الهيئة العامة للرقابة المالية

Dr. Mohamed Farid – FRA Chairman:

• Ongoing coordination with the banking sector serves to promote their participation in carbon reduction initiatives via the regulated Voluntary Carbon Market.
• The Voluntary Carbon Market empowers Egypt to pursue its international carbon neutrality and emission reduction targets.
• FRA’s vision prioritizes both financial stability and the development of innovative products and markets that align with global best practices and strengthen Egypt’s competitiveness
• FRA has established the technical infrastructure and methodologies, aligned with international standards, for measuring, reducing, and certifying carbon reduction projects.
• FRA researched global standards and best practices before establishing Egypt’s first regulated Voluntary Carbon Market to ensure its efficiency and effectiveness.
• The regulatory framework for Egypt’s Voluntary Carbon Market is finalized. Entities are encouraged to register their projects and start their carbon reduction journey.
• Robust governance of the technology used in carbon registries is essential for maximizing market efficiency, effectiveness and target achievement.
• FRA has launched the first regulated Voluntary Carbon Market in Egypt and Africa, fulfilling its COP27 commitment.

As part of their ongoing strategic partnership, the Financial Regulatory Authority (FRA) and the Egyptian banking sector conducted a workshop to present Egypt’s pioneering experience in establishing the region’s first regulated Voluntary Carbon Market, with a focus on how banking institutions can leverage this market to enhance their contributions in achieving carbon neutrality.

Dr. Mohamed Farid,  FRA Chairman delivered the keynote address at the workshop, which was held at FRA headquarters and attended by officials and representatives from the Federation of Egyptian Banks and heads of Egyptian banks.

Dr. Farid stated that FRA is working to enhance the overall stability of non-banking financial markets and ensure market integrity and the protection of stakeholders’ rights. He explained that all the technical foundations and methodologies for the voluntary carbon market have been developed in accordance with international best practices for measuring carbon emissions. He pointed out that FRA also studied global standards and experiences before establishing the market to ensure its efficiency and effectiveness.

In his speech, Dr. Farid highlighted the experience of establishing the first regulated Voluntary Carbon Market in Egypt and Africa under the supervision of capital market regulators. He also differentiated between mandatory and voluntary carbon markets, explaining the legislative frameworks for each, as well as the parties involved, objectives, success indicators, pricing, market mechanisms and the industries covered by each market.

Dr. Farid emphasized that Voluntary Carbon Markets offer significant benefits, including enabling emissions offsetting, creating financial incentives for companies to reduce their carbon footprint and driving investment in clean technologies.  He highlighted these advantages, explaining that carbon credit trading could cut climate mitigation costs by more than half (up to $250 billion) by 2030 and accelerate the shift to a low-carbon economy.

He noted that carbon credits are tradable financial instruments.  Each credit corresponds to one metric ton of CO2 equivalent emissions reductions.  These credits are issued to project developers following the successful completion of validation and verification processes conducted by local or international validation/ verification Bodies (VVB) duly registered with FRA, in accordance with established international standards and methodologies for carbon reductions.

Dr. Farid outlined the establishment of Egypt and Africa’s first Voluntary Carbon Market, beginning with a Prime Ministerial decree amending capital market regulations to recognize carbon credits as financial instruments. This paved the way for the Stock Exchange to create a trading platform and a regulatory committee, based on FRA proposal.  Subsequently, FRA established the Carbon Credit Regulatory Committee (CCRC) to control and supervise carbon emission reduction units (CERUs).  The CCRC is chaired by FRA Chairman and includes representatives from FRA, the Ministry of Environment, EGX and carbon market experts.

In furtherance of its commitment to expediting the establishment of a robust Voluntary Carbon Market and recognizing its pivotal role in supporting national carbon reduction objectives, FRA implemented several key measures.  FRA issued a regulatory framework governing the registration of validation and verification bodies (VVBs).  Following a rigorous evaluation process, including interviews, FRA registered three entities (two domestic and one international) to conduct validation and verification activities.

Furthermore, FRA promulgated rules governing listing and delisting of carbon credits on Egyptian Stock Exchanges, along with established criteria for the accreditation of local voluntary carbon registries.  These registries will function as centralized electronic repositories for the issuance, registration and tracking of carbon credits.  Concurrently, after extensive consultations and coordination, FRA adopted comprehensive trading rules and settlement procedures for carbon credits on the Egyptian Stock Exchanges.

FRA Chairman noted that the Authority is constantly reviewing policies and procedures to ensure their effectiveness in serving the vision and objectives of promoting carbon reduction practices. He pointed out that the regulatory and legislative framework for the voluntary carbon market is now complete and he called on all companies and entities to register their carbon reduction projects in the market through FRA’s website.

He explained that project plan is the first step in measuring a carbon footprint and assessing carbon reduction potential.  He added that robust governance of the technology used for carbon registries is crucial for achieving market efficiency and targets.

Dr. Mohamed Farid emphasized FRA’s regional leadership in launching the first regulated Voluntary Carbon Market in Egypt and Africa, fulfilling a commitment announced at COP27.  This market empowers developers and financiers of carbon reduction projects—whether agricultural, industrial, or otherwise—to generate and sell carbon credits. This aims to attract new local and international investors, providing additional revenue for project implementers, increasing investment in such projects, establishing Egypt’s leadership in this area and driving sustainable economic growth.

He also stated that FRA plans to hold the first auction on the Voluntary Carbon Market and develop regulations for the I-REC market.

The Carbon Credit Regulatory Committee (CCRC) was established to further develop the voluntary carbon market. The Committee is chaired by FRA Chairman and includes representatives from FRA, Ministry of Environment, Egyptian Exchange and experts in carbon markets. The CCRC regulates carbon credit issuance, oversight, and monitoring, ensuring transparency and disclosure and setting criteria for selecting Validation/Verification Bodies (VVBs).

To accelerate the development of a regulated Voluntary Carbon Market, FRA, under Decree 279 of 2024, established an advisory group to assist the CCRC. This group comprises 13 members with diverse expertise in carbon emissions reduction, sustainable development, climate change, and clean energy, including both local and international professionals. The Committee’s Chairman will nominate candidates, and the Committee will select members to serve one-year renewable terms.

The advisory group’s primary function is to assist the Committee in achieving its objectives and fulfilling its responsibilities. Specifically, the group will provide valuable technical advice on matters relevant to the Committee’s work and conduct in-depth studies on assigned topics.

The Authority’s efforts have resulted in the establishment of a robust regulatory framework for the Voluntary Carbon Market at the regional level, evidenced by the issuance of 9 key decisions. This framework supports the operation of 6 registries and the accreditation of 5 Validation and Verification Bodies (VVBs). These efforts have facilitated the registration of over 160,000 carbon credits, representing a significant reduction in emissions. Furthermore, approximately 26 projects have been registered across 6 diverse sectors, including sustainable agriculture, afforestation, reforestation, re-vegetation (ARR), biogas, energy access, cook stoves and water filtration.