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Regional alliance: The carbon adjustment mechanism will be a game-changer. This is the position of Egypt's exports (dialogue)
Dalia Al , Hamshari
You can read the original article here.
In light of the global shift towards a green economy, the European Union has imposed a new mechanism known as the Carbon Adjustment Mechanism (CBAM), which will be a game-changer for many countries that export their products to Europe.
Egypt is at the top of these countries, especially with withexports of about 20 percent of products, such as aluminum, iron, and fertilizers, to the European market.
The Secretary-General of the ZETA Alliance, Dr. Jan Haizmann, revealed in an interview with the Washington-based Specialized Energy Platform the details of the mechanism for modifying the new carbon limits and its impact on Egyptian industry and trade.
The Zero Emissions Trading Alliance (ZETA) has emerged as a regional initiative that aims to support low-emission markets and promote the transition towards a green economy in the MENA region.
In this dialogue, we highlight the objectives of the Alliance, its activities in different countries, and its role in supporting regional efforts to reduce carbon emissions. And to the text of the interview:
What is the ZETA Alliance, and what are its main objectives?
The ZETA Alliance is a regional initiative that aims to support low-emission markets in the MENA region and focuses on strengthening cooperation among member countries to develop policies and strategies that thatreduce carbon emissions.
The Alliance also encourages the expansion of clean energy use and supports innovation in environmental technology.
What activities does the coalition carry out in different countries?
The ZETA Alliance works on a range of activities in member countries, including
How does the Alliance support countries' efforts to comply with international environmental standards?
· The Alliance helps Member States understand and apply international environmental standards, such as the Paris Climate Agreement, and provides tools and resources to assess emissions, develop national action plans, and report to international bodies.
What is the mechanism for adjusting the carbon boundary of CBAM?
The Carbon Limit Adjustment Mechanism (CCRM) is a European tool aimed at combating "carbon leakage," i.e., moving emission-intensive industries from Europe to countries that do not charge emissions pricing.
Through the Carbon Border Adjustment Mechanism (CBAM), European importers are required to purchase certificates that reflect the amount of carbon generated by the manufacture of imported products, equal to the cost of production within the EU.
What sectors are currently covered by the CCRM?
It currently includes cement, iron and steel, aluminum, and fertilizers, all of which are Egypt's main exports to the EU.
What is the timeframe for the implementation of the carbon limit adjustment mechanism?
We are currently in a transition period that began in October 2023 and lasts until the end of 2025, and full implementation will begin in January 2026, when the purchase of CBAM certificates becomes mandatory.
How much is Egypt affected by the carbon adjustment mechanism?
About 20% of Egypt's exports to Europe will be directly affected by the carbon adjustment mechanism, as aluminum alone accounts for 79% of Egyptian exports to the EU, which means that any additional cost may reduce the competitiveness of these products.
What should Egypt do to minimize the negative impact?
A national framework for measuring and recording carbon emissions should be developed and then negotiated with the EU to recognize this system.
Affected sectors should be encouraged to improve efficiency and use clean energy, and the establishment of an Egyptian carbon market" would be beneficial in the long run.
Are there immediate steps industries can take?
Yes, including
Can CBAM turn into an opportunity rather than a threat?
Certainly, Egypt can play a pivotal role, particularly in fields such as offshore carbon trade through the Suez Canal and the development of an Egyptian-led African carbon market, but this requires a transparent regulatory framework and effective international cooperation.
What are your most important recommendations to the Egyptian government?
Establish a dual policy by imposing high carbon pricing on emission-intensive sectors such as aluminum while establishing a national trading market for other sectors.
We also recommend intensifying negotiations with the European Union on the recognition of domestic systems.
What first step should Egypt take to create a market for renewable electricity or carbon certificates?
Above all, Egypt needs a platform or market for electricity trading, especially renewable electricity such as solar and wind. Cairo has great potential.
This platform must be transparent and allow for the wholesale sale and purchase of electricity in an orderly manner.
How can the idea of this market be illustrated in practice?
I will give a simple example: 2,000 years ago there was a place in the Italian capital called the "Roman Forum," which served as a center for merchants to display and sell their products from across the empire.
Instead of exchanging goods with hands, everything is done at the push of a button via digital platforms, and ZETA seeks to help Egypt build a modern market for carbon trading and reduce costs for local industries.
Do you only work in Egypt, or does your activity extend to other Arab countries?
We are headquartered in Dubai, and we started working more than a year ago, but we have previous experience in Turkey, where I personally helped the Turkish government about 10 years ago to establish a market for electricity and gas, and today they have the "Istanbul Energy Exchange" to trade these resources.
How do you assess Egypt's efforts to confront climate change?
A positive side is that mega renewable energy projects such as wind farms and solar energy are on the same side, but at the same time, Egypt is still a country that relies on natural gas, which contributes significantly to carbon emissions.
Besides, industrial sectors such as fertilizers, aluminum, and steel are among the largest sources of pollution in Egypt, and we hope to help Egyptian companies find a mechanism to reduce this carbon footprint.
How can this actually be achieved?
By offering carbon certificates, these certificates can be awarded to industries that demonstrate a commitment to reducing emissions, and to achieve this goal, a market for carbon certificates and green certificates of origin must be created.
And what is the difference between them?
The difference between them is that carbon certificates follow a mandatory trading system like the one in Europe, where each company is set a certain reduction rate annually, and if it does not achieve it, it must buy carbon certificates.
Carbon certifications are mainly directed to heavy industries such as aluminum, steel, and construction.
Green certificates of origin are awarded to producers of electricity from renewable sources such as wind farms and solar energy, meaning that each type of certificate has a different role in stimulating the transition towards a green economy.
What are the future plans for the ZETA Alliance?
The Alliance plans to expand its activities by:
How can non-member countries benefit from the Alliance's expertise?
Non-member countries can participate in workshops and conferences organized by the Alliance and benefit from the resources available on its online platforms.
They can also apply to join the alliance to take full advantage of the support and services it provides.
