CAIRO - 6 November 2022: The Egyptian Exchange Holding Company for Capital Markets Development, the Agricultural Bank of Egypt and Libra Capital Group signed Sunday a framework to establish a Carbon Certificates Trading Company.
The signing came without disclosing the financial and organizational details of the company which aims to cooperate with all government and private projects, according to a statement issued by the Egyptian Stock Exchange.
Carbon certificate trading is a mechanism that aims to reduce companies’ emissions by setting a price for the polluting activities resulting from them, and allowing companies to buy and sell carbon credits related to the volume of their emissions.
The mechanism allows the company to issue a specific amount of emissions, represented in the form of credits, each equal to one ton of carbon dioxide, and if it exceeds this emissions limit, it will be required to buy more credits. In return, the companies that reduce emissions sell their available emissions credits to achieve profit, which provides a financial incentive to reduce pollution.
Head of the EGX, Ramy El-Dakani, stated that the company's framework agreement aims to create new horizons for cooperation at the continental and regional levels to encourage green investment and diversify investment options for investors.
“It will also enhance Egypt's competitiveness as a major financial center for African markets for the trading of carbon certificates, which are one of the important financial tools to help emerging countries finance their expansion plans in parallel with achieving their goals in matters of climate change,” according to El-Dakani.
“The establishment of the first entity to manage and develop the environmental products and carbon market in Egypt, enhances the company’s efforts in the field of green energy, reducing emissions and preserving the environment,” said Sherif Magdy El-Gabaly, director of Libra Capital.
For his part, Dr. Mahmoud Mohieldin, the climate leader for the Egyptian presidency of the COP27 summit, believes that a number of institutions support the African Carbon Market initiative in order to set standards, rules and regulatory systems and adapt international rules in carbon markets to African needs so that there is a possibility to acquire added value within African countries.
He pointed out that Europe is the best in standards and activity in the areas of carbon markets, and China has benefited from it and adapted it to its needs, expressing his hope that the market will be active in Africa and Egypt.
With regard to the carbon pricing process, Mohieldin explained that the current volume of transactions in carbon-related credit is increasing 20 times, pointing out the need for a minimum carbon price in Africa to vary in prices, as it is once between $2-3 and sometimes between $80-100 per ton.
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