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Sunday, 27 November 2022

What a new Green Star program could mean for manufacturers

The Enterprise guide to the Green Star program: The government earlier this month announced a set of guidelines for companies that will favor low-carbon products for government purchases, dubbed Green Star. The program will be offering a number of incentives to businesses compliant with the new environmental standards.

Keep your eyes peeled for what the incentives actually entail: Though still not yet clear, details on these new incentives will be spelled out in the new Environment Act currently under review at the House of Representatives, a source familiar with the matter told Enterprise. What is clear for now is that bringing down industrial emissions to EU standards — especially for products geared for export — will be the goal for the incentives, which could give us an edge for boosting exports.

A number of initiatives are simultaneously trying to reduce industrial emissions: In addition to the Green Star program, which will give preference to low-carbon products for government purchases, a national emissions trading scheme could help expand low-carbon technologies in the local market, Trade and Industry Minister Ahmed Samir said.

Ecolabeling will also soon come into the mix: Placing standards for environmentally sound production methods will also be a part of the larger strategy to bring down emissions. Verifying and granting producers who meet these standards with eco-labels to display on their products is also in the pipeline. The Industrial Development Authority and the air quality division at the Environment Ministry’s Environmental Affairs Agency (EEAA) will be responsible for verifying that producers are in line with regulations and issuing labels, division head Mostafa Mourad told Enterprise.

Green Star certification has already gained some ground in the tourism sector: At resort destinations like Sharm El Sheikh and El Gouna, Green Star certification has already been distributed, Mourad told us. There’s been a lot of effort and consultation with international experts before the green label program took off in places like Sharm El Sheikh, Waste Management Regulatory Authority Deputy Head Yasser Mahgoub told Enterprise.

Who decides what gets Green Star certification? A committee put together by the Trade and Industry Ministry and includes representatives from the Industrial Development Authority and the Waste Management Regulatory Authority has been tasked with organizing and monitoring industrial waste management operations, Mahgoub tells us. This same committee is also tasked with granting approvals for green labels to compliant manufacturers, he adds.

The eligibility criteria: In order for manufacturers to become eligible for a green star rating they must use fewer hazardous materials in their production processes; minimize their use of natural resources like water and electricity; and design recyclable products that produce minimal industrial waste.

We’ve been making some progress when it comes to cutting down on emissions: Egypt has managed to reduce the levels of air pollution in recent years — thanks in part to government initiatives — but still more effort is needed to bring down the concentration of particulate matter in the air, Mourad told us. The country’s industrial sector’s carbon emissions fell to 0.67 kilograms per manufacturing value added (MVA) in 2019, from 0.83 kg in 2000, according to Environment Ministry data. It’s a step in the right direction, but we still lag behind most of our African peers: On average, African countries have nearly halved their industrial emissions in the same time period to 0.63 kg per MVA in 2019, from 1.03 kg in 2000.

Can we reduce emissions even further? A number of manufacturers voiced their support for the green push but are concerned with the pressure it puts on the industrial sector. The shift away from fossil fuels and towards a greener industry is costly and requires intellectual property and specific imported programs to help measure emissions and fuel consumption, Badr City Investors Association Chairman Bahaa El Adly told Enterprise. He highlighted the importance of setting targets that support the industry, and the government’s role in setting the timetable and cost. Industry has been on the receiving end of one shock after another, which hurts its plans for industrial expansion and boosting exports, he said. The push to go green requires more cost-sensitive incentives instead of legal obligations, he said.

Funding also remains a key issue, head of the Chamber of Engineering Industries Mohamed Al Mohandes tells us. Factories don’t always have the funds to enact the eco-friendly policies that are required to get their hands on the Green Star, especially in light of recent inflationary pressures and increasing cost of production, Al Mohandes said. Factories have limited capabilities to expand their plans to reduce emissions, he said. Plans to increase Egyptian exports to USD 100 bn mainly depend on industry, he said, adding that a gradual transformation will work better for the sector.

Your top industrial development stories for the week:

  • CBE exits subsidized loan program: A decision by the government to end the central bank’s role in subsidizing loans for industry and other key areas of the economy has not been received well by some sections of the business community, with the Egyptian Businessmen’s Association (EBA) and some MPs calling on ministers to rethink their plans.
  • ACI rollout for air freight postponed: The rollout of the Advance Customs Information (ACI) customs system to air freight has been pushed for a second time to give importers, customs brokers, shipping agents and overseas companies more time to get used to the system amid volatility in the global economy.
  • Forward Egypt, the company that is manufacturing footballs for the World Cup, is getting its own freezone in Tenth of Ramadan city. The zone will have three factories for the manufacture of footballs, sports shoes, and sportswear with a capital of USD 10 mn and investment costs estimated at USD 22 mn.

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