Egypt might launch a domestic emissions trading scheme that could develop into a regional carbon market, it said in its INDC submitted to the UN on Wednesday.

The Arab nation did not set a specific target for future emission reductions, but floated the possibility of creating a domestic emissions market to help drive greenhouse gas cuts.

“A national market for carbon trading may be established. This national market may further be developed into a regional market, which can attracting foreign direct investment in national carbon credit transactions, especially in the Arab and African region,” the Egyptian INDC said, without specifying a potential timetable.

The move is the latest sign of increased interest in carbon markets in the north African region.

Last month, the European Bank for Reconstruction and Development (EBRD) said it is looking to develop an “up-scaled” CDM-based mechanism in southern and eastern Mediterranean countries and continue to support carbon market developments in the region, including in Egypt.

Egypt emitted 295 million tonnes of CO2e in 2012, much of it from old, outdated fossil fuel plants and carbon intensive fuels.

The INDC said Egypt would focus efforts on using energy more efficiently and switch to cleaner fuels, while phasing out energy subsidies within the next three to five years.

“Renewable energy technologies, which are relevant to the local context, will play a very important role in reducing GHG emissions, but they would not suffice to keep climate change manageable,” it said.

It also said it is developing an MRV system to track GHG emissions.

Egypt estimated that the adaptation and mitigation policies listed in the INDC would require $73 billion in financial contributions, but did not say whether the establishment of a carbon market would hinge on receiving those funds.

By Stian Reklev – stian@carbon-pulse.com