Navigating Egypt’s Climate Journey: Carbon Markets and CCUS

As global climate action transitions from lofty ambitions to tangible implementations, Egypt faces a pressing dilemma: how to juggle economic development, energy security, and emissions reduction. While the country recognizes renewable energy as the backbone of its long-term climate strategy, its national energy infrastructure still heavily relies on fossil fuels, particularly natural gas. In this complex landscape, carbon markets and Carbon Capture, Utilization, and Storage (CCUS) are emerging as crucial tools that could help Egypt mitigate emissions while fostering industrial growth. However, the success of these strategies hinges on several factors, including regulatory readiness, geological characteristics, and private-sector enthusiasm.

Rising Yet Modest Emissions

Egypt has witnessed a steady rise in greenhouse gas emissions, mirroring trends in population growth, urbanization, and industrial expansion. According to the 2024 Biennial Transparency Report, emissions surged from about 138 million tons (mmt) of CO₂ equivalent in 1990 to roughly 336 mmt in 2023. Although this marks a significant escalation over the decades, emissions levels have recently stabilized, especially when compared to a peak of 347 mmt in 2017, suggesting that national mitigation and energy efficiency initiatives are taking effect. Importantly, Egypt remains a minor player in the global emissions arena, contributing less than 1% of worldwide greenhouse gas emissions, with per capita emissions falling below the global average.

The urgency of Egypt’s climate policies is amplified by tightening international regulations around carbon and green finance. A landmark development was the launch of Egypt’s regulated voluntary carbon market in 2024, marking its first foray into such initiatives in Africa. By year’s end, over 18,000 verified carbon certificates had been registered, and by early 2025, nearly 30 projects had signed on, offering more than 170,000 carbon credits for trading.

The Focus of the Carbon Market

Currently, the carbon market is primarily targeting sectors where emissions reductions can be accurately measured, like renewable energy, sustainable agriculture, and land-use projects. Although trading activities are still in their infancy, a robust regulatory framework has managed to attract developers and investors who value transparency. Beyond mere trading, this burgeoning market aims to channel climate finance into Egypt’s mitigation endeavors, bolstering its broader developmental and sustainability objectives.

CCUS Potential in Egypt

While the carbon market shows promise, Egypt’s emissions profile reveals the limitations of relying solely on it. The country’s energy generation is predominantly powered by natural gas, and its role as a regional gas hub implies that significant reductions in absolute emissions may be gradual. This prevailing situation has spotlighted CCUS as a viable method to dissociate industrial growth from rising emissions, particularly in contentious sectors like cement production, fertilizers, refining, and petrochemicals.

From a geological standpoint, Egypt appears well-suited for CCUS implementation. Ongoing oil and natural gas exploration activities have generated a wealth of subsurface data, especially in regions such as the Western Desert and Nile Delta. Potential long-term CO₂ storage sites, including depleted hydrocarbon reservoirs and deep saline aquifers, could be explored, although comprehensive site assessments will be necessary. Initial regional studies indicate that Egypt’s storage potential could be substantial, especially when paired with existing energy infrastructures and industrial clusters.

The Challenges of Framework Development

Despite the promising prospects for CCUS, Egypt remains in the nascent stages of implementing large-scale facilities. There’s currently no cohesive legal framework governing carbon capture, transport, storage, or long-term liability. While pilot initiatives and feasibility assessments have been broached, the commercial launch of these projects is stymied by several hurdles. High initial capital requirements, unpredictable revenue streams, and the absence of financial incentives, like carbon pricing or tax credits, dampen private-sector interest.

In contrast to some Gulf nations that have woven CCUS into comprehensive net-zero plans backed by direct state support, Egypt’s approach continues to be cautious and gradual. A Senior Renewable Energy Specialist emphasized this sentiment, stating, “Egypt is better positioned than many think. Decades of oil and gas exploration have provided valuable geological data. What’s lacking is a clear framework to transform that potential into financially viable CCUS projects.”

Policy Readiness and Private-Sector Engagement

Successful implementation of CCUS in Egypt heavily relies on policy readiness. Establishing clear regulations regarding storage site permits, monitoring, verification, and long-term stewardship of stored CO₂ is essential. The absence of regulatory clarity poses unacceptable risks for would-be investors. Furthermore, CCUS must vie for attention against other decarbonization methods, such as the expansion of renewable energy, enhancements to the electrical grid, and energy efficiency improvements, which are all attracting a significant share of public and private investments in Egypt.

The landscape is shifting, however, as notable industrial stakeholders and energy firms begin to measure and disclose their emissions. Factors like export market requirements, investor expectations, and access to finance are driving this transition. For some companies, participation in voluntary carbon markets presents a timely opportunity to navigate emissions exposure, especially where immediate reductions are not technically feasible. In the long run, CCUS may evolve into a vital component for industrial clusters looking to remain competitive in an increasingly carbon-conscious global market.

Egypt’s Regional Climate Role

In the broader context, Egypt occupies a unique regional position. The Middle East and North Africa (MENA) regions are experiencing a marked divergence in climate strategies. While Gulf states are advancing ambitious CCUS projects alongside national carbon markets as part of their net-zero objectives, many African economies are honing in on carbon markets primarily as avenues for climate finance. Egypt finds itself at the intersection of these dynamics, with its regulated voluntary carbon market laying the groundwork for drawing in regional projects and buyers. Moreover, its geological capabilities and energy framework open avenues for future CCUS development.

The governance structures Egypt is putting in place also have implications that extend beyond its borders. By placing its carbon markets under the purview of financial regulation rather than solely environmental governance, Egypt signals a desire to incorporate emissions management into its broader economic framework. If successfully cultivated with rigorous standards and transparent oversight, its market could serve as an exemplar for other emerging economies that seek to reconcile environmental integrity with economic growth.

In navigating the pressing intersection of climate challenges and economic imperatives, Egypt may find that carbon markets and CCUS are not mere theoretical concepts but crucial, practical tools that align with national development goals. If these strategies are implemented effectively, they could enable Egypt to become not just a participant in the global climate dialogue but a pivotal regional force in the evolving economy of emissions management.