World Bank signs new emission reductions purchase agreement in Egypt

8 July 2008

The World Bank will buy 325,480 tons of carbon credits from Egyptian Company for Solid Waste Utilization (ECARU) on behalf of governments and companies in Organisation for Econmic Co-operation and Development (OECD) countries.

On July 1, 2008, the World Bank and the Egyptian company ECARU (Egyptian Company for Solid Waste Utilization) signed the Cairo Southern Zone Composting Project agreement. According to the agreement, ECARU would sell mitigated carbon emissions to the Carbon Fund for Europe, which is managed by the World Bank.

The ECARU composting facility located in 15th May city, south of Cairo, will enable waste sorting for recovery of recyclables and aerobic composting of organic waste. The World Bank expects the facility to receive 1,100 tons of municipality waste daily that would otherwise be discarded in a landfill and emit methane and other greenhouses gases. The facility is thus expected to realize a reduction of 325,480 tons of carbon dioxide equivalent greenhouse gas emissions for the period 2008-2012. 

This project is the second carbon trading that the World Bank facilitated in Egypt. The first one was the Alexandria Onyx Landfill Gas Capture and Flaring in 2006. The Alexandria project maximizes the capture of landfill gas (LFG) from two landfill sites run by Alexandria Onyx and is estimated to realize 3,715,266 tons of carbon dioxide equivalent greenhouse gas emission reductions for the period 2008-2012. Onyx would sell the generated carbon credits to the Spanish Carbon Fund, which is also managed by the World Bank.

The World Bank is the major broker and self-described "catalyst" for promoting the carbon market. The carbon market, based on a "cap-and-trade" system, allows developing countries that have ratified the Kyoto Protocol, but that do not have caps or mandated emissions reduction targets of their own, to receive payments (credits) for investments that reduce carbon emissions. Developed countries, which are also signatories to the Kyoto Protocol, can purchase the carbon credits generated from projects in developing countries to offset excess emissions in their own countries.

Critics of this market say that it actually discourages developed countries from reducing their carbon emissions, since as long as they can afford it, they can purchase credits from developing countries; any efforts by developing countries to reduce emissions can be translated into more permissible emissions to the developed countries.

Additional resources

First Finance Agreement on Solid Waste Composting, World Bank Press Release, July 1, 2008 (World Bank website)

The World Bank Carbon Finance Unit Website (World Bank website)