As global climate action moves beyond ambition and into implementation, Egypt is increasingly confronted with the challenge of reconciling economic development, energy security, and emissions reduction. While renewable energy remains the cornerstone of Egypt’s long-term climate strategy, the structure of the national energy system means that fossil fuels (particularly natural gas) will continue to play a dominant role for decades. In this context, carbon markets and carbon capture, utilization, and storage (CCUS) are emerging as complementary tools that could help Egypt manage emissions while sustaining industrial growth. The viability of these mechanisms, however, depends on regulatory readiness, geological suitability, and private-sector engagement, as well as Egypt’s ability to position itself within a rapidly evolving regional emissions landscape.
Rising Yet Modest Emmisons
Egypt’s greenhouse gas emissions have grown steadily in line with population growth, urbanization, and industrial expansion. According to the 2024 Biennial Transparency Report (BTR1), total emissions rose from approximately 138 million tons (mmt) of CO₂ equivalent in 1990 to around 336 mmt in 2023. While this represents a significant long-term increase, recent data indicates a relative stabilization in emissions levels compared to the peak of 347 mmt recorded in 2017, reflecting the early impact of national mitigation and energy efficiency strategies. Despite this increase, Egypt remains a relatively small emitter in global terms, contributing less than 1% of worldwide greenhouse gas emissions, with per capita emissions below the global average.
Egypt’s climate policies are becoming more important as global rules on carbon and green finance grow stricter. The launch of Egypt’s regulated voluntary carbon market in 2024, overseen by the Financial Regulatory Authority (FRA),was a major step. It is the first platform of its kind in Africa. By the end of 2024, more than 18,000 verified carbon certificates were registered. By early 2025, nearly 30 projects had joined, offering over 170,000 carbon credits for trading, including both local and international projects.
The market’s early focus is on areas where emissions cuts can be measured clearly, such as renewable energy, sustainable farming, and land-use projects. Trading activity is still small, but the strong regulatory system has attracted developers and investors who value transparency. Beyond trading, the market is also meant to direct climate finance into Egypt’s own mitigation projects, supporting the country’s wider development and sustainability goals.
CCUS Potential in Egypt
At the same time, Egypt’s emissions profile highlights the limitations of relying solely on carbon markets. Natural gas accounts for the majority of electricity generation, and Egypt’s position as a regional gas hub means that absolute emissions reductions will be gradual rather than immediate. This structural reality has brought renewed attention to CCUS as a potential mechanism to decouple industrial output from emissions growth, particularly in hard-to-abate sectors such as cement, fertilizers, refining, and petrochemicals.
From a geological perspective, Egypt possesses several characteristics that could support CCUS deployment. Decades of oil and natural gas exploration have generated extensive subsurface data, particularly in the Western Desert and the Nile Delta. Depleted hydrocarbon reservoirs and deep saline aquifers in these regions are considered potential candidates for long-term CO₂ storage, subject to detailed site characterization and risk assessment. Preliminary regional studies suggest that Egypt’s storage potential could be significant when integrated with existing energy infrastructure and industrial clusters.
Frameworks Still Missing
Despite this potential, CCUS in Egypt remains at an early stage. There are currently no large-scale operational CCUS facilities, and the country lacks a comprehensive legal framework governing carbon capture, transport, storage, and long-term liability. While pilot initiatives and feasibility studies have been discussed, commercial deployment faces several barriers. High capital costs, uncertain revenue streams, and the absence of incentives such as carbon pricing or tax credits limit private-sector appetite.
Unlike some Gulf countries that have embedded CCUS within national net-zero strategies and provided direct state support, Egypt’s approach remains cautious and incremental. As suggested by a Senior Renewable Energy Specialist who asked for anonymity, “From my perspective, [Egypt] is better positioned than many think. Decades of oil and gas exploration have given the country valuable geological data. What is missing is not storage potential, but it is a clear framework that turns that potential into bankable CCUS projects. Bankability is often overlooked in this futuristic approach.”
Policy readiness remains a central issue. Effective CCUS deployment requires clear rules on storage site permitting, monitoring and verification, liability transfer, and long-term stewardship of stored CO₂. Without regulatory clarity, investors face unacceptable levels of risk. Furthermore, CCUS must compete with other decarbonization options, including renewable energy expansion, grid upgrades, and energy efficiency measures, all of which are already attracting significant public and private investment in Egypt.
Additionally, private-sector engagement in emissions management is increasing. Large industrial players and energy companies operating in Egypt are increasingly measuring and disclosing emissions, driven by export market requirements, investor expectations, and access to finance. For some companies, participation in voluntary carbon markets offers a near-term pathway to manage emissions exposure, particularly where direct reductions are technically or economically challenging. Over the longer term, CCUS could become relevant for industrial clusters seeking to maintain competitiveness in a carbon-constrained global economy.
Regional Climate Role
Regionally, Egypt occupies a distinctive position. The Middle East and North Africa (MENA) regions are witnessing a growing divergence in climate strategies. Gulf countries are advancing large-scale CCUS projects and national carbon markets as part of broader net-zero commitments, while many African economies are focusing on carbon markets as a source of climate finance. Egypt sits at the intersection of these trends. Its regulated voluntary carbon market provides an institutional foundation that could attract regional projects and buyers, while its geological potential and energy infrastructure create opportunities for future CCUS development.
Egypt’s experience also carries regional significance in terms of governance. By placing carbon markets under financial regulation rather than environmental oversight alone, Egypt has signaled an intent to integrate emissions management into the broader economic system. If the market continues to mature with strong standards and transparent oversight, it could serve as a model for other emerging economies seeking to balance environmental integrity with market growth.
Ultimately, carbon markets and CCUS are not silver bullets for Egypt’s climate challenge. Renewable energy expansion, energy efficiency, and electrification will remain central to emissions reduction efforts. However, given the structure of Egypt’s economy and energy system, emissions management tools are likely to play an increasingly important supporting role. The success of these mechanisms will depend on sustained policy development, credible regulation, and the ability to mobilize private capital at scale.
Finally, for Egypt, the question is no longer whether carbon markets and CCUS are theoretically possible, but whether they can be translated into practical, investable solutions that align with national development priorities. If successfully implemented, these tools could position Egypt not only as a participant in the global climate response, but as a regional player in the emerging economy of emissions management.
