EU's Carbon Border Adjustment Mechanism Enforced, Impacting Egypt's $14 Billion Exports
The European Union's Carbon Border Adjustment Mechanism has begun enforcing carbon tariffs on Egypt's $14 billion exports, significantly impacting key sectors such as steel and cement. This initiative, which aligns with EU emissions trading prices, could lead to annual losses of $1.2-1.8 billion for Egypt, prompting the government to propose compliance strategies, including domestic carbon taxes and a national carbon market. Capacity-building efforts are also planned to train engineers and enhance emissions monitoring capabilities.
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The European Union's Carbon Border Adjustment Mechanism (CBAM) commenced full enforcement, imposing carbon tariffs on Egypt's exports to the EU, valued at $14 billion for the 2024/25 fiscal year. The tariffs, which align with EU Emissions Trading System prices of €85-100 per tonne of CO2, affect key sectors such as steel, cement, aluminium, fertilisers, electricity, and hydrogen.
The mechanism requires stringent emissions monitoring from Egyptian exporters. Industries impacted represent 33% of Egypt's GDP, with potential annual losses of $1.2-1.8 billion due to cost increases. El-Lethey outlined strategies for compliance by 2026, including leveraging domestic carbon taxes and securing $3-5 billion in green financing.
He proposed extending transitional periods to 2028 and establishing a national carbon market, which could save $800 million. Capacity building initiatives aim to train 10,000 engineers, while advanced MRV platforms will support real-time emissions reporting.
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