Egypt’s carbon market — launched last year as the first of its kind in Africa — is beginning to take shape, but momentum remains slow. While the regulatory framework is largely in place, trading volumes are still modest, and private sector engagement is limited.

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The launch was followed by some market activity, with local agriculture firm Daltex purchasing 1.5k carbon credits from an agroforestry project in India’s Punjab through Singapore-based VNV Advisory, Sekem’s Isis Organic purchasing credits representing 500 tons of carbon dioxide from 10 farms through the Egyptian Biodynamic Association, and SCB Environmental Markets buying 2.5k carbon credits from VNV Advisory.

But there’s been little action on the market since, with the market — renamed earlier this year to the Egyptian Climate Exchange — counting only six transactions since its launch, according to its website.

There’s been progress on the listing front, however, with registered credits reaching nearly 140.0k from 28 projects across five countries, of which it says 42.0k have been retired. Agricultural projects remain the main driver of carbon credits in the exchange.

We could see an acceleration of issuances soon, with the government gearing up to issue carbon credits for renewable energy projects exceeding 10 MW, a government source told EnterpriseAM. The projects will be listed on the exchange in the second half of this year or early 2026, we were told.

Pricing remains a challenge, as Egypt has so far relied on international benchmarks for negotiations — as was the case with the Benban solar park. However, the introduction of an organized mechanism will allow for a fair pricing system for these certificates, the source said.

While private engagement in the market is increasing, it’s yet to reach the desired level, VNV Advisory MEA Lead Omar El Nemr told EnterpriseAM. The growth is supported by extensive awareness and capacity-building efforts from the Financial Regulatory Authority, which initially focused on establishing a robust regulatory framework.

The carbon market is now very welcoming to developers, private sector investors, and offtakers, with streamlined processes for project registration and credit trading, we were told. The expectation is that the coming year will bring increased private sector engagement from the demand side, as projects are already listed on the exchange.

CBAM-affected sectors have shown most interest in emission reductions and offsetting, specifically the fertilizer and aluminum industries, El Nemr tells us. These sectors are actively inquiring about the potential role of carbon credits in reducing their CBAM exposure, though the exact nature of this role remains unclear.

How would it affect them? CBAM allows EU importers to deduct the cost of any carbon tax or emissions trading system already paid in the exporting country. If a non-EU country has its own carbon pricing in place, its exporters can reduce their CBAM-related costs by the equivalent amount paid domestically.

The regulatory framework to facilitate investment is already in place. The next step is to provide clear guidance on how and when carbon credits should be utilized. Institutional investors often don’t fully grasp the value of carbon credits, how to hedge associated risks, or the general risks involved — a challenge observed in both domestic and international carbon markets.

So what comes next? Education and capacity building take priority when it comes to developing a robust pipeline of high-quality carbon projects in Egypt, El Nemr added. The goal is to “raise awareness and build capacity for the private sector on what a carbon credit is and how it is used and when it should be used,” he added. Many current emission reduction initiatives in Egypt struggle to meet return requirements and are often unaware of the potential value carbon markets and credits can add to their performance. Efforts should also incorporate integrity principles such as the core carbon principles, as issued by the Integrity Council for the Voluntary Carbon Market (ICVCM), he said.

The FRA is supporting this by providing education and facilitating matchmaking between validation verification bodies, project developers, and registries. The FRA also has a soon-to-be-fully-launched platform that serves as a knowledge center to guide emission reduction project developers through the process, stakeholders, steps, and relevant regulations in Egypt.

Private companies should actively consult platforms like Verra and Gold Standard for guidance on credit standards and project eligibility to make the most of carbon markets for both climate goals and financial returns, says El Nemr. These platforms offer methodologies applicable to projects that companies might register and suggest project types for investment or offsetting as part of environmental stewardship. Engagement with local registries in Egypt, such as Economy of Love, is also encouraged, particularly for companies seeking to support local farmers and communities.

National carbon registries — platforms monitoring the full lifecycle of carbon credits — play a crucial role in the evolving market, El Nemr told us. A carbon registry serves as a central platform for issuing, storing, and tracking carbon credits, including transfers and ownership changes, which can be essential for transparency and regulatory oversight — especially now that carbon credits are classified as financial instruments in Egypt.

Speaking of transparency and monitoring: Digital measurement, reporting, andverification (DMRV) technologies, including satellite imagery and blockchain, can play a significant role, particularly in project development. Given that many potential projects in Egypt will be located in remote areas and there’s growing interest in distributed energy systems, DMRV becomes increasingly important for continuously monitoring these systems from a central control point, El Nemr said.

Where should the focus be? The energy and agriculture sectors are key to developing a robust pipeline of carbon projects in Egypt. The energy sector accounts for the majority of Egypt’s emissions, while the country’s economy largely depends on the agriculture sector, which is actively “looking to transition to a low-carbon industry,” El Nemr tells us.

Regarding the long-term decarbonization strategy in Egypt, the voluntary carbon market is an excellent starting point, El Nemr adds. Adopting a voluntary mechanism initially allows the private sector to choose its engagement, which is seen as a smoother approach. After establishing sufficient awareness of carbon credits and allowances and the distinctions between voluntary and compliance credits, engagement with the compliance market is expected to increase.

Your top green economy stories for the week:

  • The EFG Foundation for Social Development launched the EFG Hermes Applied Technology School for Agri-tech in Luxor, marking Egypt’s first applied technology school specializing in climate-smart agriculture.
  • Egypt plans to issue a new tranche of sovereign green bonds, a senior government source told EnterpriseAM. The Finance Ministry, in consultation with the offering advisors, is looking into either replacing the bond maturing in September or reopening the current bond for another five years.
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