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Egypt: A voluntary carbon market

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In brief

A recent Prime Ministerial Decree No. 4664 of 2022 (“Decree“) was published on 25 December 2022, incorporating new provisions to the executive regulations of the Capital Markets Law No. 95 of 1992.

The Decree provides for the establishment of a voluntary carbon market platform within the Egyptian Stock Exchange (EGX) for the trading of carbon emissions reduction certificates (CERs). The CERs are tradeable financial instruments for greenhouse gases (GHG) and are to be issued in favor of entities establishing projects reducing GHG emissions after obtaining the approval of the relevant authorities which are not currently specified. Each CER unit shall represent the equivalent of one metric ton of carbon dioxide reduced.

In more detail

All governmental authorities, the public sector, the private sector and project developers shall be required to notify the Financial Regulatory Authority (FRA) and the Ministry of Environment of all projects for which CERs shall be issued. Moreover, entities for which CERs are issued shall be required to disclose any events or changes having an impact on approvals issued from the competent authorities throughout the term of the issuance.

A committee, “The CERs Supervisory and Monitoring Committee” shall be established by the FRA board of directors in coordination with the Ministry of Environment involving representatives from the relevant authorities to set the rules for the issuance and trading of CERs, as well as supervising and monitoring the same. EGX shall also issue the CERs trading rules which shall only apply after their ratification by the FRA. FRA shall hold a registry of the projects for which CERs are issued and shall inform the Ministry of Environment of such projects on a monthly basis.

Stay tuned for more updates on any upcoming developments on the topic.

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Lamyaa Gadelhak is a partner at Helmy, Hamza & Partners, Baker McKenzie Cairo, where she co-heads the Banking & Projects Practice Group. She has over 15 years of experience working on the entire spectrum of banking and finance as well as on major projects development including in the field of energy, mining, infrastructure, and in environmental markets and climate change. Lamyaa has been at the forefront of Baker McKenzie's efforts in expanding the Firm's expertise in other jurisdictions, including in Africa. She is currently a member of the Firm's Africa Initiative Steering Committee and of the Global Project Finance Steering Committee. She was also a member of the Firm's EMEA Banking & Finance Steering Committee and EMEA Financial Institutions Working Group. She is a member of the Institute for Energy Law of the Center for American and International Law and the Egyptian Bar Association. Lamyaa has contributed to various publications, offering insights on renewable energy, banking and finance, emissions trading, climate change, and carbon capture and storage. She also regularly speaks and sits at panels on renewable energy and climate change at industry conferences. Chambers Global, Legal 500 and IFLR have all ranked Lamyaa as a leading lawyer and recognized her various contributions and distinguished work in the field.

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Hania Meshref is an associate at Helmy, Hamza & Partners, Baker McKenzie Cairo. She advises a wide range of lenders, sponsors and borrowers on domestic and cross-border transactions, with a particular focus on syndicated loans, real estate finance and project finance. Hania is also currently involved in card payment processing and Fintech projects.

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