Egypt Secures Two-Year Reprieve from EU Carbon Border Tax
Egypt has received preliminary approval from the European Union to exempt its exports from the Carbon Border Adjustment Mechanism until the end of 2027, providing the country’s energy-intensive manufacturers with crucial breathing room to decarbonize before facing potentially costly border tariffs. The waiver particularly benefits the fertilizer and cement industries, which had faced the prospect of significant additional costs under the carbon pricing regime.
The Eurozone is Egypt’s largest export market, and local authorities estimate that a carbon border tax could add as much as $300 million annually in carbon surcharges to manufacturing costs. Since Brussels has stipulated that any carbon price paid in Egypt will be deducted from the European invoice, the Egyptian government now has precious time to construct a domestic carbon tax framework.
The process begins with an in-depth study of the short and long-term repercussions a local carbon tax will have on the competitiveness of Egyptian trade and the future of exports. The Egyptian government initially included a carbon tax in the draft new Income Tax law currently under debate, but authorities now want to promulgate a separate, full-fledged carbon tax.
One of the tasks of the Egyptian House of Representatives, whose new term started on January 12, 2026, is to deliberate on a local carbon tax and work on legislative amendments to the Environmental Protection Law, which would mandate a phased compliance schedule. The two-year extension provides Egyptian policymakers with critical time to design a framework that protects domestic industry while meeting international decarbonization expectations.
Source: africaoilgasreport.com
