الهيئة العامة للرقابة المالية

The Financial Regulatory Authority (FRA), under the leadership of H.E. Dr. Mohamed Farid, has launched Egypt’s first regulated and supervised Voluntary Carbon Market (VCM). This milestone event marks a significant step towards supporting the country’s efforts to achieve carbon neutrality and foster a robust lower carbon economy.

The (VCM) allows the registration of Voluntary Carbon Emission Reduction projects and the issuance and trading of carbon reduction certificates, The FRA collaborated with the Ministry of Environment to complete all regulatory requirements for this (VCM); through a carbon credits supervision and oversight committee including representatives from Ministry of Environment, The Egyptian Exchange (EGX) and key private sector stakeholders.

The launch event was attended by several key government officials, their presence underscored the strong government backing and the collaborative efforts across multiple ministries to ensure the success of this groundbreaking milestone, such as ministers H.E. Dr. Rania Al-Mashat, Minister of International Cooperation and Planning and Economic Development, H.E. Dr. Yasmine Fouad, Minister of Environment, H.E. Hassan El Khatib, Minister of Investment and Foreign Trade, H.E. Dr. Manal Awad, Minister of Local Development, H.E. Alaa Farouk, Minister of Agriculture and Land Reclamation, H.E. Mahmoud Fawzy, Minister of Parliamentary Affairs and Political Communication and Mr. Ahmed El Sheikh, Chairman of the EGX.

Key Participants and Transactions: During the launch event, three trades took place between of the private sector participants in Egypt’s new carbon market (VCM), namely:

• Isis Food Industries acquired 500 voluntary carbon certificates from the Egyptian Biodynamic Agriculture Association (EBDA) at EGP 1,040 per certificate. The transaction was facilitated by Beltone Securities Brokerage.
• SCB Environmental Markets purchased 2,500 carbon credits from VNV Advisory. This transaction highlights SCB’s active participation in the inaugural trades and their commitment to supporting carbon reduction efforts through the newly established market.
• Daltex purchased 1,500 international Verra carbon credits from VNV Advisory for a total value of over EGP 1.3 million (USD 27,000). The credits were sourced from the Punjab Agroforestry Project in India, which spans over 500,000 hectares and aims to enhance smallholder farmers’ incomes through carbon revenue while improving their livelihoods.

These transactions were executed through brokerage firms regulated and licensed by the FRA, namely, Beltone Securities Brokerage and CI Capital Securities Brokerage.

Additionally, a future contract was entered into between Misr Insurance Company and VNV Advisory.

Private Sector Engagement Nationally and Internationally:

A-Isis Food Industries and EBDA

Demonstrated their commitment to sustainable agricultural practices by participating in the inaugural trades, highlighting the growing involvement of local agricultural entities in the voluntary carbon market. This collaboration underscores the importance of organic and biodynamic farming in contributing to carbon reduction efforts in Egypt.

B- SCB Environmental Markets

Played a key role in the market launch. Kevin Mc Geeney, CEO of SCB Environmental Markets, expressed his enthusiasm, stating, “Under the strong leadership of the Egyptian Financial Regulatory Authority, we are excited to be part of this pioneering step towards a low-carbon future. This voluntary carbon market is a vital tool in the global effort to combat climate change, and we are proud to support these early efforts in Egypt.”

C- Daltex

A leading agribusiness player in Egypt and the largest potato exporter globally, proudly became the first private sector company to trade international carbon credits through Egypt’s voluntary carbon market. This strategic move reinforces Daltex’s decarbonization agenda and supports Egypt’s broader goals of building a robust carbon credit economy in line with Vision 2030.

D- VNV Advisory

A key player in the global carbon market facilitated the sale of carbon credits to both Daltex and SCB Environmental Markets. By partnering with these companies, VNV Advisory plays a crucial role in supporting both local and global decarbonization efforts through Egypt’s newly established voluntary carbon market. Omar El Nemr, Lead Project Management and Structuring MEA at VNV Advisory Services, highlighted the importance of the collaboration between VNV Advisory, Daltex, and SCB Environmental Markets, stating: “By partnering with Daltex and providing these international carbon credits through Egypt’s first voluntary carbon market, and with SCB’s involvement, we are not only supporting local decarbonization efforts but also promoting sustainable practices on a global scale.”

E- Misr Insurance Company

Played a pioneering role in this market (VCM), with Managing Director and CEO Mr. Omar Gouda stating that the company’s strategy aligns with the Sustainable Development Goals. He expressed pride in being the first to execute forward contracts on registered projects that have not yet issued carbon emission reduction certificates.

Regulatory and Market Structure: The foundation of this new voluntary, regulated and supervised carbon market (VCM) was laid by the Prime Minister’s decree (No. 4664 of 2022) based on FRA’S B.O.D Proposal, which amended the executive regulations of the Capital Market Law to classify carbon reduction certificates as financial instruments. Following this, the FRA established a supervisory committee, including representatives from the FRA, Ministry of Environment, and the Egyptian Exchange, to oversee the operations and ensure regulatory compliance.

The market features a comprehensive regulatory framework that governs the registration, issuance, and trading of carbon reduction certificates. The Egyptian Exchange has availed various trading mechanisms, such as continuous auctions, single auctions, and pre-agreed transactions, to facilitate the smooth operation of this market.

The FRA encourages all companies and entities to register their voluntary carbon reduction projects in this regulated and supervised market (VCM). The establishment of this market is a crucial step towards achieving Egypt’s goal of carbon neutrality and sustaining economic growth through innovative financial tools that attract both local and international investors.

This launch event marks a new era for Egypt’s carbon economy, with the active involvement of key private sector players nationally and internationally like Isis Food Industries, EBDA, Daltex, VNV Advisory, SCB Environmental Markets, and Misr Insurance Company, setting the stage for future growth and leadership in the global carbon market.