A mandatory carbon market is in the works: The government is planning to launch a pilot phase for a proposed mandatory carbon market in 1Q 2024, two government sources told Enterprise. The market — which will take efforts to reduce greenhouse gas emissions up a notch from the EGX’s planned voluntary carbon market — will be piloted during a non-compulsory first phase, before it goes live following approval from the EGX and the Financial Regulatory Authority (FRA).

ICYMI: The EGX last year announced it would set up Africa’s first voluntary carbon market. The market aims to allow companies in Egypt and Africa working on emissions-reducing projects to sell certified carbon credits, which can then be bought by other companies wanting to offset their emissions.

Voluntary vs. mandatory carbon markets:Voluntary markets allow companies to voluntarily purchase carbon credits to offset their carbon emissions. Mandatory markets legally require participants to offset their carbon emissions by purchasing credits to achieve government-mandated or international reduction targets.

We already have an advisor for the project: The World Bank is advising the Environment Ministry on how to set up the market, one source tells us. In the meantime, a number of governmental entities — including the environment and electricity ministries as well as the FRA and the EGX — are looking at regulatory frameworks adopted by other countries.

Who will be involved? The project will target companies and institutions that operate in a number of industries, including fertilizers, petrochemicals, transportation, waste recycling, renewable energy, construction, mining, and petroleum. The electricity sector has already sold carbon certificates for renewable energy projects, we’re told.

The project could be an FX generator: Carbon certificates will be sold to both local and foreign companies, our source said. Al Borsa also reports that the government will offer surplus carbon credits on international markets in a bid to raise FX.

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