Egypt has received preliminary approval from the European Union (EU) to exempt its exports from the Carbon Border Adjustment Mechanism (CBAM) until the end of 2027,
This waiver grants the country’s energy-intensive manufacturers, especially the fertilizer and cement industries, a two-year window to decarbonize before facing high border tariffs.
The Euro zone is Egypt’s largest export market. Local authorities say a carbon border tax could add as much as $300Million annually in carbon surcharges, on the cost for manufacturers.
As the instruction from Brussels is that any carbon price paid in Egypt is deducted from the Euro invoice, the Egyptian Government now has precious time to construct a domestic carbon tax framework, starting with an in-depth study of the short- and long-term repercussions the local 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. Now the authorities want to promulgate a separate, full-fledged carbon tax.
One of the tasks of the Egyptian House of Representatives, whose new term started on January12, 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.
