was unable to reply to requests for comment by dispatch time.

We do know that newly-established Libra Carbon will supply the carbon offsets: A subsidiary of the EGX recently signed an agreement with the Agricultural Bank of Egypt and Enara Group’s Libra Capital to establish the Egyptian company Libra Carbon, which “will supply high-quality carbon offsets to the market,” head of project development Omar El Nemr told Enterprise Climate. As of now, the supply of carbon offsets being issued in the Egyptian market is relatively low, he said. “As Libra Carbon, we’ll work towards providing sufficient volume in the new market to kickstart trading operations.”

BACKGROUND- Voluntary carbon markets are gathering steam across the region. Saudi Arabia’s sovereign wealth fund, the Public Investment Fund (PIF) last month set up a regional voluntary carbon market company, which auctioned 1.4 mn tons of carbon credits at Davos in the Desert. Singapore is also said to be eyeing the purchase of carbon credits from Morocco, we noted.

ALSO YESTERDAY- US climate envoy John Kerry also announced a plan to unlock US capital for clean energy and other climate projects in emerging markets. Enterprise Climate has the rundown on that and more in this morning’s edition here.

Enterprise is a daily publication of Enterprise Ventures LLC, an Egyptian limited liability company (commercial register 83594), and a subsidiary of Inktank Communications. Summaries are intended for guidance only and are provided on an as-is basis; kindly refer to the source article in its original language prior to undertaking any action. Neither Enterprise Ventures nor its staff assume any responsibility or liability for the accuracy of the information contained in this publication, whether in the form of summaries or analysis. © 2022 Enterprise Ventures LLC.

Enterprise is available without charge thanks to the generous support of HSBC Egypt (tax ID: 204-901-715), the leading corporate and retail lender in Egypt; EFG Hermes (tax ID: 200-178-385), the leading financial services corporation in frontier emerging markets; SODIC (tax ID: 212-168-002), a leading Egyptian real estate developer; SomaBay (tax ID: 204-903-300), our Red Sea holiday partner; Infinity (tax ID: 474-939-359), the ultimate way to power cities, industries, and homes directly from nature right here in Egypt; CIRA (tax ID: 200-069-608), the leading providers of K-12 and higher level education in Egypt; Orascom Construction (tax ID: 229-988-806), the leading construction and engineering company building infrastructure in Egypt and abroad; Moharram & Partners (tax ID: 616-112-459), the leading public policy and government affairs partner; Palm Hills Developments (tax ID: 432-737-014), a leading developer of commercial and residential properties; Mashreq (tax ID: 204-898-862), the MENA region’s leading homegrown personal and digital bank; and Industrial Development Group (IDG) (tax ID:266-965-253), the leading builder of industrial parks in Egypt.