Voluntary carbon markets are those where carbon credits are sought after and purchased for voluntary use, without a regulatory regime or obligations to reduce carbon emissions.

Carbon credits are verified reductions in emissions, achieved through climate projects and were established under Article 6 of the Paris Agreement in 2015. Once the projects are approved by the Supervising Body, a collection of 12 members chosen from the parties of the Paris Agreement, carbon credits are issued and can be sold to companies, individuals and governments.

Buyers of carbon credits can be industrial companies, airlines, car manufacturers, or other players that are looking to lower greenhouse gas emissions. This enables them to compensate for their own emissions by financing projects that reduce emissions from other sources.

According to Ecosystem Marketplace, the value of the voluntary carbon market is estimated at around $2 billion in 2021, around four times the value of 2020. The increase has been driven by an acceleration of nature-based solutions trading volume and higher prices projects with non-carbon environmental and social benefits.

Globally, voluntary carbon markets grew by an average of 30 percent annually between 2016 and 2021, with the demand for African carbon credits also rising by an average of 36 percent every year, according to a report issued last month by the United Nations' initiative Sustainable Energy for All (SE4All).

According to the report, Africa has the potential to mobilise $6 billion a year from voluntary carbon markets by 2030.

Egypt’s voluntary carbon market platform announced during COP27 will see relevant authorities such as the Egyptian Exchange and Financial Regulatory Authority working on developing frameworks, business models, and organisational structures before the platform is activated.

Businesses looking to offset their emissions are the main drivers of the voluntary carbon markets, but governments and nonprofit organisations can also purchase carbon credits. These markets are decentralised and anyone or entity can buy and sell carbon credits that represent certified reductions of greenhouse gas emissions.

"Carbon credit transactions can help with the offsetting of many industries by contributing to mitigating the emissions output, and help finance climate actions," said Helmy Abouleish, chief of the board of trustees of Heliopolis University for sustainable development and CEO of SEKEM initiative for sustainability in ecology, economy, society and culture.

He added that the voluntary carbon market represents a major opportunity to drive economic development and curb greenhouse gas emissions in many industries and sectors, especially in agriculture.

"Lowering global greenhouse gas emissions requires the agriculture sector becoming more sustainable," Abouleish told Ahram Online, adding that organic farming can contribute to reducing emissions by enhancing soil carbon sequestration and decreasing use of farming inputs like fertilisers.

Conventional agriculture causes increased greenhouse gas emissions, soil erosion, water pollution, and threatens human health, Abouleish pointed out, adding that organic farming has a smaller carbon footprint, conserves and builds soil health, replenishes natural ecosystems for cleaner water and air, all without toxic pesticide residues.

"COP27 was the most successful COP in regards to agriculture, with a special day dedicated to agriculture, as an acknowledgement of the importance and necessity of sustainable agriculture for climate change action," Abouleish noted.

Sustainable agriculture can help reduce harmful emissions by absorbing carbon dioxide emitted by humans and the industry, he added.

Abouleish explained there are five million tons of emissions for every 10 million fedans of conventional farming.

Although organic farming is gaining more popularity in Egypt, it is still a more expensive option. However, Abouleish said that conventional farming can be more expensive if we take indirect costs into consideration, including the effect on the environment and the contribution to adaptation and mitigation costs later on.

Moreover, organic farmers who help stabilise carbon dioxide in the soil and prevent harmful emissions can profit from carbon credit certificates.

"The African voluntary carbon market platform launched during COP27 will help organic farmers to trade their carbon credit certificates in the stock exchange without waiting for a reward from local and international entities," Abouleish noted.

"Voluntary carbon market will get bigger overtime in the coming years, driven in part by demand from businesses looking to offset their emissions," he said, adding that a project by Heliopolis University to help farmers adopt organic farming with about 2,000 farmers participating in the first phase was successful.

According to Abouleish, a new phase of the project will be launched in 2023 with 40,000 farmers turning to organic agriculture. The number of farmers joining the initiative is expected to grow significantly in the next few years.

"Organic farming has become an important player in climate action and needs to grow faster and become more widely recognised," he concluded.