The amount of global greenhouse gas (GHG) emissions are increasing annually in a significant way, that makes climate change one of the world’s most pressing and complex challenges.
Human activities like industry, agriculture, transportation, energy, etc., are responsible for almost all of the increase in greenhouse gases in the atmosphere. Mitigating those emissions is the main way that countries and business are putting efforts on.
One of the mitigation approaches is creating a Carbon Market, which is considered as an emission-trading mechanism that aims to reduce greenhouse gas emissions in an economically efficient way by setting limits on emissions and enabling the trading of emission units. Trading enables countries or entities that can reduce emissions at lower cost to be paid to do so by higher-cost emitters to satisfy their carbon emission requirements, thus lowering the economic cost of reducing emissions.
By putting a price on carbon emissions, carbon market mechanisms help to internalize the environmental and social costs of carbon emissions, encouraging investors and consumers to choose lower-carbon paths.
International carbon markets have evolved considerably from the Kyoto Protocol’s flexible mechanisms to the Paris Agreement’s cooperative mechanism and approaches. With the conception of Article 6 under the Paris Agreement, Parties to the UNFCCC have significantly changed the modalities in which international cooperation (through market and non-market approaches) takes place.
DCarbon, a partner in consortium in cooperation with the Egyptian Ministry of Environment, was assigned to develop a Carbon market study accordingly after developing Egypt’s Low Emissions Development Strategy (LEDS), that is pending approval from Prime Minister’s Office for adoption.
The Carbon Market study aims at establishing a mechanism for GHG Emissions Reduction that suits Egypt’s national context, and using the best fitting tools to select the optimum system that can achieve GHG emissions reductions for each sector, including: