PD 7

Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized
November 8, 2022
EGYPT
Country Climate and Development Report: Egypt

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i
Table of Contents
Acknowledgments ...................................................................................................................iv
Acronyms ............................................................................................................................... vii
1. Framing the climate challenge in Egypt’s development context ............................... 1
1.1. Progress in development outcomes has been considerable, but structural challenges
remain ................................................................................................................................................ 1
1.2. Increasing climate risks could exacerbate the existing development challenges ............. 3
1.3. Future water availability is uncertain, bringing challenges for consumption and
productive sectors.............................................................................................................................. 6
1.4. A low emissions pathway can build economic resilience and competitiveness ................. 7
1.5. Growing urban population puts additional stress on services and contributes to
increased exposure to climate hazards .......................................................................................... 10
2. Climate Change Policy, Institutions and Regulatory Framework .......................... 15
15
2.1. An ambitious climate change policy ................................................................................... 15
2.2. Coordination, capacity and robust MRV to enable effective climate action .................. 18
2.3. Egypt’s Updated Nationally Determined Contributions (NDC) ..................................... 20
3. Pathway Toward Resilience and Low Carbon Development .................................. 22
3.1. Strengthening resilience and adaptation ........................................................................... 22
3.1.1. Enhance efficiency in how resources are used and allocated based on their true value .............. 23
3.1.2. Provide better information and information systems and increase awareness about climate
change impacts for collective action ............................................................................................................ 26
3.1.3. Enhance resilience and reduce the risk of stranded assets through complementary actions ........ 28
3.2. Transitioning to low carbon development ......................................................................... 34
3.2.1. Accelerate the transition to renewable energy ............................................................................. 38
3.2.2. Reduce emissions in the oil and gas value chain and lower carbon intensity of the energy supply
mix 40
3.2.3. Reduce inefficiencies in the use of energy for electricity and industry ....................................... 42
3.2.4. Reduce emissions in the transport sector ..................................................................................... 44
3.2.5. Take synergistic actions across adaptation and mitigation .......................................................... 47
4. Growth, Equity, and Financial Implications ............................................................ 52
4.1. Create the enabling environment needed to support the transition toward a low-carbon
and climate resilient economy ........................................................................................................ 57
4.2. Mobilize finance to build resilience to climate and support the transition to low carbon
62
4.3. Ensure a focus on the most vulnerable .............................................................................. 63
5. Summary of Priority Actions ..................................................................................... 67
6. References ...................................................................................................................lxx
ii
iii
Acknowledgments
This Country Climate and Development Report (CCDR) is a collaborative effort of the World Bank, the
International Finance Corporation (IFC), and the Multilateral Investment Guarantee Agency (MIGA),
produced by a core team led by Oliver Braedt (Program Leader), Kevin Carey (Lead Economist), Nancy
Lozano Gracia (Lead Economist), and Ashok Sarkar (Senior Energy Specialist, Program Leader). The
core writing team includes Jacqueline Marie Tront (Senior Water Resources Management Specialist),
Rama Chandra Reddy (Senior Environmental Economist), Maria Eugenia Genoni (Senior Economist),
Harsh Goyal (Urban Development Specialist), Ellen Olafsen (Senior Private Sector Specialist), Katharina
Ziegler (Program Analyst), Nada Farid (Regional Economist, IFC), Federica Ranghieri (Program Leader),
Evelyn Sanchez Hernandez (Sustainable Development Consultant), Rajesh Balasubramanian (Senior
Water Supply and Sanitation Specialist), Nobuhiko Daito (Transport Specialist), Carlos Alberto Lopez
(Senior Oil and Gas Specialist), Yanchao Li (Energy Specialist), Yousra Mohamed Ossama Mostafa
Assaker (Senior Energy Specialist), Ihab Elmassry (Energy Consultant), Anthony Kubursy (Energy
Consultant), Ankush Sharma (Urban Consultant). Marcela Tarazona (Genesis Analytics), Valentina
Rodriguez (Genesis Analytics), Amr Osama (Integral Consult), and Ede Ijjasz-Vasquez (Consultant)
provided overall guidance to the team.
A large team contributed to the report with inputs and background notes including Laila Abdelkader,
Ghassan Khaled Ismail Al-Akwaa, Fatma El Zahraa Yassin Aglan, Mark Eugene Ahern, Mihasonirina
(Miha) Andrianaivo, Arturo Ardilla, Affouda Leon Biaou, Nataliya Biletska, Andrew Burns, Camila Cortes,
Michaela Mei Dolk, Krishnamurti Damodaran, Ira Irina Dorband, Eric Dunand, Svetlana Edmeades, Alia
Eldidi, Mariam Hoda El Maghrabi, Mohamed Hisham El Shiaty, Amal Nabil Faltas, Salma Abdel Fattah,
Catiana Garcia-Kilroy, Artavazd Hakobyan, Ghada Ahmed Waheed Ismail, Djibrilla Adamou Issa, Amira
Kazem, Rachel Chi Kiu Mok, Arthur Kochnakyan, Susan Lim, Dahlia Lotayef, Harika Masud, Mohamed
Nada, Alastair Charles Norris, Pia Peeters, Eric Raoul Philippe, Martijn Gert Jan Regelink, Adeel Abbas
Syed and Monica Vidili.
Various inputs were also received from Maissa Gaber Ramadan Abdalla, Fatmaelzahraa Yassein
Abdelfat Aglan, Heba Abuellei, Aijaz Ahmad, Heba Yaken Aref Ahmed, Fatimah Mutlaq H Alotaibi, Sara
B. Alnashar, Harinath Sesha Appalarajugari, Damian Mckinnon Brett, Mena Cammett, Patrice Claude,
Charles Caporossi, Lauren Culver, David, Groves, A S Harinath, Hosam Hassan, Wilfried Hundertmark,
Alexander, Johannes Huurdeman, Salma Hany Adly Abdelfattah Ibrahim, Jon Kher Kaw, Arthur
Kochnakyan, Peter Ladegaard, Enas Shaaban Mahmoud, Tom Remy, Rianna L. Mohammed, Christina
Paul, Fida Rana, Manu Sharma, Maysra Mahmoud Ali Shamseldin and Thi Thanh Thanh Bui.
Detailed feedback, suggestions, and comments were received from internal peer reviewers: Stephane
Hallegatte (Senior Climate Change Adviser), Mona Haddad (Global Director), Stephen Alan Hammer
(Adviser), Serhiy Osavolyuk (Operations Officer), Fan Zhang (Lead Economist), Vivek Pathak (Director),
Somik Lall (Lead Economist), Victor Mosoti (Chief Counsel), Pablo Fajnzylber (Director, Strategy and
Operations), Alberto Rodriguez (Director of Strategy and Operations), Hoveida Nobakht (Practice
Manager), Ahmadou Moustapha Ndiaye (Director of Strategy and Operations), and Andrea Kucey
(Manager), and Lina Abd El Ghaffar (External Affairs Officer). Invaluable comments and inputs were also
received from external reviewers: Celine Allard (International Monetary Fund). The CCDR benefitted
from dialogue with the Government of Egypt.
The team benefited from close collaboration and feedback from participants to a series of inter-
ministerial consultation workshops, and consultations with private sector, think tanks, academics, civil
society, and development partners. Inputs from GoE were provided under the overall guidance of the
National council for Climate Change, headed by H.E. Prime Minister Moustafa Madbouly, H.E. Dr. Rania
iv
A. Al-Mashat (Minister of International Cooperation) and H.E. Dr. Yasmine Fouad (Minister of
Environment).
The CCDR was prepared under the guidance of Ferid Belhaj (World Bank Regional Vice President of
Middle East and North Africa), Ethiopis Tafara (World Bank Vice President and Chief Risk, Legal and
Admin Officer), Sergio Pimenta, (Regional Vice President, IFC), Marina Wes (Country Director for Egypt,
Yemen and Djibouti), Ayat Soliman (Regional Director for Sustainable Development), Paul Noumba Um
(Regional Director of Infrastructure), Lia Sieghart (Practice Manager, Environmental, Natural Resource
and Blue Economy Practice), and Irina Astrakhan (Practice Manager, Finance and Markets Global
Practice).The English version of the report was edited by Erin Aylor.
v
vi
Acronyms
BAU Business as Usual
CBAM Carbon Border Adjustment Mechanism
CCDR Country Climate and Development Report
CCS Carbon Capture and Storage
CCUS Carbon Capture Usage and Storage
CO2 Carbon dioxide
EU European Union
EV Electric Vehicle
FDI Foreign Direct Investment
GDP Gross Domestic Product
GHG Greenhouse Gas
IPPU Industrial Processes and Product Use
MtCO2e Metric Tonne of Carbon Dioxide Equivalent
NDC Nationally Determined Contribution
PV Photovoltaic
R&D Research and Development
RE Renewable Energy
SO2 Sulphur Dioxide
tCO2e Tonne of carbon dioxide
TWh Terawatt Hour
AAP Ambient Air Pollution
ASME Agricultural Sector Model for Egypt
BCM Billion Cubic Meter
BESS Battery Energy Storage System
BRT Bus Rapid Transit
Bscf Billion standard cubic feet
BUR Egypt's Biennial Updated Report
CAGR Compund Annual Growth Rate
CAIT Climate Analysis Indicators Tool
CAPMAS Central Agency for Public Mobilization and Statistics
CBE Central Bank of Egypt
CC Climate Change
CCCD Climate Change Central Department
CCGT Combined Cycle Gas Turbine
CH4 Methane
CIB Commercial International Bank of Eqypt
CNG Compressed Natural Gas
COP Conference of the Parties
CPAT Carbon Pricing Assessment Tool
CPS Current Policies Scenario
DSM Demand-side Management
EbA Ecosystem-based Adaptation
EBRD European Bank for Reconstruction and Development
EDGE Excellence in Design for Greater Efficiencies
EE Energy Efficiency
EEAA Egyptian Environmental Affairs Agency
EEHC Egtyptian Electricity Holding Company
EG Environmental Goods
EGAS Egyptian Natural Gas Holding Company
EMIS Energy Management Information System
ENR Egyptian National Railways
EPM Electricity Planning Model
EPR Extended Producer Responsibility
ESCO Energy Service Company
ESG Environmental, Social and Governance
vii
ETI Energy, Transport and Industry
EWRA Egyptian Water Regulatory Agency
FI Financial Institution
FRA Financial Regulatory Authority
GAFI Egyptian General Authority for Investment and Free Zones
GCF Green Climate Fund
GCI Global Competitiveness Index
GIZ German Agency for International Cooperation GmbH
gm/kWh Grams per Kilowatt Hour
GOE Government of Egypt
GoPP General Organization for Physical Planning
GW Gigawatt
GWh Gigawatt Hour
ha hectare
HEICS Egyptian Integrated Household Survey
HFO Heavy Fuel Oil
IAC Infrastructure Access Charging
ICE Internal Combustion Engine
ICT Information and Communication Technologies
ICZM Integrated Coastal Zone Management
IDA Industrial Development Authority
IEA International Energy Agency
IEC International Electrotechnical Commission
IFC International Finance Corporation
ILO International Labor Organization
IPCC Intergovernmental Panel on Climate Change
ISES Integrated Sustainable Energy Strategy
ISO International Organization for Standardization
ITS Intelligent Transportation Systems
IWMI International Water Management Institute
IWRM Integrated Water Resource Management
KPI Key Performance Indicator
LCH Low Carbon Hydrogen
LIH Low Income Housing
lpcd Liters Per Capita per Day
MACC Marginal Abatement Cost Curve
MENA Middle East and North Africa
MFMOD Macroeconomic and Fiscal Model
MIGA Multilateral Investment Guarantee Agency
MiNTS Misr National Transport Study
MLD Ministry of Local Development
MMBTU 1,000 British Thermal Units
MoE Ministry of the Environment
MOETE Ministry of Education and Technical Education
MoF Ministry of Finance
MoHP Ministry of Health and Population
MoHUUC Ministry of Housing, Utilities and Urban Communities
MoI Ministry of the Interior
MoLD Ministry of Local Development
MoP Ministry of Petroleum and Natural Resources
MoPED Ministry of Planning and Economic Development
MoT Ministry of Transportation
MoTI Ministry of Trade, Industry, and Small and Medium Projects
MPA Marine Protected Area
MRV Monitoring, Reporting and Verification
MSME Micro, Small and Medium Enterprises
MSMEDA Micro, Small and Medium Enterprises Development Agency
MSP Marine Spatial Planning
viii
Mt Metric tonne
MTI Ministry of Trade and Industry
MW Megawatt
MWRI Ministry of Water Resources and Irrigation
NbS Nature-based Solution
NCCC National Council on Climate Change
NCCS National Climate Change Strategy
ND-Gain Notre Dame Global Adaptation Index
NEEAP National Energy Efficiency Action Plan
NG Natural Gas
Central Bank and Supervisors’ Network for Greening the Financial
NGFS
System
NM3 Normal Cubic Meter
NMT Non-motorized Transportation
NPV Net Present Value
NRW Non-revenue Water
NUCA New Urban Communities Authority
NWFE Nexus on Water, Food and Energy
NWRP National Water Resources Plan
NZ100 Net Zero 100%
NZ60 Net Zero 60%
NZ80 Net Zero 80%
O&M Operation and Maintenance
ORP Operational Response Plan
PEVC Private Equity and Venture Capital
PIM Public Investment Management
PM Particulate Matter
PPP Purchasing Power Parity
PPP Public Private Partnership
PSP Payment Service Provider
RCP Representative Concentration Pathway
RCSF Regional Center for Sustainable Finance
SCADA Supervisory Control and Data Acquisition
SCD Systematic Country Diagnostic
SLR Sea Level Rise
SME Small and Medium-sized Enterprise
SNS Social Networking Services
SOB State Owned Bank
SOE State Owned Enterprise
SPC Shadow Price of Carbon
SWD Storm Water Drainage
SWM Solid Waste Management
T&D Transmission and Distribution
TJ Liquid Fuels Consumption
TKP Takaful and Karama Programme
ToD Transit-oriented Development
TTP Tertiary Treatment Plant
UHI Urban Heat Island
UN United Nations
UNFCC United Nations Framework Convention on Climate Change
UNIDO United Nations Industrial Development Organization
USD US Dollar
VAT Value Added Tax
VKM Vehicle Kilometer Traveled
WB World Bank
WRI World Resources Institute
WWF World Wildlife Fund
WWT Wastewater Treatment
ix
WWTP Wastewater Treatment Plant
μg/m3 Micrograms per Cubic Meter
x
1. Framing the climate challenge in Egypt’s development
context
Main Messages
• Climate change will exacerbate Egypt’s current vulnerabilities, with the potential to deepen persistent
human development and spatial disparities. Climate change increases the uncertainty in availability
of water resources in the country, increases heatwaves and desertification affecting biodiversity, and
threatens food security and availability.
• Egypt’s economic and emissions growth are still tightly linked to each other, as reflected in total GHG
emissions from 1990 to 2019, which grew 163% in absolute terms and 47% per capita.1 Just between
2005 and 2015, emissions increased by about 31%, from 248 Mt CO2eq in 2005 to 325 Mt CO2eq
in 2015.2
• In 2019, Energy, Transport and Industry accounted for about 80% of total emissions3 GoE estimates
that for 2015 the Energy sector, which includes transport and industry emissions (65%), and Industrial
Processes and Product Use (IPPU) (12%), together represented 77% of emissions.4 Egypt's global
emissions remain at around 0.6%.5
• A growing urban population (estimated to be 41.4 million by 2050) will put additional strain on
urban-area service provision and deepen the exposure of assets and people to climate risks, with
those risks disproportionately borne by most vulnerable population.
• Taking action now can bring important savings for Egypt, by limiting the future costs of climate change
impacts. Estimates for Egypt suggested that by 2060 the combined impact of climate change will
represent between 2% and 6% of Egypt’s GDP.6
1.1. Progress in development outcomes has been considerable, but

structural challenges remain
Egypt’s growth continues to show resilience two years into the COVID-19 pandemic, but incipient
balance of payments stresses have resurfaced due to spillovers from the war in Ukraine. COVID-19
caused a decline in economic activity, especially in Egypt’s key export-oriented sectors, with overall real
GDP growth decreasing to 3.3% in FY2020/21, from 3.6% during FY2019/20 (pre-pandemic growth
averaged 5% since FY2016) (see Figure 1). Reforms implemented since 2016 through the National
Program for Economic and Social Reforms helped cushion the effects of the global economic downturn,
but the impact of the pandemic remained significant.7 The global economic slowdown negatively
impacted growth, unemployment, and foreign income sources; however, the economy quickly
rebounded, with GDP growth reaching 9.8% in the first quarter of FY2022.8,9
1 In 1990 emission were 134 Mt CO2eq and 2.38t CO2 eq per capita, in 2019 emissions were 352 Mt CO2eq (~163% increase from 1990) and 3.51t
CO2eq per capita (~47% increase from 1990). Climate Watch. 2022. Washington, DC: World Resources Institute. Available online
at: https://www.climatewatchdata.org.
2 Egypt’s First Biennial Updated Report (BUR), 2018. and estimates from the Global Carbon Project for 2020.
3 In 2019, CAIT suggested that the contribution of these sectors to emission reached over 80%, from Energy (incl. electricity & heat (32%), transportation
(16%), manufacturing (11%), fugitive and other fugitive emissions (10%), building (5%)), and 8% from industrial processes. Climate Watch. 2022.
Washington, DC: World Resources Institute. Available online at: https://www.climatewatchdata.org.
4 Egypt's Biennial Updated Report (2018).
5 Egypt's Biennial Updated Report (2018).

6 Estimates consider changes in water supplies, agriculture, air quality, heat stress, and tourism. Other sensitive sectors, including water pollution, energy
consumption, and biodiversity, are not included in this assessment of impacts. Smith JB, McCarl BA, Kirshen P, Jones R and others (2014) Egypt’s
economic vulnerability to climate change. Clim Res 62:59-70. https://doi.org/10.3354/cr01257
7 The first phase of the National Program for Economic and Social Reforms was launched in 2016, and it was focused on monetary and financial policies
and introduced a targeted social protection program. Its second phase, launched in April 2021, is focused on three sectors: technology-intensive
transformative industries, agriculture, and information and communications technology.
8 Alnashar et al. 2021/ Egypt Economic Monitor, December 2021: The Far-Reaching Impact of Government Digitalization (English). World Bank (2021)
9 Ministry of Planning and Economic Development, data on Real GDP Market Prices (annual % growth). Reviewed on February 28, 2022.
1
The recently completed World Bank Systematic Country Diagnostic (SCD) identifies key development
challenges, including rising poverty, persisting unemployment, and limited productivity growth. Learning
poverty remains at 70% and lack of education limits the future productivity of a child born today to only
49% of her potential. 10 Egypt’s share of poor (using international poverty benchmarks) increased
between 2010 and 2017. According to the national poverty rate (~US$3.80 a day - 2011 PPP USD),
the percentage of the poor was 32.5% in
Figure 2. Real growth and employment rates in Egypt 2017-18, although the poverty rate of
(FY2016Q1-FY2021Q4)
29.7% reported for the October 2019-
12 12 October 2020 period suggests small pre-
Percentage of Working-Age Population

10 pandemic gains in people’s welfare.11
10
8
That said, the provision of quality basic
6
8 services and infrastructure have not kept
Percentage
pace with population growth.

4 6
2
4 Challenges remain both in the level and
0
2
structure of growth. Growth has been
-2
based on employment opportunities
-4 0
created either in low value-added
GDP growth rate Unemployment rate sectors or in sectors that have
Source: CAPMAS and Ministry of Planning and Economic Development
experienced a productivity decline.12 The
largest employers are agriculture
(24.4%) and the public sector (17.2%), including social services (see Figure 1). Further, at 2.5 percent
per year, growth in output per worker (labor productivity) remains low in Egypt.13 Between 2003/04 and
20017/18, employment creation and sector productivity growth were negatively correlated; this
challenge is exacerbated by the Egyptian economy’s shift away from tradable sectors, which offer more
possibilities for expanding employment in potentially higher value-added sectors.14 Exports are mainly
driven by primary commodities, with oil products accounting for more than 25% of total exports;
however, non-tariff and Figure 1. Largest employers remain relatively low value-added (FY16-
export restrictions hinder FY18)
Egypt’s integration into
global value chains.15,16
An upstream move
towards higher value-
added, complex
manufacturing activities is
limited by the costs and
the lack of availability of
high-quality inputs and
technology critical to
production. These factors,
along with the extensive
role of the State-Owned Source: World Bank (2020). Egypt Economic Monitor: From crisis to economic transformation: Unlocking
Enterprises (SOEs), Egypt’s productivity and job creation potential
regulatory gaps for competitive neutrality, and a need for a more detailed enforcement of contracts,
deter the private sector and firm-level productivity from reaching their full potential.
11 Egypt Economic Monitor, December 2021: The Far-Reaching Impact of Government Digitalization (English). World Bank (2021).
12 Unlocking Egypt’s Potential for Poverty Reduction and Inclusive Growth. Egypt Systematic Country Diagnostic Update World Bank (2021).
14 Egypt Economic Monitor: From Crisis to Economic Transformation: Unlocking Egypt’s Productivity and Job Creation Potential. World Bank (2020).
15 Observatory of Economic Complexity, Egypt’s Profile, https://oec.world/en/profile/country/egy
16 Country Private Sector Diagnostic: Creating Markets in Egypt. IFC (2020).
2
High population growth and rising fertility rates suggest that creating jobs for youth and women will
remain a challenge. The employment rate has declined, with structural impediments to labor demand
affecting youth and women most deeply. Even before the pandemic, labor force participation was in
decline, falling from a peak of 49% in 2010 to 42% in 2019,17 although it had rebounded slightly to
44% by the end of 2021.18 While supply-side labor market issues do exist, including skill mismatches
and low education quality and relevance, the main drivers of youth unemployment are on the demand
side, particularly: (i) an overall decline in the employment rate; (ii) a slow rise in formal private sector
employment, mostly in SMEs; (iii) a substantial increase in informal private sector employment from
26% in 2007 to 42% in 2018 in non-agricultural activities; and (iv) a decrease in the quantity and quality
of jobs in the past few years, resulting in limited growth in high-skilled occupations.19,20 Currently, 76%
of Egypt’s population is under the age of 40, however in 2019, only 24% of youth (ages 15-24) were
participating in the labor force.21 Egypt’s high population growth (2.1% across the past ten years) and
rising fertility22 rates mean that creating jobs for these future generations will remain a challenge. In
2021, women’s formal labor force participation rate was only 16%, compared with men’s 74%,23 with
a notable drop during the pandemic, illustrating this group’s vulnerability to external shocks.24 In
addition, poor women are one of the groups with the lowest human capital accumulation in Egypt,
putting them at a disadvantage in the labor market.25
Addressing these challenges requires reforms and investments, but Egypt faces a financing shortfall to
support development projects due to limited fiscal space, low savings rates, and a lack of foreign
investment. Egypt is struggling with higher-than-average inflation and lower-than-average savings rates.
A large proportion of domestic savings are consumed by an overall budget deficit that is higher than
that of Egypt’s peer countries, especially due to the size of debt service.26 Thus, limited domestic
financing is available for new investments. The financing gap for development projects was forecasted
to reach 6.4% of GDP in 2021/2022.27 Further, there is room to expand foreign direct investment (FDI)
inflows both in size and scope. In 2018 net FDI inflows amounted to 2.7 percent of GDP, slightly down
from net inflows of 3.1 percent of GDP in 2017.28 Such inflows have been concentrated in the
petroleum sector (74.3% of the total FDI).29 In May 2022, the Prime Minister announced a strategy to
deal with the implications of the war in Ukraine. The strategy includes enhancing the role of the private
sector in the economy, localizing national industry and expanding production, reducing public debt and
budget deficit by 2026, revitalizing the Egyptian stock market through a public offering program,
enhancing social protection, and ensuring availability of basic commodities.
1.2. Increasing climate risks could exacerbate the existing development

challenges
Climate change is expected to increase mean temperatures and heat extremes in an already dry, arid
environment. Temperatures in Egypt have already increased over the past decades (0.53°C per decade
over the last 30 years; see Figure 3). By mid-century, temperatures are expected to increase between
17 https://data.worldbank.org/indicator/SL.TLF.CACT.NE.ZS?locations=EG
18 Egypt Economic Monitor, December 2021: The Far-Reaching Impact of Government Digitalization (English), World Bank (2021).
19 Unlocking Egypt’s Potential for Poverty Reduction and Inclusive Growth. Egypt Systematic Country Diagnostic Update, World Bank (2021)
20 Fedi, L, M Amer, and A Rashad. 2019. “Growth and Precariousness in Egypt.” Working Paper No. 2. ILO/SIDA Partnership on Employment.
21 World Development Indicators (2019). Labor force participation rate for ages 15-24, total (%) (modeled ILO estimate) (SL.TLF.ACTI.1524.ZS)
22 Average fertility rate averaged 3.35% from 2010-2020. World Development Indicators (2020), Fertility rate, total (births per woman) (SP.DYN.TFRT.IN).
23 Calculations based on Egypt in Figures March 2022, Central Agency for Public Mobilization & Statistics.
https://www.capmas.gov.eg/Pages/StaticPages.aspx?page_id=5035, last accessed on August 22nd, 2022
24 Egypt Economic Monitor, December 2021: The Far-Reaching Impact of Government Digitalization, World Bank (2021).
25 Unlocking Egypt’s Potential for Poverty Reduction and Inclusive Growth: Egypt Systematic Country Diagnostic Update, World Bank (2021).
26 Unlocking Egypt’s Potential for Poverty Reduction and Inclusive Growth. Egypt Systematic Country Diagnostic Update, World Bank (2021).
27 Human Development Report: Egypt, UNDP (2021).
28 Unlocking Egypt’s Potential for Poverty Reduction and Inclusive Growth: Egypt Systematic Country Diagnostic Update, World Bank (2021).
29 Country Private Sector Diagnostic: Creating Markets in Egypt, IFC, (December 2020).
3
1.5°C and 3°C, with greater increases in the country’s interior and during the growing season.30 Heat
waves will increase in their severity, frequency, and duration, with an average of 40 additional days of
extremely hot days per year projected by mid-century.31 High temperatures and more heat waves will
raise the already high evaporation rate, accelerate crop transpiration, functionally increase soil aridity,
and elevate water requirements for human consumption and agriculture. Finally, evidence shows that
temperature increases from 26°C to 31°C can lead to a 30% drop in labor productivity.32
Figure 3. Observed temperatures for Egypt Figure 4. Projected precipitation and temperature
25
change values for the Nile Basin, 2050
24 4
Temperature
Temperature change (C)

23 2
22 0
RCP4.5
21 -2 RCP8.5
5-yr smooth Annual Mean
20 -4
-6
-20 0 20 40
Percipitation change (%)
Source: World Bank (2020) Climate Risk Country Profile: Egypt. StaData, Provided for the 29 models recognized by the IPCC for two
warming scenarios (RCP4.5; RCP8.5) for September, an example rainy
season month
There is high uncertainty around the timing and volume of Nile River water available to Egypt due to
climate change impacts. The Nile River accounts for about 97% of freshwater resources in Egypt.
Changes in temperature, evapotranspiration (ET), and precipitation in the Nile Basin induced by climate
change will significantly affect Egypt’s water availability. The global models recognized by the
Intergovernmental Panel on Climate Change (IPCC) consistently predict increased temperatures in the
Basin but show a wide range of possible precipitation changes (Figure 4). Due to the Nile Basin’s unique
hydrology and large size, even small changes in precipitation dramatically affect water availability in
Egypt. For example, a 1 mm change in precipitation results in roughly a 3 billion cubic meter (BCM)
change in runoff at Lake Nasser.33,34 In the coming century, the variability of the region’s rainfall is
projected to increase with estimates showing a 50% increase in variability by 2100, thereby impacting
the Nile flow into Egypt. This change will result both in more frequent drought years and more frequent
high-flow years, as well as increase the frequency and intensity of flash flooding in Egypt’s coastal
areas.35,36 Changes in global and regional weather patterns are also altering the seasonal timing and
intensity of rainfall in Egypt’s coastal areas, which will not materially impact availability of water
resources in Egypt given that coastal rainfall provides a small portion of overall water resources,37 but
30 Historical data used in the Climate Risk Country Profile is produced by the Climatic Research Unit at the University of Est Anglia. Harris I, Osborn TJ, Jones
P and Lister D (2020) Version 4 of the CRU TS Monthly High-Resolution Gridded Multivariate Climate Dataset. Sci Data 7, 109
(2020). https://doi.org/10.1038/s41597-020-0453-3.
31 Max daily temperature greater than 40⁰C. Source: Harris I, Osborn TJ, Jones P and Lister D (2020) Version 4 of the CRU TS Monthly High-Resolution
Gridded Multivariate Climate Dataset. Sci Data 7, 109 (2020). https://doi.org/10.1038/s41597-020-0453-3

Climate Risk Country Profile: Egypt, World Bank (2020).
32 Lee, SW., Lee, K. & Lim, B. Effects of climate change-related heat stress on labor productivity in South Korea. Int J Biometeorol 62, 2119–2129 (2018).
https://doi.org/10.1007/s00484-018-1611-6
33 While median values for temperature and precipitation changes are forecasted to result in almost no change in overall runoff (because the impact of
slightly increased precipitation is offset by losses from increased ET) many of the global climate models, together with hydrological models, either predict
greatly increased runoff (e.g., +20% by 2050) or greatly reduced runoff (e.g., -15% by 2050). The more extreme dry global climate models with reduced
runoff predict a drastic reduction in water availability in the Basin.
34 Climate Change and Future Flood Impacts in Alexandria, Egypt’s CCDR Background Note. World Bank (2021).
35 Siam M. S. and E. A. B. Eltahir (2017) Climate change enhanced interannual variability of the Nileriver flow. Nature Climate Change vol. 7
36 Niang, I., O.C. Ruppel, M.A. Abdrabo, A. Essel, C. Lennard, J. Padgham, and P. Urquhart, 2014: Africa. In: Climate Change 2014: Impacts, Adaptation,
and Vulnerability. Part B: Regional Aspects. Contribution of Working Group II to the Fifth Assessment Report of the Intergovernmental Panel on Climate
Change [Barros, V.R., C.B. Field, D.J. Dokken, M.D. Mastrandrea, K.J. Mach, T.E. Bilir, M. Chatterjee, K.L. Ebi, Y.O. Estrada, R.C. Genova, B. Girma, E.S.
Kissel, A.N. Levy, S. MacCracken, P.R. Mastrandrea, and L.L.White (eds.)]. Cambridge University Press, Cambridge, United Kingdom and New York, NY, USA,
pp. 1199-1265.
37 The increase in flash flood events in coastal areas due to climate change is broadly accepted and is referenced in the following reports. Seneviratne,
S.I., X. Zhang, M. Adnan, W. Badi, C. Dereczynski, A. Di Luca, S. Ghosh, I. Iskandar, J. Kossin, S. Lewis, F. Otto, I. Pinto, M. Satoh, S.M. Vicente-Serrano, M.
Wehner, and B. Zhou, 2021: Weather and Climate Extreme Events in a Changing Climate. In Climate Change 2021: The Physical Science Basis. Contribution
of Working Group I to the Sixth Assessment Report of the Intergovernmental Panel on Climate Change [Masson-Delmotte, V., P. Zhai, A. Pirani, S.L. Connors,
4
will cause more frequent and intense flash-flood events in Egypt, putting an additional 1.1 million
people annually at risk.38
Densely populated cities and urban areas in the Nile Delta will be significantly impacted by the
combined effects of sea level rise (SLR), increasing flood events and water availability challenges.39
Local SLR in Egypt has been occurring consistently across the past decades. Sea levels rose from 1.8
mm annually until 1992 to 3.2 mm annually after 2012 and are expected to rise 1-6 mm/year along
the coastal zones.40,41 As highlighted in Egypt's updated NDC, the spatial concentration of cities and
fertile agricultural lands in the Nile Delta, which lies ~1 m above mean sea level, and along the
Mediterranean Sea and Red Sea coasts, amplifies the potential climate change impacts of SLR on
Egypt’s population and economic productivity. Egypt ranks fifth in the world in terms of SLR’s potential
economic impact on urban areas, with damage costs under a medium SLR scenario (RCP4.5 SSP2) of
1% of GDP annually by 2030.42 Assessments of coastal flooding scenarios conducted for this CCDR
estimate that in Alexandria, rising sea levels will also lead to saltwater intrusion, inundation, and
erosion, which will amplify climate change impacts on water available for agriculture and affect the
quality and availability of drinking water.43
Climate change is a compound risk that can deepen current social and economic challenges, in
particular persistent human development vulnerabilities and spatial disparities. The poor and most
vulnerable are often the most severely affected by the impacts of climate change, while possessing
fewer resources to cope with and respond to climate change risks. For Egypt to achieve a just transition,
it must ensure that the future growth model accounts for the interdependence between environmental
effects and social issues, heterogeneity in the impacts of climate change and climate policies, and
adjustment costs over time. It is expected that the population living on less than US$4 a day
(approximately the expected national poverty line)44 will increase by 0.8% by 2030 due to a subset of
climate change impacts (effects on agriculture, health, temperature, and increase of natural
disasters).45 Effects will not be felt equally across all regions. Upper Egypt, where about half of the poor
live and rely primarily on agriculture for their income (Figure ), is expected to see deeper impacts.
Further details of impacts on the most vulnerable are provided in Chapter 4.
The health impacts of climate change and extreme weather will affect everyone, but vulnerable groups
such as the elderly, children, women, individuals with underlying health conditions, and the rural poor
will feel them most deeply. Dust and sandstorms, already common in Egypt, are associated with
increases in infectious diseases such as influenza and pneumonia, and the worsening of non-infectious
diseases such as respiratory health problems in children and chronic cardiopulmonary diseases in the
elderly. Similarly, climate change will indirectly affect health through changes in the ecological ranges
and distribution of vector-borne diseases and water-borne pathogens, the availability of water and food,
C. Péan, S. Berger, N. Caud, Y. Chen, L. Goldfarb, M.I. Gomis, M. Huang, K. Leitzell, E. Lonnoy, J.B.R. Matthews, T.K. Maycock, T. Waterfield, O. Yelekçi, R.
Yu, and B. Zhou (eds.)]. Cambridge University Press, Cambridge, United Kingdom and New York, NY, USA, pp. 1513–1766,
doi:10.1017/9781009157896.01, and Climate Risk Profile: Egypt (2021): The World Bank Group
38 Climate Change and Future Flood Impacts in Alexandria, Egypt’s CCDR Background Note. World Bank (2021).
39 Ganges-Brahmaputra delta in Bangladesh and the Mekong delta are the other extreme vulnerability hotspots. IPCC Fourth Assessment Report: Climate
Change (2007).
40 Climate Change and Future Flood Impacts in Alexandria Egypt, CCDR Background Note, World Bank (2021).
41 Resilient Cities and Coastal Economies, Egypt’s CCDR Background Note, World Bank (2021).
42 Medium SLR (RCP 4.5, SSP2) scenario follows the historical growth SLR patterns, with an estimates SLR of .13 meters by 2030, .24 meters by 2050
and .58 meters by 2100, The SLR estimates for Egypt were produced using the DIVA model (Dynamic Interactive Vulnerability Assessment model 2.0.1,
database 32), a global model to estimate the long-term impacts of SLR. For details in the model, please refer to Nicholls RJ, Hinkel J, Lincke D and van der
Pol T, 2019. Global Investment Costs for Coastal Defense through the 21st Century, World Bank Policy Research Working Paper 8745, World Bank,
Washington DC. The latest estimates of the DIVA model were updated for the Egypt CCDR background paper, Resilient Cities and Coastal Economies.
Egypt CCDR Background Note. World Bank (2021).
43 Climate Change and Future Flood Impacts in Alexandria, Egypt CCDR Background Note, World Bank (2021).
44 In 2017/2018 the national poverty line was 736 EGP per capita per month or approximately US$3.80 per day (2011 PPP USD).
45 Additional people below $4 as % of the total population. Data from the report: Hallegatte, Stephane; Bangalore, Mook; Bonzanigo, Laura; Fay, Marianne;
Kane, Tamaro; Narloch, Ulf; Rozenberg, Julie; Treguer, David; Vogt-Schilb, Adrien. 2016. Shock Waves: Managing the Impacts of Climate Change on
Poverty. Climate Change and Development. Washington, DC: World Bank.
5
and the association between weather variables and physical and mental health, with particularly acute
implications in urban settings.46,47
Climate change will also significantly Figure 5. Distribution of the Overall Population and the
affect biodiversity and critical ecosystems, Poor Population, by region
which will have a multiplier effect on the
Overall 19% 12% 32% 11% 25%
rest of the economy because they support
the income and employment of local Poor 16% 5% 27% 10% 40%
communities.48 The preservation of
natural resources is directly connected to Metropolitan Lower Urban Lower Rural
the economic growth of the country: 10% Upper Urban Upper Rural Borders Urban
Borders Rural
of Egypt's revenues come from natural Source: Staff’s calculations using HEICS 2017/18 following the official poverty
resources.49 The cost of environmental methodology.
degradation for the country was estimated at over 3% of GDP in 2018.50 Climate change will put
significant pressure on the country’s land and water resources, which are already strained by high
population growth and rapid urbanization. The Notre Dame-Global Adaptation (ND-Gain)51 Index
classifies Egypt as “highly vulnerable” to climate change effects.52
The cost of limited action on climate change and the associated economic losses, lives lost and
decreased health, can outweigh the cost of early action. Global studies cited by the IPCC show that
limiting warming below 1.5°C can prevent significant economic costs in the future, with estimates
suggesting global GDP losses as high as 2.6% by 2100.53,54 Moreover, limiting warming to 1.5°C rather
than 2°C by 2060 can result in co-benefits of between 0.5% and 0.6% of world GDP.55 Estimates for
Egypt suggest that the combined impact of climate change on water resources, tourism revenue,
coastal resources, agriculture and human health through air pollution and water stress, represent
between 2% and 6% of Egypt’s GDP by 2060.56
1.3. Future water availability is uncertain, bringing challenges for

consumption and productive sectors
Egypt is currently using more water than its renewable resources supply and is expected to require even
more water in the near future, given population growth and the productive sectors’ increasing water
needs. The potential impacts of climate change in water are recognized in the First Update to Egypt's
Nationally Determined Contributions (NDC). According to Egypt’s National Water Resources Plan (NWRP
2017), the annual water availability from the Nile River averages 55.5 BCM (Billion Cubic Meters), which
is 33.75 BCM less than demand reported in the NDCs. Egypt is considered water scarce but has still
46 For analysis on the climate change and its impact on infectious disease, see Infectious Disease in Relation to Climate Change in the Arab World. In:
Laher I. (eds) Handbook of Healthcare in the Arab World. Springer, Cham, 2019; DOI https://doi.org/10.1007/978-3-319-74365-3_135-1, Publisher:
Springer Nature https://link.springer.com/referenceworkentry/10.1007/978-3-319-74365-3_135-1
47 Climate and Health Profile – Egypt. World Health Organization (2015). URL: https://apps.who.int/iris/bitstream/handle/10665/208860/WHO_FWC_
PHE_EPE_15.06_eng.pdf?sequence=1
48 Dasgupta, P. (2021), “The Economics of Biodiversity: The Dasgupta Review.” (London: HM Treasury).
49 Natural resources revenue includes those generated by forests (timber and ecosystem services), mangroves, fisheries, agricultural land (cropland and
pastureland), and protected areas. The Changing Wealth of Nations 2021: Managing Assets for the Future, World Bank. 2021.
50 Heger, Martin Philipp, Lukas Vashold, Anabella Palacios, Mala Alahmadi, Marjory-Anne Bromhead, and Marcelo Acerbi. 2022. “Blue Skies, Blue Seas:
Air Pollution, Marine Plastics, and Coastal Erosion in the Middle East and North Africa.” World Bank, Washington, DC. License: Creative Commons Attribution
CC BY 3.0 IGO
51 Notre Dame – Global Adaptation Initiative (ND-Gain) assesses a country’s vulnerability to climate change and readiness to improve resilience.
52 ND-GAIN (2021). Egypt. Retrieved from https://gain-new.crc.nd.edu/country/egypt
53 Hoegh-Guldberg, O., D. Jacob, M. Taylor, M. Bindi, S. Brown, I. Camilloni, A. Diedhiou, R. Djalante, K.L. Ebi, F. Engelbrecht, J.Guiot, Y. Hijioka, S. Mehrotra,
A. Payne, S.I. Seneviratne, A. Thomas, R. Warren, and G. Zhou, 2018, “Impacts of 1.5ºC Global Warming on Natural and Human Systems. In: Global Warming
of 1.5°C. An IPCC Special Report on the impacts of global warming of 1.5°C above pre-industrial levels and related global greenhouse gas emission
pathways, in the context of strengthening the global response to the threat of climate change, sustainable development, and efforts to eradicate poverty.”
54 While estimates vary across studies, Burke et al. (2018) indicates that a temperature increase of 3.66°C will result in a global GDP loss of 2.6% by
2100, compared to a loss of 0.3% with a 1.5°C increase.

55 Burke, E.J., S.E. Chadburn, C. Huntingford, and C.D. Jones, 2018: “CO2 loss by permafrost thawing implies additional emissions reductions to limit
warming to 1.5 or 2.0 °C.”

56 Smith, J., Jones, R., Elshamy, M and Hassanein, M. (2014). Egypt’s economic vulnerability to climate change. Climate Research.
6
not reached the extreme water scarcity threshold of 500 m 3 per person per year (water availability in
2018 was 570 m3 of freshwater per person per year).57
If available water resources remain constant and population growth continues to increase along current
trend-lines, estimates suggest that Egypt will reach the extreme water scarcity threshold in 2033.58
Periods of low flow rates from the Nile will further complicate the existing water scarcity. Drinking water
supply is the first priority for water allocation, and the population is most heavily impacted if there is
insufficient drinking water due to water stress and scarcity. The average per capita production of
drinking water is between approximately 150 lpcd (liters per capita per day) and 300 lpcd, but can be
much higher in large cities like Cairo and Alexandria, which produce more than 450 lpcd.59 The NWRP
2037 recognizes the challenge posed by increased water scarcity and estimates a reduction in per
capita drinking water allocation from 309 lpcd to 242 lpcd by 2037, even as total demand will increase
from 11.5 BCM to 13 BCM.
The impact of climate change-induced water scarcity will be large, affecting productive sectors such as
agriculture. Agricultural and agribusiness products account for 21% of exports, and the agri-food sector
provides jobs to a third of Egyptians.60,61 Recent biophysical and economic model analyses using
IMPACT62 and the Agricultural Sector Model for Egypt (ASME) conclude that by 2050, every crop type
will be vulnerable to the biophysical impacts of climate change, including insufficient water, water
salinization, heat stress, and heat shocks. Examination of the impacts of reduced water availability
show that a reduction from 55 BCM to 45 BCM in Nile River inflow to the High Aswan Dam, a reduction
that may be expected during the increasingly frequent droughts in the Basin, can reduce irrigated land
by 22%, productivity per irrigated hectare by 11%, and agricultural employment by 9%. Further, overall
food production in Egypt is projected to decline by 5.7% by 2050, a higher share than the 4.4% decline
predicted for the rest of the world.63
1.4. A low emissions pathway can build economic resilience and competitiveness
Egypt’s economic and emissions growth are still tightly linked to each other. Egypt’s historical share of
global emissions is not high, estimated at 0.6% of the global emissions.64 Despite achieving a relative
decoupling, with GHG emissions growth lower than GDP growth, GDP and emissions remain closely
linked, with emission growth remaining positive for most of the last 30 years (see Figure 6). GHG
emission levels trended upwards between 1990 and 2019, in both absolute (~163% increase) and per
capita (~47% increase) terms.65 Between 2005 and 2015 only, emissions increased by about 31%.66,67
In 2019, CAIT suggested that the contribution of energy, transport, and industry sectors to total
emission reached over 80%, with 74% of emissions coming from Energy (incl. electricity & heat (32%),
transportation (16%), manufacturing (11%), fugitive and other fugitive emissions (10%), building (5%)),
57 Egypt First Updated Nationally Determined Contributions, June 2022

58 Author’s calculations based on World Bank population data. In 2018, the GoE estimates an expected fall in water availability to 390 cubic meters per
year by 2050. Ministry of Water Resources and Irrigation Strategy 2050 (issued 2016), cited in Egypt First Updated Nationally Determined Contributions,
June 2022.
59 Egyptian Water Regulatory Agency Report for 2017-18.
60 United Nations COMTRADE database (2020)
61 The agrifood system–including both farming and off-farm components–accounts for over a third (35%) of all total jobs in Egypt according to WB staff
calculations. Estimates from a series of 10 years of LFS data by the Michigan State University/World Bank show that on-farm agricultural activities
accounted for 24% of total primary employment in Egypt in 2017, and a further 5% in agroprocessing, 4% in downstream commerce and distribution, and
2% in food preparation.
62 Perez, Nicostrat's D.; Kassim, Yumna; Ringler, Claudia; Thomas, Timothy S.; and ElDidi, Hagar. 2021. Climate change and Egypt’s agriculture. MENA
Policy Note 17. Washington, DC: International Food Policy Research Institute (IFPRI).
63 Perez, Nicostrato D.; Kassim, Yumna; Ringler, Claudia; Thomas, Timothy S.; and ElDidi, Hagar. (2021b). “Climate change and Egypt’s agriculture”. MENA
Policy Note 17. Washington, DC: International Food Policy Research Institute (IFPRI).
64 Official numbers suggest Egypt’s emissions represented 0.6% of global emissions in 2015.Egypt’s Biennal Updated Report (2018). Estimates from the
Global Carbon Project suggest Egypt contribution to global emissions has remained at around 0.6% in 2020).
65 In 1990 emission were 134 Mt CO2eq and 2.38t CO2 eq per capita, in 2019 emissions were 352 Mt CO2eq (~163% increase from 1990) and 3.51t
CO2eq per capita (~47% increase from 1990).

66 Egypt’s First Biennial Updated Report, shows an increase from 248.770 Mt CO2e in 2005 to 325. 614 Mt CO2e in 2015.
67 CAIT data reports an increase from 244.26 Mt CO2e in 2005 to 352 Mt CO2eq CO2e in 2019. Climate Watch. 2022. Washington, DC: World Resources
Institute. Available online at: https://www.climatewatchdata.org.
7
and 5.4% from industrial processes.68 Importantly, electricity and transport are the only sectors with an
upward growth trend in emissions (Figure 7). Official government sources estimate that for 2015, the
Energy sector, which includes transport and industry emissions (65%), and Industrial Processes and
Product Use (IPPU) (12%), together represented 77% of emissions.69
In the energy sector value chain, the production and, particularly, the use of Natural Gas (NG) and crude
oil remain the main primary energy supply and GHG emission sources. Despite the ambitious targets
for both the integration of renewable energy and adoption of energy efficiency measures in Egypt’s
Integrated Sustainable Energy Strategy ISES 2035, NG and oil together still represented about 92% of
the total primary energy supply in 2019. Oil products alone accounted for 7.6% of total primary energy
supply (Figure ). According to official data natural gas and petroleum products satisfied 98% of the total
primary energy consumption in FY 2014/2015 compared to 1.5% from hydropower, 0.4% from coal,
and 0.1% from wind and solar power
70 Egypt’s large available power Figure 6. Decoupling: GHG Growth vs GDP Growth, 1990-
2018
generation capacity surplus of 21 GW
in 202271 is still largely reliant on 10
thermal plants (90% of installed

capacity).72 This surplus and the
Percentage
5
remaining lifetime of gas-based power
generation capacity limit the space - 0
and need- in the short- to medium 1990 1995 2000 2005 2010 2015 2020
term for the integration of RE in the -5

GDP growth GHG growth
generation mix. This is particularly Source: Climate Watch. 2022. Washington, DC: World Resources Institute.
relevant given the new thermal, Note GHG growth between 2005 and 2015 aligns with official government data (Egypt’s
First Biennial Updated Report, 2018), as both report a 31% increase in this period.
combined cycle power plants
(14.4GW) commissioned in 2018 Figure 7. Emission Profile
accounted for 25% of the actual
generation in FY21. These new three
plants are highly energy efficient, with
comparative low fuel consumption
rates (150gm/kWh). In 2021,
according to the Egyptian Electricity
Holding Company (EEHC) 2020/2021
annual report, the share of non-hydro
RE in the total energy mix was just 5%
(10,202 GWh generated from wind
and solar compared to total
generation of 204,794 GWh), still well
below its potential.
A low carbon transition can foster Source: WB team elaboration, using data from Climate Watch. 2022. Washington, DC:
Egypt’s competitiveness and World Resources Institute. https://www.climatewatchdata.org.
economic growth, as market
preferences shift toward greener and lower carbon content products and policies. One example is the
European Union’s planned implementation of the Carbon Border Adjustment Mechanism (CBAM). As
68 CAIT data of 2019, from Climate Watch. 2022. Washington, DC: World Resources Institute. Available online at: https://www.climatewatchdata.org.
Official government sources estimate that for 2015, the Energy sector, which includes transport and industry emissions (65%), and Industrial Processes
and Product Use (IPPU) (12%), together represented 77% of emissions. Egypt’s First Biennial Updated Report (BUR), 2018.
69 Egypt’s First Biennial Updated Report, 2018.
70 Ibid.
71 Egypt ERA, March 2022 Report.
72 53 GW of thermal power capacity out of the 58.8 GW total power capacity. In terms of power generation, the share of thermal is 88% (180 GWh thermal
out of 204.7 GWh total). Egyptian Electricity Holding Company, FY21 Report.
8
further discussed in Chapter 3, transitioning to a low carbon path could help Egypt prepare for an
uncertain future by strengthening the competitiveness of Egyptian products
There are significant opportunities for decarbonization in the energy sector value chain. In a recent
assessment of sustainable energy policies and regulations, Egypt scored 79, above the MENA regional
average of 66.73 Egypt has focused its attention on using NG for meeting its energy needs, increasing
levels of renewable energy (RE), and improving energy efficiency on both the supply and demand sides.
Today, renewable electricity generation sits at 12.2% of the total power generated in 2021, with
installed capacity at 18.9%74, in line with Egypt's Integrated Sustainable Energy Strategy (ISES) 2035
interim target. Egypt has a strong comparative advantage in RE, with high potential for wind and solar
generation. Accelerating the integration of RE in the system in accordance with the NCCS and update
NDCs, will require more facilities, including storage systems, to accommodate and stabilize the network.
Demand for energy will increase, due to the combined effects of climate change, population growth,
urbanization, growing incomes and industrial development. Climate change-driven rises in temperature
will have a multiplier effect on demand growth in many of these sectors, for instance by increasing
energy demand for the cooling of physical spaces. Moreover, elevated temperatures can decrease the
efficiency and lifespan of industrial equipment (e.g., motors, coolers, electrical/electronic components),
leading to higher energy consumption. Figure charts total final energy consumption by sector in 2019.
For 2015, Official data estimated that energy industries accounted for 43% of energy consumption,
manufacturing industries and construction for 23%, transport for 23%, other sectors such as residential
for 8% and fugitive emissions from oil and natural gas for 3% of fuel combustion activities.75
Figure 8. Egypt’s Primary Energy Supply by Figure 9. Final Sectoral Energy consumption by
source (percent), 2019 sector (percent), 2019
Biofuels and
Commercial
waste, 3.5%
Natural Residential, and public
gas, Hydro, 22% services, 6%
54.8% 1.2%
Agriculture /
Wind, solar, forestry, 2%
etc., 0.5%
Coal, 2.8% Transport,

30% Non-energy
Crude oil, use, 12%
29.8%
Oil
Industry,
products,
28%
7.6%
Source: IEA statistical data, 2019 Source: IEA statistical data, 2019
Transport, the fastest-growing sector, accounts for 30% of energy consumption 76 and is one of the
largest air pollution emitters. These factors impose a high economic and health toll. Between 2005 and
2019, transport emissions increased 75%, from 31.47 in 2005 to 55.2 MtCO2e in 2019, at a faster
rate than total GHG emissions growth (44%).77 Likewise, Official estimates indicate that between 2005
to 2015 transport emissions increased 66%, from 29.1 MtCO2e in 2005 to 48.3 MtCO2e in 2015, at
73 RISE is a set of indicators to help compare national policy and regulatory frameworks for sustainable energy. It assesses countries’ policy and regulatory
support for each of the four pillars of sustainable energy—access to electricity, access to clean cooking (for 55 access-deficit countries), energy efficiency,
and renewable energy. Retrieved from https://rise.esmap.org/country/egypt-arab-rep
74 The 18.9% is calculated by the GoE as the ratio between the RE generation capacity, including solar, Wind and Hydro, to the peak load, not to the total
generation capacity which has a huge surplus. In 2019, the Hydro installed capacity was 2.8 GW, and 2.2GW from Wind and Solar, while the total generation
capacity including thermal was 58.3 GW. There is a slight change in FY21, as the Hydro installed capacity remained 2.8GW, and the Wind/ Solar was 3
GW, together representing 10% RE out of total generation capacity of 58.8 GW.
75 Egypt’s First Biennial Updated Report, 2018.
76 Total Final Consumption by sector, IEA statistical data, 2019.
77 Climate Watch. 2022. Washington, DC: World Resources Institute. Available online at: https://www.climatewatchdata.org.
9
double the rate of total GHG emissions growth (31%) during the same period.78,79 As of 2017, road
transportation accounted for 11% of overall CO2 emissions,80 the result of suburban sprawl, passenger
cars in large urban regions, and dependency on trucks for freight transport. Emissions in Greater Cairo
are among the highest of all global cities, imposing a toll on the health of its inhabitants. Even in MENA,
which leads the world in rates of morbidity and mortality due to ambient air pollution (AAP), Egypt has
the highest rates. More than 150 per 100,000 people died prematurely in Egypt due to AAP in 2019.81
According to the IEA, the industry sector, a key source of economic growth, development, and
employment, is the third-largest consumer of energy at 28%.82 The importance of the industry sector,
which contributes one-third of Egypt's GDP, means that it must green its production processes and
energy sources. The highest-emitting priority industries for Egypt are iron and steel, aluminum, cement,
and oil refineries, which together emit 29 MtCO2e annually (equivalent to about 9% of total GHG
emissions in 2015).83 Emissions in these sectors are expected to continue to increase in tandem with
the growing population if no action is taken.84 Neither the best available energy efficient industrial
production technologies nor green management practices, which could both help reduce emissions
intensity, are currently practiced widely in the MENA region.85
1.5. Growing urban population puts additional stress on services and

contributes to increased exposure to climate hazards
Egypt is undergoing high population growth combined with rapid urbanization. The UN estimates that
Egypt’s population will reach 159.9 million by 2050, up from 102 million in 2020, with 55.6% of the
total population living in cities by 2050.86 Under these forecasts, cities will be required to deliver
services to an additional 41.4 million people over the next three decades. Demand will be higher for
electricity, water and food, as well as health and education services.87 In Greater Cairo alone, the urban
population is expected to increase by 36% to 28.5 million by 2035.88
78 Official estimates indicate that between 2005 to 2015 transport emissions increased 66%, from 29.1 MtCO2e in 2005 to 48.3 MtCO2e in 2015, at
double the rate of total GHG emissions growth (31%) during the same period. Growth calculations by the WB staff using data from the Egypt’s First Biennial
Updated Report (BUR), 2018. In particular, 2005 numbers correspond to those presented in Table 2.1 pg. 64 under BUR estimates. Values for 2015 are
extracted from Annex C GHG emissions (C02e) in 2015 (pg. 141).
79 Official estimates indicate that between 2005 and 201, the intensity of transport emissions per person increased: per capita emissions increased 29%
from 0.41 tCO2e in 2005 to 0.52 tCO2e in 2015. Transport emissions per unit of GDP increased at a lower rate – 8% - over this period, from 0.18 tCO2e
per $1,000 (2010 Constant) to 0.19 tCO2e per $1,000 (2010 Constant). World Bank calculations using data from the Egypt’s First Biennial Update Report,
2018.
80 Emission data provided by Egypt's Fourth National Communication, 2017 emissions. Emissions for road transport are reported at 38,452 Gg C02e, from
a total national emission of 351,192.48 Gg C02e.

81 Heger, Martin Philipp; Vashold, Lukas; Palacios, Anabella; Alahmadi, Mala; Bromhead, Marjory-Anne; Acerbi, Marcelo. 2022. Blue Skies, Blue Seas: Air
Pollution, Marine Plastics, and Coastal Erosion in the Middle East and North Africa. MENA Development Report. Washington, DC: World Bank
82 IEA statistical data, 2019.
83Team calculations using numbers from Egypt’s First Biennial Updated Report (BUR), 2018. Annex E, pg 156-157. The following categories are aggregated:
Cement production, Iron and Steel Production, Aluminum and Steel production and Oil.
84 Energy Transition: Energy, Transport and Industry, Egypt CCDR Background Note, World Bank (2022).
85 In the MENA region, only 20% of firms adopted any energy efficiency measures, 10% of firms adopted any air pollution control measures, 12% engaged
in climate-friendly energy generation on site, 11% adopted water management measures, and 23% adopted energy management measures. European
Bank for Reconstruction and Development (2019). Transition Report 2019-2020.
86 World Urbanization Prospects: The 2018 Revision, Online Edition, United Nations, Department of Economic and Social Affairs, Population Division (2018).
87 World Bank Open Data, Data Retrieved December 2019. Data Bank: World Development Indicators, Egypt. URL: https://databank.
worldbank.org/source/world-development-indicators.
10
Cities, the engines of economic
development, may face significant risks to Figure 10. Percentage of Population Exposed to 1, 2, or 3
or More Climate Change Hazards
resilience and livability.89 Egypt’s
urbanization is centered around 14
medium-to-large-sized cities/urban Zagazig
agglomerations (out of a total of 192), Tanta
Suez
which account for 72% of the country’s Port Said
urban population. Greater Cairo Mansoura
Luxor
contributes between 47% and 49% of Kafr El Dawwar
Egypt’s GDP, while coastal governorates Ismailia
Faiyum
contribute between 24% and 28% of El Mahalla El Kubra
GDP.90 A major proportion (between 80% Cairo
Asyut
and 100%) of the people in these 14
Aswan
major cities is exposed to at least one Alexandria
major climate risk, and a substantial 0% 50% 100%
fraction faces more than one such risk 3 Hazards 2 Hazards 1 Hazard
(Figure ). These risks include flooding, Source: Resilient Cities and Coastal Economies. Egypt CCDR Background Note.
World Bank (2021) using data from the Urban Climate Risk Analysis (World Bank,
heat stress, air pollution, desertification, GFDRR City Resilience Program)
and, for coastal areas, SLR.91
Rapid urbanization has exacerbated urban population vulnerabilities. The rapid growth of Egypt’s urban
population has resulted in unplanned urban expansion, inadequate access to services, and inappropriate
land use. Analyses of the 14 key cities show that urbanization has decreased green areas by ~8.6%,
resulting in reduced resilience through the densification of impervious land area. With significant
amounts of urbanization on the horizon, a lack of climate-smart planning systems could lead to urban
transitions wherein the lock in-effects are not easily reversable: for instance, not incorporating natural
air flow in building construction can increase heat and further degrade the livability and productivity of
Egyptian cities. This is exacerbated in informal settlements, where no or limited urban planning has
already led to limited access to infrastructure including access to clean water, transport services, and
good quality housing, which put the most vulnerable at high risk for climate change impacts. In 2019,
informal settlements covered around 38% of the built area and housed around 5.2% of the urban
population.92
Estimates for this report suggest that 80% of Egypt’s direct CO2e emissions come from cities.93 City
emissions have increased more than tenfold across the past five decades, from 18 MtCO2e to 182
MtCO2e. Per capita emission intensities in cities have quadrupled between 1970 and 2015, from 0.58
to 2.43 t CO2e.94 The increase is driven not only by urban growth, economic activity, rising incomes, and
changing consumption patterns, but also by policy choices and investment decisions that guide land use
planning, building materials and location selections, and the provision of urban mobility services, and
89 Climate change risks to cities, settlements and key infrastructure will rise rapidly in the mid- and long-term with further global warming, especially in
places already exposed to high temperatures, along coastlines, or with high vulnerabilities (high confidence). By 2100 the value of global assets within the
future 1-in-100 year coastal floodplains is projected to be between US$7.9 and US$12.7 trillion (2011 value) under RCP4.5, rising to between US$8.8 and
US$14.2 trillion under RCP8.5 (medium confidence). IPCC (2022): Climate change impacts, adaptation and vulnerabilities.
90 GDP data comes from Ministry of Planning and Economic Development. (https://mped.gov.eg/Governorate/Index?lang=en).
92 Egypt’s 2021 Voluntary National Review, Ministry of Planning and Economic Development.
93 World Bank staff calculations using EDGAR emissions data combined with information on urban extents. Crippa et al., 2021. “Global Anthropogenic
Emissions in Urban Areas: Patterns, Trends, and Challenges. EDGAR data is a global dataset and is based on based on mapping of emitting activities and
corresponding emissions factors that are in line with IPCC guidelines. The EDGAR data provides emissions of GHGs and air pollutants for all anthropogenic
emitting sectors, following the IPCC categories, namely 'energy-industry' (which includes the combustion in the power and non-power generation industries,
fugitive emissions, fuel production, refineries and transformation industries), 'residential' (which includes small scale combustion), 'transport' (which
includes both road and non-road transport), 'waste' (which includes solid waste disposal and waste water treatment) and 'other' (which includes all
emissions not included in the other categories such as industrial process emissions (e.g. cement production, iron and steel production, non-metallic
minerals production, non-ferrous metals productions, chemicals production), solvent use, indirect emissions for N2O, etc.). EDGAR data provides Scope 1
emissions spatially across types of settlements. City emissions are aggregated overlaying information on urban settlements with the EDGAR data.
94 Emission numbers correspond only to urban centers. Data from Emissions Database for Global Atmospheric Research (EDGAR), Crippa et al., 2021.
“Global Anthropogenic Emissions in Urban Areas: Patterns, Trends, and Challenges.”
11
solid waste and wastewater management, among others. For example, the existing stock of 21 million
residential and public buildings accounts for 17.42 MtCO2e95 annually. Given that Egypt requires an
additional 3.8-4.2 million housing units by 2030, along with non-residential buildings (such as offices,
hospitals, schools, and hotels), decisions about where these new houses and buildings are placed and
how they are built will have a bearing on future emissions.96
Urban heat island effects, air pollution and emissions further degrade cities’ livability and productivity.
The projected temperature increase will result in the increased severity, frequency, and duration of heat
waves.97 Across the 14 major Egyptian cities, nearly 90% of the total urban population lives in areas
where surface temperatures can reach extremely high levels of more than 40°C, exacerbating existing
urban heat island (UHI) effects.98 For several cities in Egypt pollution levels measured through particle
matter remain at high level, contributing to reducing quality of life and worsening heat-related climate
change impacts.99 Further, the evidence of links between air pollution and health costs in Egypt is strong,
with recent work suggesting that the a 10 µg/m3 increase in PM10 causes a roughly 2% percent higher
hospital admission rate for respiratory diseases in Egypt, implying important increases in health
expenditures and GDP loss.100,101
Unplanned and unregulated spatial urban expansion is leading to both increased desertification and an
associated rapid decline in arable land as well as urban sprawl, increased congestion, and rising
transport emissions. Weak spatial planning systems, resource-efficient territorial planning and land
governance challenges, together with the need for land readjustment laws are resulting in significant
desertification effects in Egypt. Arable land, a key resource constraint for Egypt, is shrinking at the rate
of ~2% per decade as desertification intensifies, especially around urban areas. As a result of urban
expansion, the rate at which arable land is being lost has accelerated between 2000 and 2015, with an
overall decrease of ~8.6% (43,000 hectares) and decreases as high as 30% in Asyut and Aswan.
According to modeling done for this report, continued urban growth and expansion following current
patterns would lead to an additional loss of 138 km2 of natural land is projected by 2030. An additional
loss of 251.24 km2 of agricultural land will result from urban expansion. Similarly, Egyptian cities suffer
from fragmented spatial and mobility planning, insufficient public transport systems, heavy congestion,
and heavy reliance on fossil fuel-based vehicles. By 2030 in 12 of the 14 large cities in Egypt, density is
expected to drop from 316 to 273 inhabitants per hectare, leading to increased dependency on private
vehicles, vehicle kilometers traveled (VKT), emissions, and costs. Access to public transportation, green
public spaces, and social infrastructure (hospitals, schools, etc.) remains a challenge in all cities, as less
than 8% of city residents live within walking distance of a bus stop.102
Limited solid waste and wastewater recycling in cities puts additional strain on scarce resources. While
wastewater recycling can significantly reduce water security risks from climate change, only 1.7% of
generated wastewater103 in Egypt is treated to tertiary standards, recycled, and reused, suggesting very
limited progress on building the basis for a circular economy in cities.104 Mismanaged wastewater
contributes to water pollution, deepens risks of urban flooding, and degrades fertile land. As population
95 Including both embedded carbon and energy consumption. WRI’s climate watch data tool https://www.climatewatchdata.org/ (lasted accessed
September 30, 2022)
96 Resilient Cities and Coastal Economies. Egypt CCDR Background Note. World Bank (2021).
97 Calculations using Wet Bulb Globe Temperature, Resilient Cities and Coastal Economies. Egypt CCDR Background Note. World Bank (2021).
100 Heger, Martin; Zens, Gregor and Meisner, Craig. 2019. Particulate matter ambient air pollution and respiratory disease in Egypt. The World Bank
101 See “Chemical characteristics of atmospheric PM2.5 loads during air pollution episodes in Giza, Egypt. Atmospheric Environment, 2017; 150 346e355”
funded by Ministry of Higher Education & Scientific Research, for additional detail on the study sources of air pollution, chemical characteristics of PM2.5
and health importance.
103 Hany F. Abd-Elhamid et. al. “Safe Reuse of Treated Wastewater for agriculture in Egypt”, (2018).
104 Several studies funded by the Ministry of Higher Education & Scientific Research focus on the improvement of solid waste and wastewater recycling,
including Polishing of secondary treated wastewater using nano-ceramic hybrid PET waste plastic sheets. Desalination and water treatment, 2021; 217:
214–220, Three-dimensional, flow-through silver-magnetite nanocomposite–modified reactive electrochemical system with slow silver ions release for
efficient bacterial disinfection of sewage. Journal of Environmental Chemical Engineering, 2022; 10, 106985., and combining chemical coagulation
processes and innovative aerobic reactor for the treatment of de-hairing wastewater, Waste and Biomass Valorization, (2021); 12:2557–2564.
12
and income increase, so will the volume of waste. In 2018, only 62% of municipal solid waste was
collected, leading to illegal landfills and open burning of waste on the street, impacting public health and
contributing to ~8% of GHG emissions in 2019.105,106 Estimates suggest that around 135 million tons of
mismanaged waste will be produced in cities between 2021 and 2030. Mismanaged waste with high
plastic content (~13%), is expected to continue to contribute to Egypt’s enormous share of marine litter,
impacting health and coastal economies.107 Egypt contributes to 0.25 million tons per year of marine
plastic waste to the Mediterranean Sea, only followed by Turkey (0.11million tons per year).108 Egypt is
projected to contribute about 0.5 million tons of plastic waste to the Mediterranean Sea by 2025.109
Growing evidence suggests that plastic pollution (and microplastics) interferes with the absorptive
carbon capacity of soils and the world’s oceans.
Vulnerability to pluvial flooding and coastal risks (from SLR, subsidence, saltwater-intrusion, coastal
storms and urban flooding) will impact the livability and economic productivity of cities. Currently, the
resilience of cities even against low-intensity rainfalls is limited due to inadequacy of urban drainage
infrastructure and weaknesses in planning, operation and maintenance (for example, there is no
separate stormwater management system; all water goes through the sewage network) and limitations
in existing early warning systems, which must be improved and enhanced. Coastal cities such as
Alexandria, Port-Said, Ismailia, and Suez face the highest level of climate and economic risks.
Coastal and blue economy exposure to climate change is significant and expected to grow. The coastal
and blue economies are driven by diverse economic activities of fisheries and aquaculture, tourism,
ports and marine transport, and critical ecosystems such as mangroves and coral reefs. All are subject
to long-term risks from climate change. Fisheries and aquaculture valued at about US$3.7 billion are a
pillar for food security (they contribute to 25% of households’ protein intake) and a source of jobs to
more than one million people directly and indirectly.110 Marine capture fisheries have seen a decline in
catch volumes over the years even despite the expansion of the fishing fleet.111 Overfishing, pollution,
habitat destruction and climate change have contributed to capture fisheries’ declining productivity. On
the tourism front, the Red Sea, home to 209 types of coral and over 5% of the world's coral reefs, is a
major contributor. Coastal tourism, in particular, has been estimated to account for about half of Egypt’s
tourism, attracting a total of 13.6 million visitors and contributing about 12% to Egypt’s GDP in 2019.
The economic benefits of coastal tourism to local communities are projected to be adversely impacted
due to coral reef bleaching, retreat of mangrove areas in the Red Sea, and coastal erosion on the
Mediterranean coast. Estimates from the High Level Panel for a Sustainable Ocean Economy presented
at COP25 suggest that by 2100, Egypt could lose US$5.6 billion in revenue compared to 2019 under
RCP 8,5.112 Coral bleaching has been observed in the Red Sea as far north as Hurghada, although
recent studies show that corals of the Red Sea’s Gulf of Aqaba have a high bleaching threshold of 32°C,
making the Gulf a "coral refuge" of sorts.113,114 However overfishing and unsustainable practices at local
105 Official estimates from the First Biennial Updated Report (BUR), indicate that in 2015, the waste sector contributed also to 8% of the total GHG
emissions.
106 2019 data from Climate Watch Historical GHG Emissions. 2022. Washington, DC: World Resources Institute. Available online
at: https://www.climatewatchdata.org/ghg-emissions.
108 Losses from plastic pollution are estimated at €641 million per year for the Mediterranean, including up to €268 million in tourism, €235 million in the
maritime industry, and €138 million in fisheries. Dalberg (2019). “Stop the Plastic Flood: How Mediterranean Countries Can Save their Sea.” Report for
the World Wide Fund for Nature (WWF), Gland, Switzerland.
109 Dalberg (2019). “Stop the Plastic Flood: How Mediterranean Countries Can Save their Sea.” Report for the World Wide Fund for Nature (WWF), Gland,
Switzerland.
110 Capturing Value from the Egyptian Blue Economy: Aquaculture and Fish Supply Chains. World Fish (2019). Report prepared with support of World Bank
and UK Government.
111 GAFRD, Fish Statistics Year Book (27th Edn.), 27th ed. (General Authority for Fish Resources Development (GAFRD), Ministry of Agriculture and Land
Reclamation, Egypt, 2017).

112 High Level Panel for a Sustainable Ocean Economy. Summary for Decision-makers: The Expected Impacts of Climate Change on the Ocean Economy.
Available at: http://www.oceanpanel.org/sites/default/files/2019-12/expected-impacts-climate-change-on-the-ocean-economy-executive-summary.pdf

113 Fine, M., Gildor, H., and Genin, A. (2013). A coral reef refuge in the red sea. Glob. Chang. Biol. 19, 3640–3647. doi: 10.1111/gcb.12356
114 Fine, M., Cinar, M., Voolstra, C. R., Safa, A., Rinkevich, B., Laffoley, D., et al. (2019). Coral reefs of the Red Sea — Challenges and Potential Solutions. Reg.
Stud Mar. Sci. 25:100498. doi: 10.1016/j.rsma.2018.100498.
13
level may put these natural assets at risk even if Red Sea corals are able to adapt to warming water
temperatures.
Egypt’s geographical location lends significance to ports and maritime transport in both the
Mediterranean and Red Seas, linked by the Suez Canal. The Suez Canal is the main trade route between
Europe and Asia, accounting for roughly 12% of world sea trade. Approximately 90% of Egypt’s
international trade is seaborne, with strong reliance on over 60 seaports (15 commercial ports; six
mining ports; six fishing ports; five marinas; and 10 oil shipping ports). This seaborne trade is a major
pillar of the Egyptian economy and employment. Central to achieving Egypt’s plan to become a global
trading hub is the role of ports and logistics to enhance capacity, efficiency, and resilience. Climate
change is projected to cause disruptions in port infrastructure and operations stemming from coastal
flooding and overtopping due to sea level rise, as well as heat stress impacts that may affect both
infrastructure and operations leading to subsequent economic losses.115,116
115Resilient Cities and Coastal Economies. Egypt CCDR Background Note. World Bank (2021).
116 Izaguirre, C., Losada, I.J., Camus, P. et al. Climate change risk to global port operations. Nat. Clim. Chang. 11, 14–20 (2021).
https://doi.org/10.1038/s41558-020-00937-z
14
2. Climate Change Policy, Institutions and Regulatory
Framework
Main Messages
• The National Climate Change Strategy 2050 (NCCS) and the First Updated National Determined
Contributions mark important steps for Egypt’s climate policy, laying down priorities for action in
mitigation and adaptation and supported by enabling goals on regulations, financing, technology, and
capacity. The strategy builds on various other national articulations, which have contributed to significant
progress in climate change adaptation and mitigation action.
• The National Council on Climate Change (NCCC) headed by the prime minister is the main body
responsible for climate change, ensuring enhanced coordination and integration of climate change
aspect within the national plans and strategies. Dedicated climate units are currently being established
in various sectors to enhance coordination and address challenges that stem from overlapping
responsibilities between and within sectoral ministries
• Going forward and to achieve national ambitions on climate policy, mobilizing private sector financing on
climate change priorities will be key. To provide the right enabling environment it will be important to
strengthen regulatory frameworks, support the role of local governments and improve coordination from
the center of government to support climate action across the government, public and private sector.
Integrating climate-related risks and mitigation actions in budgeting and public investment management
(PIM) and improving links between PIM and Private Public Partnerships will be key to ensuring that
national budget and investment decisions are aligned with Egypt’s climate goals. Further, including
climate considerations in SOEs’ governance frameworks and improving monitoring, reporting, and
verification (MRV) will be conducive to climate action.
2.1. An ambitious climate change policy

Egypt’s COP27 presidency provides a unique opportunity to strengthen its role on climate policy and
action. The country has already taken important steps and built a strong institutional basis for climate
action. But tackling the challenges at the intersection of climate and development described in Chapter
1 will require clear commitments, strong institutions and national regulations, and effective
coordination. This chapter presents an overview of Egypt’s climate policies, including its National
Strategy for Climate Change and related decrees. It also describes the institutional layout for climate
action and discusses some opportunities to strengthen it.
Egypt’s climate change policy has evolved from adhering to specific international commitments to
defining a long-term strategy in line with the country’s ambition to become a regional leader on climate
change. Since the ratification of the United Nations Framework Convention on Climate Change
(UNFCCC) in 1994, Egypt has developed national strategies, made commitments, and established
national steering mechanisms on climate change. As further discussed below, in June 2022, the country
launched its First Updated Nationally Determined Contributions (NDC) covering the period between
2015 and 2030. Moreover, Egypt aims to be a regional leader on climate change and has stated its
commitment to a sustainable future and a just transition.
The most recent national articulation of climate policy is reflected in Egypt’s National Climate Change
Strategy 2050 (NCCS), launched in May 2022. The NCCS provides a comprehensive institutional
framework for the articulation of climate action to 2050 with two goals on mitigation and adaptation
priorities and three enabling goals intended to overcome the governance, financing and technology,
15
and awareness constraints.117 The NCCS reflects continuity with other national articulations, such as
Egypt’s Sustainable Development Strategy (Vision 2030). The NCCS lays down clear objectives and
targets for Egypt to transition towards a low-carbon development pathway and enhance resilience, and
includes the establishment in all the ministries of specialized units in charge of climate change issues
(intended to foster institutional coordination at the sector and overall level). The NCCS includes 26 high-
priority projects to be completed by 2030. As stressed in Chapter 1, interlinkages across sectoral
challenges call for cross-sectoral actions.
In an effort to tackle the compounded risks on energy, water and food, the GOE has put forward the
Country Platform for the Nexus of Water, Food, and Energy (NWFE) Program . The platform will facilitate
the design, structuring and preparation of concrete and implementable climate action projects. NWFE
integrates nine high-priority projects for adaptation and mitigation, bundled around the nexus of Water, Food,
and Energy, and selected through a prioritization process led by the GOE. These climate action projects are
to be implemented under a programmatic approach and include projects that would replace existing
inefficient thermal power plants with renewable energy, enhance small farmers’ adaptation to climate risks,
increase crop yields and irrigation efficiency, build resilience of vulnerable regions, develop water
desalination capacity, establish early warning systems, and modernize on-farm practices.
Implementation of climate policies remains a challenge despite important advances under Vision 2030.
Egypt has taken important steps to achieve adaptation and mitigation goals under Vision 2030. While
not comprehensive, Table 1 highlights the Egyptian government’s key recent achievements in reducing
GHG emissions and protecting its population from the impacts of climate change. However, while
strategies have been put in place, in many cases their implementation remains a challenge and limited
monitoring and evaluation prevents a clear assessment of such advances.
Table 1. Selected Examples of Egypt’s Mitigation and Adaptation Achievements Across Sectors
Mitigation Measures Adaptation Measures
Renewable energy Water resource management
The non-Hydro Renewable energy capacities Irrigation Canals: Extending/rehabilitating of canals to
have been increased form 687 MW in 2014 to reduce irrigation water losses.
3016 MW in 2021. The most prominent recent Protection structures: Building protection structures to
renewable energy accomplishments were the harvest and store additional water.
launch of Benban Solar Park (total of 1,465 Wastewater: Inauguration of the Bahr Al-Baqar, the
MW), Assuit hydropower plant (32 MW), Kom largest WWTP in the world (5.6 million m3/day) and
Ombo Solar PV Plant (26 MW), Zafarana Wind construction of Al-Hammam WWTP which will be every
Power Plant (542 MW), Ras Ghareb Wind bigger (6.5 million m3/day).
Power Plant (250 MW), and Gabal El-Zeit Wind Desalination plants: 76 plants are in operation, with
Power Plant (580 MW). capacity expanded from 140,000 m3/day in 2014 to
750,000 m3/day in 2021. Final capacity of 6.4 m
m3/day renewable energy-based desalination plants is
expected by 2050.
Specifically, the NCCS 2050 goals are 1) Achieving Sustainable Economic Growth and Low-Emission development in the Different Sectors, 2) Enhancing
117
Resilience and Adaptive Capacity to Climate Change and Alleviating the Associate Negative Impacts, 3) Enhancing Climate Change Action Governance and
Management, 4) Enhancing Climate Financing Infrastructure, and 5) Enhancing Scientific Research, Technology Transfer, Knowledge Management and
Awareness to Combat Climate Change.
16
Energy efficiency Agriculture and livelihoods
Prominent programs include Improving the Irrigation modernization program: The areas that use
Energy Efficiency of Lighting and Building modern irrigation systems in Egypt account for 4.6
Appliances (2010–2017), Industrial Energy million feddans118, of which 3.7 million are in the new
Efficiency (IEE) Project (2013-2018), Solar
lands, out of the total 9.7 million feddans cultivated in
Heating in Industrial Processes (SHIP) (2014-
2022) and Motor Efficiency Improvement Egypt.119
(Phase I: 2015 – 2018, Phase II: 2018 – 2022). Canal rehabilitation: To date, 4,447 km of canals have
Public: Large-scale transition to energy-efficient been lined and rehabilitated and 4,185 km are
lighting systems in Egypt resulted in a 12.8% currently undergoing rehabilitation.120 The goal is to
nationwide reduction in fuel consumption by rehabilitate 20,000 km of branch canals for improved
power stations since 2015. irrigation and drainage service delivery.
Industry: The Environment Pollution Abatement Improved techniques and land consolidation: To
Project Phase III (2017-2022), a mechanism for support the adaptation of smallholders in Upper Egypt
the adoption of resource-efficient technologies to climate change, the government introduced early
and management. warning systems, heat tolerant varieties of common
Policy: Structural reform of the sector and crops, techniques for improving farmland productivity
programs for gradual removal of energy and income, education on efficiency measures such as
subsidies. switching to drip irrigation, and land consolidation.
Fuel switching programs to substitute lower- Policy: Restrictions on the cultivation of crops with high
efficiency fuels (gasoline, diesel) with cleaner water content such as rice, sugar cane, and banana,
fuels such as Natural Gas and renewable changing sowing dates and management practices,
sources. and land reclamation projects for 4 million acres.
Oil and Gas121 Land management: Reclaimed 4 million feddan
MOPMR has developed an institutional (irrigated land for agriculture).
framework for EE in the petroleum sector Research: Establishment of several specialized
including the establishment of:122 research institutes, including the Agricultural Research
- Higher Energy Committee to promote EE & Center, to explore innovative technologies for climate
Climate in the petroleum sector resilient agriculture.
- Energy Efficiency & Climate Department at the
MOPMR
MOPMR has established an EE policy in line with
ISO 50001 requirements, with the main goal of
improving energy efficiency for petroleum sector
activities to minimize energy consumption, GHG
emissions and operating costs.
-Recovery and utilization of associated gases
generated from the crude oil fields, which is an
ongoing program with 19 projects.123
-Egypt’s signing in 2017 of the World Bank Zero
Routine Flaring Initiative by 2030.
Transportation
Railway: Expansion of the Cairo underground
metro system network included the opening of
Stage 4 (length 11.5 km -- Phase I: 2019, Phase
II: 2020) of the third Cairo metro line.
Additionally, it includes the expansion and
development of electric railway networks.
Buses: Introduction of a high-quality bus system
and electric buses in Alexandria.
118 A feddan is an Egyptian unit of area equal to 1.038 acres

119 Information provided by the Ministry of Water Resources and Irrigation in July 2022.
120 As informed by the Ministry of Water Resources and Irrigation on July 3, 2022
121 The following policies were developed with the following objectives: i)Develop energy efficiency departments in all companies: ii) Increase awareness
for the importance of reducing energy consumption; iii) Establish energy consumption database and monitoring systems; iv)Implement low cost/ no cost
and housekeeping energy efficiency measures; v)Introduce EE New/Oriented technologies to reduce cost and improve yield; vi) Identify KPI and set EE
targets for all the petroleum sector companies to minimize the energy consumption and to be reported and reviewed annually during company’s general
assembly meeting. Information provided by the MOPMR.
122 Objectives included among others increasing awareness of the need to reduce energy consumption, establishing information and monitoring systems,
and identifying indicators and targets for companies in the oil and gas sector to minimize energy consumption.
123 Information provided by the Ministry of Petroleum.
17
Electric Vehicles (EV): Developing EV
infrastructure and issuance of an EV charging
tariff.
Industry Cities and coastal resilience
Launch of eco-industrial park pilot projects to Aquaculture: Investing in establishing large sea
catalyze improved environmental and economic aquaculture systems in coastal governorates.
performance of industries, according to a Coastal protection: Enhancing adaptation of the hot
framework jointly developed by the World Bank, spots on the Mediterranean coast under a GCF-funded
UNIDO and GIZ.124 project in the North Coast and the Nile Delta regions.
Sea-level rise: Preparing for sea-level rise by linking
Solid Waste Management land use planning for coastal protection along 100km
Investments in establishing solid waste of coastline, and including shore protection along 40
management infrastructure in the four pilot km.
governorates (Kafr El-Sheikh – Assuit – Qena – Municipal wastewater reuse: Egypt has developed
Al Gharbiya) under the Egyptian National Solid some of the largest wastewater treatment plants in the
Waste Management Programme. In Greater world (Bahr Al-Baqar, Al-Mahsama, Al-Hammam) as
Cairo, the Air Pollution Management and part of a strategy to reuse treated wastewater in
Climate Change Project (2020 – 2026) focuses agriculture
on reducing vehicle emissions, improving the Municipal solid waste management: Investments in
management of solid waste, and strengthening collection and transportation systems, waste-to-energy
the air and climate decision-making system. and recycling facilities, and landfill development
including methane capture.
Education
Universities are including climate change in their
education curriculum to help build needed skills and
increase awareness.125
Sources: EEAA (2021) Sowing seeds for Future generations: http://mdgfund.org/content/climatechangeriskmanagementegypt; Mahmoud, S. H., &
Gan, T. Y. (2018). Urbanization and climate change implications in flood risk management: Developing an efficient decision support system for flood
susceptibility mapping. Science of the Total Environment, 636, 152-167. Egypt First Updated Nationally Determined Contributions, June 2022.
2.2. Coordination, capacity and robust MRV to enable effective climate

action
Egypt has made significant institutional changes to address climate challenges, nonetheless climate
action remains fragmented. Recognizing that climate change will have implications across all sectors
of Egypt’s economy, the GOE revamped the institutional framework for climate action. The national
climate change committee, established in 1997, was restructured in 2015 and then elevated in 2019
to be headed by the Prime Minister, ensuring that climate change issues receive the highest
consideration in the GOE’s decision-making. The NCCC is supported by a high-level committee to
oversee strategic issues related to climate action in Egypt, an executive bureau to supervise the
implemented policies or actions, and specialized technical working groups responsible for tracking the
progress on policies and actions. In 2020, the Government took two important climate-related actions:
first, it mandated all ministries to focus on the shift toward the Green Economy and increase public
investments directed to green projects from 15% in the 2020-2021 plan to 30% in the 2021-2022
plan, and second, it required all ministries to apply the sustainability standards, including climate
change, in the national Sustainable Development Plan. Although the NCCC is the main body responsible
for climate change policy, policies are formulated and implemented by many ministries, leading to
fragmentation and coordination difficulties.126 In May 2022, Egypt adopted the NCCS 2050 through
Prime Ministerial Decree (No.1860 of 2022) and all concerned ministries are required to develop action
plans in coordination with the NCCC. Climate change is by definition cross-sectoral, leading to an
124 United Nations Industrial Development Organization “UNIDO and Switzerland to support Egypt with the development of eco-industrial parks (17 January
2022) https://www.unido.org/news/unido-and-switzerland-support-egypt-development-eco-industrial-parks
125 Information provided by Ministry of Higher Education and Scientific Research.
126 Human Development Report: Egypt, UNDP (2021); Abdel Monem, M. A., & Lewis, P. (2020). “Governance and Institutional Structure of Climate Change
in Egypt” in Climate Change Impacts on Agriculture and Food Security in Egypt (pp. 45-57). Springer, Cham.
18
inevitable overlap of ministerial responsibilities.127 For example, the Ministry of Environment’s area of
responsibility has been expanded to include topics such as industrial pollution, waste management and
water quality, which had historically been under the jurisdiction of other line ministries. Better
coordination and clarity of roles are needed to reduce overlap in responsibilities and inconsistency in
the formulation and implementation of climate change policy. Given Egypt’s dual executive system,128
national fragmentation challenges on climate action and planning are replicated at the local level.
Strengthening the regulatory framework can help engage a wide range of stakeholders, including the
private sector. The major environmental protection laws enacted across the period mentioned above to
address gaps related to water pollution, hazardous substances, and waste management,129 also
advance climate change priorities. Decrees as executive orders have also been published on the
climate agenda. For instance, Presidential Decree 566 of 2016 mandates that all agencies comply with
the Paris Agreement. However, additional steps are needed to transform such decrees into regulations
that are more comprehensive and have wide-ranging applicability. Adopting regulations that improve
compliance with and participation in climate-sensitive and green management practices by a wide
range of stakeholders, including the private sector, facilitates awareness for climate action. The revised
Environmental Protection Law (Law no. 105, adopted in 1994 and amended in 2015) with a chapter
on climate change, improves the scope for compliance and contributes to increasing awareness of
climate action.
Strengthening sector-level, climate change-related capacity at the national and local levels is a priority
for strong interagency cooperation and will require both a national strategy and coordination to build
human capital capacity for climate change. The institutional capacity at the sector level is concentrated
in a few institutions, such as the climate change central department at the Ministry of Environment, the
climate change and energy efficiency units at the Ministry of Electricity and Renewable Energy, and the
energy efficiency unit at the Ministry of Petroleum. To address this gap, the first systemic capacity
development initiatives have been set up and carried out within key institutions.
Putting in place climate-sensitive governance and institutional frameworks to mainstream climate

change in core government and broader public sector operations will be critical for supporting climate
action. Integrating climate in planning and public financial management to establish a coordinated
approach across government (central and sectoral ministries at the national level as well as subnational
governments) and the broader public sector will be key. Under the Green Financing Framework, Egypt
determined that by 2025, 50% of public investment projects should be green. While this is a step in the
right direction, work remains to further strengthen public investment management by government and
public sector entities. Additionally, coordination of the capital and recurrent budget processes to
support the allocation of limited public funds to climate-responsive projects should be improved.
Including climate objectives in a governance framework for state-owned enterprises will be equally
important given the large number of SOEs that are present in most sectors of the economy, affecting
competition and market contestability. Egypt should continue ongoing efforts to ensure that public
assets and investments comply with climate change requirements, including disaster and risk
assessments.
The NCCS 2050 affirms the role of the private sector in climate action. For example, under the broad
goal of enhancing climate change action governance (Goal 3), the NCCS sets out an objective (3.c) for
127 Institutions involved in climate change policy include the Ministry of Environment, the EEAA, the Ministry of Trade and Industry, the Ministry of Health
and Population, the Ministry of Petroleum, the Ministry of Electricity and Renewable Energy, the Ministry of Education and Technical Education, the Ministry
of Higher Education and Scientific Research, the Ministry of Agriculture and Land Reclamation, and the Ministry of Water Resources and Irrigation, among
others.
128 In this system, national ministries have sectoral directorates, with sectoral budgets at the governorate level,
129 For example, the recently enacted Decree 113 of 2022 defines fee schedules for waste management licenses and approval, a step toward
implementation of the Waste Management Law no. 202 of 2020
19
sectoral policy reform to capture the required climate change mitigation and adaptation interventions
and specifies that the necessary sectoral policies should be developed and reformed to ensure the
involvement of the private sector and all relevant groups. This provides a means to anchor the private
sector’s role in climate action in existing economic policy programs, such as the National Structural
Reform Program. On the finance side, mobilizing private sector financing on climate change priorities
will be key in the coming years.
Empowering local-level institutions and strengthening their institutional capacity and systems is vital
for Egypt to advance action against climate change at the local level, both for building resilience to
climate hazards and chronic stresses, as well as for decarbonizing its economy. Egypt’s climate change
governance at the local level remains limited. It is essential that the local administration system is
functional and capable of, first, assessing the climate risks and their impacts in a spatially focused and
integrated manner, and second, identifying, prioritizing, planning, and implementing actions to ensure
that communities and citizens are protected from the disastrous effects—and accompanying economic
losses—of climate risks. However, at the subnational level, decision-making power relating to planning
and budgeting is limited.130 Local administration units in Egypt have a relatively narrow scope for public
investments, with local governments being highly dependent on national transfers. The result is a lack
of sufficient local-level autonomy and financial capacity for successful climate change action, especially
for adaptation measures
Climate sensitivity needs to be integrated into city and local government planning and management
(covering spatial, land-use, infrastructure, economic development, and investment/financial
management dimensions). While local service delivery plans and local sectoral investment plans are
prepared through a bottom-up approach, limited decision-making power at the subnational level, as
mentioned previously. Further, the investment planning process is fragmented, resulting in weak
linkages between the national socioeconomic plan and sub-national plans. The socioeconomic
development plan is, therefore, implemented with limited synergies between different sectors from a
spatial/regional perspective. It also lacks a climate resilience and low-carbon focus. These gaps, if left
unaddressed, will impact the implementation of climate resilient pathways for cities, and limit their
capacity to engage into public-private partnerships for green investments in infrastructure and utilities.
It is vital that the planning process at the sub-national level be integrated, climate-risk informed,
emission-sensitive, and well-resourced to ensure the identification and implementation of priorities to
drive sustainable, resilient, and inclusive development.131
2.3. Egypt’s Updated Nationally Determined Contributions (NDC)

In June 2022, Egypt submitted its First Updated Nationally Determined Contributions (NDC) setting
quantitative targets for reducing harmful emissions. Egypt’s first NDC was submitted in 2015 and
highlighted priorities for climate change, including qualitative goals for mitigation and adaptation. The
updated NDC features clearly defined targets and measurements, as well as mechanisms to ensure
the monitoring of progress. Such quantifiable targets include mitigating 33% of emissions from the
electricity sector, 65% from the associated gases subsector of the oil and gas sector, and 7% of
emissions from the transportation sector by 2030, against a business-as-usual (BAU) scenario (with
2016 as the starting year of projections). The estimated cost of implementing the proposed mitigation
interventions provided in the updated NDC is US$196 billion by 2030, while implementation of
130 The majority of local administration funding (both for recurrent services as well as local investments) is provided by central transfers due to the limited
ability of the local government to create taxes, with only vehicles tax and local fees being collected at the local level.
131 Initial steps have been taken to localize SDGs and improve the institutional and service delivery performance of governorates, with an initial focus on
the Upper Nile. The Egyptian government has recently promulgated a new planning law for governorates that requires all the spatial, economic and
investment plans at the local level to be climate-risk informed and to incorporate green development solutions/models. Ongoing flagship government
programs such as “Haya Karima” and the Waste Management Law no. 202 of 2020 could also help the pivot toward climate-resilient and green
development approaches for long-term sustainability.
20
adaptation interventions is estimated to require US$50 billion. The updated NDC is based on the goals
and objectives presented in Egypt’s 2050 National Climate Change Strategy (NCCS). The BAU scenario
in the updated NDC reflects continuation of the same development trends and practices that were
followed by the country before 2016.
Between 2015-2021, in efforts to transition towards clean energy, Egypt successfully implemented a
number of electricity sector reforms which bore fruit. Most notably a phased removal of energy
subsidies (both electricity and fuel subsidies) and improved power plant and demand-side energy
efficiency. These reforms were accompanied by efforts to scale up the share of renewable energy,
particularly utility-scale solar and wind (such as the Benban solar park and Jabal Al-Zit wind farm), as
well as the discovery of large commercial-scale gas reserves that resulted in the deployment of new
more energy-efficient combined cycle gas-fired power plants. This electricity sector transformation led
to a considerable reduction in the growth of energy demand, improvement in generation efficiency, and
a sectoral shift away from plans to construct high emitting coal-fired power plants (with no coal projects
developed or currently under development). These developments suggest that future capacity additions
for electricity supply over the next two decades can complement the energy-efficient combined cycle
gas-fired power plants with renewable energy and demand-side energy efficiency improvements across
various end-use sectors.
Importantly, the update to the NDCs also puts forward key adaptation actions and the need to
strengthen MRV systems. In terms of adaptation, the updated NDC provides a set of policy actions and
measures across Water Resources and Irrigation, Agriculture, Coastal Zones, Urban Development and
Tourism and other adaptation actions such as early warning systems and resilience measures in the
most vulnerable regions.
Building appropriate MRV systems to track improvements is an important step in strengthening Egypt’s
climate commitments and enhancing implementation of existing policies. As outlined in the updated
NDC, measurement, reporting and verification (MRV) systems would be fundamental to enhance
national and international climate action. Egypt has drafted a proposed national climate MRV structure,
coordinated by the Climate Change Central Department. The MRV pathways for data flow consist of four
tracks: (i) GHG Inventory MRV, (ii) Mitigation Policies and Actions MRV, (iii) Support Received MRV, and
(iv) Adaptation Policies and Actions MRV. While the proposed MRV framework has been formally
adopted by the NCCS, it has not yet been institutionalized, and funding and other capacity building and
technology resources are pending for its launch. In addition to the current MRV targets, the national
system could also examine the social impacts of projects, including the social impacts related to climate
change. Currently the country is implementing the second phase of the Interactive Vulnerability Map for
the Risk of Climate Change that links mathematical models to a geo-climatic database to assist
policymakers in identifying areas exposed to potential risks and strategically mobilize resources.
21
3. Pathway Toward Resilience and Low Carbon
Development
Main Messages
• Egypt should focus on managing risks stemming from uncertain water availability and on enhancing
the resilience of people and firms in cities and coastal areas. The high contribution of the energy,
transport and industry sectors to Egypt’s total emissions suggests that focusing on these sectors will
allow Egypt to accelerate its transition to a low carbon development path, building on the current
efforts undertaken by the government.
• There are two courses of action to address climate challenges and deliver on national strategies and
visions, including the NCCS 2050:
o Strengthen resilience and adaptation to prepare for an uncertain future by (i) Enhancing
efficiency in how resources are used and allocated; (ii) providing better information and
information systems and increasing awareness about climate change impacts for collective
action; and (iii) enhancing resilience and reducing the risk of stranded assets through
complementary actions.
o Move to a low carbon trajectory to strengthen export competitiveness, leverage co-benefits of
emission reductions, and avoid the lock-in of carbon-intensive capital, by (i) accelerating the
transition to renewable energy ; (ii) reducing emissions in the oil and gas sectors and lower
intensity of the energy supply mix; (iii) reducing inefficiencies in the production and use of
energy for electricity and industry; (iv) reducing the carbon intensity of the transport; and (v)
taking synergistic actions across adaptation and mitigation.
3.1. Strengthening resilience and adaptation

Climate change creates increased uncertainties in water availability and amplifies risks from natural
hazards, with large impacts concentrated in cities and coastal areas. As stressed in Chapter 1, climate
change increases rainfall variability, resulting in high uncertainty of water availability for people and
productive activities, in particular agriculture. The spatial concentration of people and economic
activities in coastal areas suggests that the exposure of people and the economy to climate change is
high today and is set to increase in the future. Importantly, as highlighted in the diagnostic presented
in Chapter 1, climate change risks are not isolated but intertwined across sectors. While these sectoral
interlinkages are not the only ones that represent opportunities for strengthening resilience to climate
change in Egypt, these areas of focus were selected through the review of climate and development
challenges discussed in Chapter 1, and a consultative process with stakeholders. In the face of these
challenges, this section builds upon modeling and qualitative analysis focusing on (i) the intersection
of challenges between water and agriculture and (ii) the risks and opportunities present in cities and
coastal economies.132 The impacts of future water variability and policy measures at the intersection of
water, agriculture, and energy challenges are explored through a combination of two modeling
exercises: (i) an irrigation study combining the Agricultural Sector Model for Egypt (ASME) model (to test
policy and investment options to determine potential damages due to reduced water availability or
insufficient adaptation investments) with an institutional assessment to identify more suitable policy
options/investments for irrigation modernization; and (ii) financial modeling and technical calculations
to quantify investment needs and energy/GHG savings related to investments in desalination, biogas
capture, non-revenue water reduction and water use rationalization. To understand the challenges in
urban and coastal areas and to identify opportunities for strengthening the resilience of people and
firms, this section leverages analysis focused on the city of Alexandria to illustrate flood risks, and urban
growth modeling in Egypt’s 14 largest cities paired with a qualitative analysis of cities and coastal
132 Background notes: Climate Change and the Water-Food-Energy Nexus Note, and three background notes on cities: Resilient Cities and Coastal
Economies Note, Climate Change and Future Flood Impacts in Alexandria Note, and Coastal and Marine Economy in Advancing Climate Change Priorities
of Egypt Note. All World Bank, various dates.
22
economies to identify opportunities to enhance resilience (and opportunities for emission reduction, as
discussed in the following section).
A focus on improving information, reducing inefficiencies and strengthening resilience of infrastructure

can help Egypt cope with an uncertain future. Managing risks by providing the information and tools
that governments, people, and firms need to cope with uncertainty is the first step toward strengthening
resilience and adaptation. Investments in information to manage risks, produce early warnings and
incentivize favorable behavior changes are also cost effective, with an estimated cost benefit ratio of 1
to 9.133 Reducing inefficiencies can help minimize the losses from climate hazards as well as contribute
to slowing climate-related impacts (e.g., water scarcity, heat, floods, etc.) on productive sectors. Finally,
efforts are needed to expand infrastructure that protects households and firms from climate-related
hazards. Laying the foundations for the private sector to increase its contribution to adaptation through
innovation and financing will be important.
3.1.1. Enhance efficiency in how resources are used and allocated based
on their true value
To minimize losses from climate change risks, it will be key to reduce inefficiencies in how resources
are used, allocated and valued. Inefficiencies can arise from the waste of resources (natural or built
capital), lack of coordination between the institutions in charge of implementing policies, overlapping
functions, or a misallocation of subsidies, leading to resource waste. Reducing inefficiencies can help
reduce waste and effectively increase the availability of resources.
Reducing losses of scarce resources
Without additional measures to increase water efficiency in agriculture, water scarcity will increase net
virtual water134 imports by 15% by 2030, reaching 45% in drought periods. The transition to a
sustainable development model requires reducing waste and losses and improving the way scarce
resources are used, especially water. Given Egypt’s unique arid climate, agriculture in the country relies
almost entirely on irrigation systems, but a large portion of farms are likely to face severe water and
agricultural production risks if traditional irrigation practices are not modernized. With its drainage
reuse policy, the GOE has already taken steps to augment irrigation supplies. This has raised the
system’s efficiency up to 78%. When fully operational, Al-Mahsama, Al-Hammam and Bahr Al-Baqar
WWTPs, can recycle over 13 MCM of treated wastewater for agriculture. When completed, the Irrigation
Modernization Program is expected to increase the productivity of water use in agriculture by an
estimated 15%, while also enhancing the resilience of the food and agriculture systems to water-related
risks and limited water availability (drought). ASME model analyses suggest that irrigation
modernization will result in a 6% increase in gross agricultural production value, due primarily to a 10%
increase in irrigation efficiency at branch canal and farm levels, and a 7% increase in cropping intensity
(shifting towards less thirsty, high-value seasonal crops). Notably, intensification of the food systems is
expected to raise agricultural employment by 5% and reduce food imports by 12% compared to the
reference scenario. These measures are remarkable, but still not fully adequate given the water
shortages Egypt faces. Given current levels of efficiency, without further action it is expected that water
scarcity will increase net virtual water imports by 15% by 2030, with this figure jumping above 45%
during periods of drought.135 Additional water efficiency measures in agriculture and improvements in
irrigation service delivery systems are needed to maintain productivity and improve value given a
changing climate. Irrigation modernization is not expected to deliver substantial water savings at the
Nile system level, although farm-level savings provide an opportunity for intra-system resource re-
133 “Adapt Now: A Global Call for Leadership on Climate Resilience,” Global Commission on Adaptation (2019). https://gca.org/reports/adapt-now-a-global-
call-for-leadership-on-climate-resilience/
134 Virtual water refers to the water “hidden” in the products, services and processes people buy and use every day.
135 Irrigation Modernization Policy Dialogue. World Bank (2021).
23
allocation. Drip irrigation and sprinklers operate at high efficiency and apply less water more uniformly
to fields, allowing farmers to produce a more diversified crop mix of higher value with less water.
Institutional reforms are needed to align cross-sectoral priorities and actions that impact water use and
allocation. Multiplicity of institutions in the water sector and limited coordination between water and
agriculture institutions also lead to inefficiencies in water use and allocation, arising from duplicated
efforts or missed opportunities from uncoordinated actions. Implementation of water-related climate
adaptation actions is currently tasked to eight different agencies,136 with each agency pursuing
adaptations aligned with its own priorities and timeline. Coordinated planning and implementation
based on a shared set of development and adaptation goals can instead reduce the risk of over- or
under-investment, duplication of efforts, and high transaction costs. One recommendation to address
this problem is institutional reforms that align food security and water security objectives through the
balancing of domestic production for food self-sufficiency with food trade policies. Egypt exports high-
value fruits and vegetables such as citrus, potatoes, onions, and grapes, with horticulture only
generating over US$ 2 billion in export earnings in 2020.137 Egypt imports about 40% of its food needs
annually (it is the largest importer of wheat in the world), with imports representing US$6.3 billion in
2019.138 Model analyses suggest that to produce an additional 5 million tons of domestic wheat, Egypt
would require almost 5.5 BCM of water—the equivalent of 10% of its primary supplies from the High
Aswan Dam. Efforts to scale up the delivery of treated wastewater for use in agriculture will supplement
water availability for specific types of crops such as forage and fiber crops139, but must be advanced in
coordination with improved land use planning, efforts to modernize irrigation practices, appropriate
crop choices, and the scaling up of implementation of on-farm, climate-smart agriculture practices that
ensure that crops and on-farm practices align with the salinity levels of the reclaimed water. Economic
and financial analyses of the investments that would be needed to scale up use of these adaptation
tools would help the GoE choose among alternatives and maximize the cost-benefit ratio of investment
in adaptation. Synchronized planning would ensure that opportunities for increased yields are
maximized, while increased coordination and better understanding of tradeoffs would help to ensure
that operating and maintaining these more efficient systems will be financially sustainable.
In cities, rationalizing urban water use, enhancing the efficiency of urban water service delivery systems
and reducing non-revenue water140 could help Egypt save over 2 BCM of water annually.141 Egypt’s
Sustainable Development Strategy 2030 has targeted a reduction of water losses from 29% to 15%.
There is a significant opportunity for Egypt to rationalize urban water usage and improve efficiency in
operations—increasing its ambition for reducing water loss—by reviewing current norms and targeting
investments that help reduce technical and commercial losses. The NWRP 2037 targets a per capita
allocation of 242 lpcd by 2037, but this would still lead to an increase in demand from 11.5 BCM to 13
BCM by 2037. Bringing down water losses to 20% and revising water supply norms to 80% of current
levels (which would still be a high value), could help Egypt save an additional 2.2 BCM of water annually
by 2050 (over a third of estimated water production in 2050 for domestic consumption)—over and
above the NWRP target—through reduced demand and improved efficiency, thus making water
available for other uses. Today, water supply for some areas in Egypt remain as high as 400 lpcd.142
While industrial water use was not studied extensively as part of this report, some of the industries
136 The NWRP 2037 defined the following ministries as coordinating public entities for different outcomes: Ministry of Water Resources and Irrigation,
Ministry of Environment, Ministry of Housing, Utilities and Urban Communities, Ministry of Local Development, Ministry of Agriculture and Land Reclamation,
Ministry of Trade and Industry, Ministry of Foreign Affairs, and Ministry of international Cooperation.
137 FAO (2021). FAOSTAT Food and agriculture data. Food and Agriculture Organization of the United Nations (FAO)
138 Ibid
139 Regulatory control is exercised to ensure that the water quality of treated wastewater reuse is acceptable for the crops where it is practiced, in particular
for non-food crops such as forage and fiber crops.

140 Non-revenue water (refers to volume of water that is lost due to physical losses such as leaks in the distribution system, reservoirs, household service
connections, etc. and commercial losses such as pilferage, illegal connections, metering inaccuracies etc.)
141 Egypt plans for an average annual water availability of 55.5 BCM for all water uses, of which approximately 24 percent or 13 BCM is allocated for
drinking water while the actual production is 11.52 bcm. The bulk of the remaining water is used for agriculture and a small proportion for industries.
(CAPMAS 2021).
142 This is over twice as much as water supply in Jordan, Morocco, and Tunisia (168, 155, and 159 lpcd). Global Water Intelligence (GWI) WaterData
Indicators database, 2016.
24
prioritized as growth industries by the authorities are water-intensive, such as textiles and apparel. It
will therefore be important for water resource efficiency and water treatment to become an integral part
of forthcoming export competitiveness strategies.
Ensuring food security will require focused, short- and medium-term actions in rural areas to reduce
waste through investments in improved storage infrastructure for strategic grains. Further, such
investments can help strengthen climate resilience and build competitiveness while reducing
waste/losses along the agri-food value chain. Average losses in the wheat supply chain can account for
up to 12% or around 1.2-2 million metric tons per year, with an estimated cost of around up to USD $1
billion at current prices. The highest losses in the wheat supply chain are seen in post-harvest handling
and storage.143 This is an area that the GOE is already actively trying to address, by rehabilitating
existing storage facilities and building new ones, to reduce losses in the system. Open-air storage
facilities (shona), for example, do not provide protection from birds, rodents, weather changes, and
insect infestation. Extreme temperatures and increases in atmospheric humidity due to climate change
increase the risk of insect infestation, a source of wheat loss and health risks. Safe wheat storage is
considered a measure to adapt to climate change and contributes to food security, particularly in the
context of the expected drop in domestic wheat production due to climate change.144
Allocation of resources according to their value
Agricultural water allocation reform that recognizes the economic and social value of water could help
incentivize the adoption of climate-smart technologies in agriculture. A policy on water allocation is
evolving. The current policy, the Logical Framework of the National Water Resources Plan 2017-2037
contains specific policy objectives focused on the supply of water for domestic use, industry and
irrigation purposes, but these policies do not include a water allocation policy that would use economic
efficiency allocation considerations to guide the distribution of water. Rather, water is allocated to the
urban system based on demand (which is highly variable between cities, without efforts to curb higher
demand) and to various parts of the agricultural system based on land area irrigated in combination
with crop-specific norms. Water-intensive crops such as rice and sugar cane have a higher irrigation
water requirement compared to wheat or barley, but do not have a higher value per cubic meter of
water used. By reforming the allocation policy to consciously maximize social and economic gains from
water allocations, including through the reduction of allocations to areas that have modern irrigation
systems,145 the GOE will incentivize farmers to adjust their cropping systems and on-farm water
management practices to improve productivity and value from agriculture. Closer examination of
allocation among and within sectors is needed to improve the efficient use of resources by recognizing
their true social and economic value; an allocation policy among agricultural users is needed to meet
the goals of the Irrigation Modernization Program.
Rationalizing urban residential water tariffs will also support improved water use and help ensure
financial sustainability of desalinization plans. The sector overall is highly subsidized, and all revenue
streams should be reviewed to improve financial sustainability, particularly in light of plans to scale up
desalination. Expanding desalination is a strategic priority for Egypt, as it is expected to alleviate the
pressure on Nile water for supplying urban and tourism demand in coastal areas. The incremental capex
requirement over the next 10 years is expected to be US$3.45 billion, in addition to the operation and
maintenance outflow of US$390 million per annum by 2032.146 However, given the high costs of
desalinated water, user tariffs are unlikely to cover the full costs of planned adaptation measures. Egypt
143 Yigezu, Yigezu A., et al. "Food Losses and Wastage along the Wheat Value Chain in Egypt and Their Implications on Food and Energy Security, Natural
Resources, and the Environment," Sustainability 13.18 (2021): 10011.
144 Exchange rate at 1 USD = 18.4790 EGP calculated on April 20, 2022 (www.xe.com)
145 It is important to ensure alignment of incentives and communication of benefits as systems are modernized to ensure continued adoption of modern
systems Reductions in allocation would need to reflect changes in on-farm needs arising from higher field application efficiency. Reduced allocations in
more efficient areas are a way to effectively use and reallocate water within the system and to fill existing and emerging gaps in a context of water scarcity.
146 Based on financial projections by the World Bank team.
25
should therefore consider a combination of financial options including viability gap funding, annuity
models, and guarantees for scaling-up desalination within an affordable fiscal envelope. The need to
focus on diversifying financial options and attracting private sector financing further underscores the
need to focus on tariff reform to underpin the financial viability of the sector as capital and operational
expenditures rise. Reforming tariffs would have the additional benefit of better reflecting the value of
water and would be an important factor in reducing the per capita demand.
Better management of spatial urban growth would also help increase efficiency in the use and
allocation of land and water resources, preserving nearly 39,000 hectares of green areas, including
very scarce agricultural land. Guiding urban growth away from high-risk areas (such as flood-prone
areas) can help minimize future damage. Estimates suggest that better management of urban
expansion in Egypt’s 14 major cities could result in the conservation of nearly 39,000 hectares of green
areas (for further details on this analysis see Chapter 4, Box 4). These actions would result in the
conservation of permeable surfaces, which are key for flood management, contribute to food safety by
preserving prime agricultural land, and mitigate heat stresses. Compact urban growth will also require
prioritizing infill development against urban expansion, to increase densities in cities. To support this,
updated city-level, long-term detailed plans and strategic plans and strengthening legal frameworks for
land registration will be needed.
Mainstreaming digital information systems that bring together information on land use, buildings, and
provided services can improve efficiency in resource allocation, land as well as financial. Digital building
platforms improve the management and collection of own-source revenues, such as monetizing land
assets, implementing land value capture instruments for adaptation, and scaling up nature-based
solutions. Similarly, smart digital solutions (e.g., water quality monitoring systems) can increase
efficiency of service delivery while enhancing the local resource governance. The growing use of digital
technologies in the energy, transport and industry sectors requires appropriate cybersecurity and data
privacy measures. Additionally, considering that food, water and energy security cannot be easily
achieved without some level of digitalization and the appropriate digital resilience, it is important that
Egypt be prepared to respond to different types of cyber risks.
3.1.2. Provide better information and information systems and increase

awareness about climate change impacts for collective action
To enable more effective and timely early warnings and response actions to floods and droughts,
continued efforts to strengthen information services that leverage innovative technologies are needed
to better predict seasonal and daily changes in rainfall and flows in the Nile Basin and in Egypt’s coastal
areas. The storage capacity of Lake Nasser is used as the primary system for flood control and drought
risk mitigation, as it can store nearly twice the expected annual inflow of the Nile. As flow variability
increases, however, it will be necessary to enhance the tools that predict changes in precipitation and
runoff in the entire Nile Basin. Seasonal forecasting to better understand the severity and extent of both
dry years and extremely wet years will be critical to the optimal operation of Lake Nasser and the
appropriate allocation of available water in any given year. Near-real-time forecasting of precipitation
and runoff in the Nile Basin during the rainy season can usefully inform emergency releases and avoid
spilling water, which is fundamentally wasteful, as the frequency of riverine flood events in the basin
increases. Real-time forecasting for coastal and other flash flood-prone areas is an essential tool as
flash-flood events increase in frequency and intensity over the coming century. The costs of ignoring
these risks and not adapting can be high (Box 1 below provides details on estimated costs from flooding
and SLR in Alexandria). To adapt to increasing variability in precipitation, continued efforts to deploy
advanced technology tools will be critical (innovative earth observation technology, advances in
numerical weather prediction, and other remote sensing technologies) and cooperation with Nile Basin
26
riparians will be needed to collect real-world observations that can then be used to increase the
accuracy and lead times of early warning and response systems (by using that real-world data to
calibrate predictive models).
Strengthening the way that hydro-meteorological (hydromet) information systems are used will help
boost the resilience of many to disasters such as drought and flood. This can be done by improving the
systems that share climate- and hydrology-related information with affected stakeholders and by
grounding investment planning, operation of climate and hydrological risks-affected systems, and
governance measures in precise assessments of climate change impacts. Predictive information on
flood and drought hazards is only useful if relevant stakeholders have access to the information in a
format and frequency that facilitates informed decision-making and triggers response actions by end
users. The GoE can deepen its effort to pair their information generation and forecasting with improved
information dissemination to relevant users in the agricultural, industrial, transport, and financial
sectors and with awareness raising efforts at all levels.147 These needs are also recognized in the
update NDCs. Preparedness plans at multiple levels that reflect the evolving risks of climate change
will improve stakeholder access to information needed to act within the relevant timeframe. Deepening
consultations with stakeholders such as farmers, urban and peri-urban dwellers, tourism companies,
industry, pastoralists, and other vulnerable groups will support a renewed approach to building
resilience to disaster risks and mobilizing information to support responses that safeguard the common
good.
A comprehensive, multisectoral drought risk management system is needed to link hydro-

meteorological information services to the appropriate dissemination channels and emergency
response actions in cities and rural areas, in order to improve resilience through better prevention,
preparedness and response. Actions along three pillars will be important: (i) strengthening the GOE’s
forecasting and early warning systems as the anchor points for predicting and tracking the location and
intensity of droughts, with the end goal of informing decision making and triggering preparedness and
contingency responses; (ii) developing a modern Operational Response Plan (ORP) that is based on a
vulnerability assessment and a strong contingency plan, with well-defined metrics when a drought hits;
and (iii) establishing disaster risk financing avenues that are available at multiple levels, including
insurance, risk-layering strategies, and social safety net programs that can support stakeholders in the
event of impacts that are not mitigated by the drought program. A truly multisectoral and modern
drought ORP would consider responses and protocols for all water uses, including satisfying basic water
needs for household consumption, setting the priority levels for industrial and agricultural allocations,
and preserving groundwater quality in the Nile Delta. Most importantly, while ORP development would
be led by the government, it would need to follow a participatory approach, including strong stakeholder
engagement and ensuring ownership by civil society and the private sector. The ORP should include
details on how the Lake Nasser storage is operated during drought situations so that reserve water is
available to meet basic needs, evaporative losses are minimized, and there are incentives for water
users to reduce or halt water use during drought periods. Measures for the agriculture sector should
specify water allocations during times of low availability to comply with water rights, preserve medium-
term productivity and critical agricultural functions, and avoid saline intrusion and contamination of
groundwater systems in the Nile Delta. Finally, the development of the mitigation and response
measure in the ORP should stem from a well-informed dialogue with key stakeholders, to ensure that
the multisectoral risk management system underpins resilience and financial risk mitigation for diverse
stakeholders.
147The GoE investments in early warning infrastructure include the developed three weather radars to improve weather prediction and installed 24 devices
used to measure the amount of evaporation, which allows for the determination of the quantities of irrigation water required. Projects related to early
warning systems in the agriculture sector have been implemented in cooperation with the Ministry of Agriculture and the Meteorological Authority (which
carries out the weather forecast using numerical models). and funded by the United Nations World Food Program (WFP). For instance, the Food Security in
Egypt to Adapt to Climate Change project provides an early warning service to farmers through the use of smart phone applications.
27
Box 1. Alexandria faces multiple flash flood risks from coastal rainfall, coastal flooding storm
surges and sea level rise, threatening populations and economic activity
Alexandria is the second-largest city in Egypt, with 5.18 million residents, and is a key tourist and economic
activity center along the Mediterranean. Analysis suggests that the total exposure-at-risk (expressed as a
percent of the total replacement value for Alexandria’s buildings—estimated at US$46.6 billion),148 by
flooding from coastal rainfall could be as high as 10.9% in case of extreme events. The exposure-at-risk
from coastal flooding risk ranges from 22.7% to 30.1% of the total building stock. Economic losses from
disruption to services, mobility, industrial productivity, socio-economic costs, and flooding of heritage
buildings and socio-economic infrastructure (e.g., schools, hospitals) add to the cost of flooding in
Alexandria city.149
Analysis of Climate Change and Future Flood Impacts in Alexandria, Egypt CCDR. Background Note. (World Bank, 2021)
3.1.3. Enhance resilience and reduce the risk of stranded assets through
complementary actions
Strengthening the resilience of ongoing and projected investments is the only way to ensure long-term
sustainability and avoid stranded assets. Complementary actions to foster innovation, strengthen
capacity and improve institutions in key adaptation sectors—water, agriculture, urban development, and
environmental management—are needed to ensure that planned and ongoing investments contribute
to strengthening resilience to climate change and help manage uncertainty. The goal is to reduce the
likelihood that resources are wasted on large infrastructure investments with the potential to become
stranded assets. A focus on resilience also aligns with the NCCS, which includes a sub-goal on resilient
infrastructure and services. The returns on early action to increase infrastructure resilience can be high.
Global evidence suggests that the cost-benefit ratio for investments in more resilient infrastructure is
about 1 to 5.150
Irrigation and Agriculture
The Irrigation Modernization Program requires complementary policies and investment actions to
strengthen sustainability and resilience to shocks. Egypt’s goal is to improve agriculture productivity by
30% while reducing water consumption by 10%. While current irrigation investments, such as the
NWRP, are well aligned with adaptation needs, the country needs to further adapt its irrigation
investments given the high uncertainty of water availability and to ensure that improvements in
agriculture do not result in an increased demand for water. Based on international experience,
investments in irrigation modernization must be combined with institutional systems designed to
manage, allocate and distribute water savings. These include (i) agricultural water allocation reform to
incentivize the adoption of climate-smart irrigated agriculture and to reduce crop consumptive water
use and non-beneficial atmospheric losses; (ii) improved groundwater governance to slow over-draft of
the resource and retain the productivity of land and water in the Delta; and (iii) a policy shift toward the
holistic management of irrigation and drainage systems and services, in a way that is responsive to
modernized farm irrigation needs. Without the requisite policy and institutional reform measures, the
risk is high that investments in irrigation modernization will not meet the goal of doubling agricultural
148 The assessment of the scale of flood risk hazard and the subsequent EAR (Exposure-at-risk) for Alexandria has been conducted based on global flood
layers such as Climate Central dataset (2020) and Fathom dataset. Buildings’ built-up floor area exposure and replacement value has been estimated
based on the 2019 WSF-3D Structure raster layers with 90 m cell resolution. The scenarios are based on the Fathom scenario that model the impact of
each of the varying return periods of 5, 10, 20, 75, 100, 250, 500, 1000 years. Analysis of Climate Change and Future Flood Impacts in Alexandria, Egypt
CCDR Background Note, (World Bank, 2021).
149 The assessment was conducted based on global flood layers such as Climate Central dataset (2020) and Fathom dataset. Fluvial and Pluvial scenarios
from Fathom dataset, consider climate current change trends, while coastal risk considers RCP8.5 scenario, in 50 th and 95th percentile. Source: Analysis
of Climate Change and Future Flood Impacts in Alexandria. Egypt CCDR Background Note. World Bank (2021).
150 “Adapt Now: A Global Call for Leadership on Climate Resilience,” Global Commission on Adaptation (2019). https://gca.org/reports/adapt-now-a-global-
call-for-leadership-on-climate-resilience/
28
water productivity within 10 years (which is equivalent to a linear water productivity growth rate of 7.4%,
NWRP 2037). Specifically, policy reform should (i) enable farm investment in modern irrigation systems
and (ii) ensure that improved irrigation service delivery from canals is fully compatible with the needs
of modern irrigation systems. With the passage of new water resource and irrigation legislation in 2020,
water user organizations, in conjunction with agriculture cooperatives, will play a greater role in the
interface between off- and on-farm investment facilitation, improving irrigation service delivery and cost
recovery.
Complementary policy reform measures and institutional changes are needed. Otherwise, the risk is
high that investments will not improve agricultural productivity and may even be detrimental to the
sustainability of agriculture systems. Policy reform that enables the holistic management of irrigation
systems and improved allocation within these systems is necessary to avoid the distributional impacts
anticipated if no action is taken. For example, for many farm holdings that rely on irrigation supplies
from drainage reuse and Nile waters, policies need to be in place to ensure reliability of supplies at
times when reusable drainage return flow is reduced. An irrigation pilot study conducted by the
International Water Management Institute in 2015 (IWMI 2015) identified inequitable distribution of
water across the head and tail end reaches of branch canals, which created long-term water shortages.
A typical response from farmers is to file a complaint at the office of the district engineer; if outcome of
the complaint is not favorable, they adapt to water shortages by seeking other sources of water such
as groundwater or drainage water, with the latter often of poor quality. The ongoing branch canal
rehabilitation program of the Ministry of Water Resources and Irrigation (MWRI) addresses
distributional deficiencies of the irrigation delivery network across the head and tail end reaches of
branch canals, leading to fewer complaints being filed.151 Coupling these efforts with an improved and
institutionalized service delivery approach that is tailored to the needs of modernized irrigation systems
can help improve effectiveness of the irrigation modernization program. With improved irrigation
services farmers are likely to consolidate their farm unit and collectively invest in farm irrigation
modernization. The process is likely to see many smallholders exiting from farming to take advantage
of the much-increased land rents and/or higher land sale prices and hence complementary actions -
including transparent policy and institutional reforms, will be needed to support a fair transition into
non-agricultural jobs.
Fostering innovation in the agricultural sector through targeted spending and incentives can be a cost-
effective way to strengthen economic resilience and improve livelihoods. Greater spending on crop
research and development (R&D), better provision of extension services, and the introduction of smart
subsidies for the construction of greenhouse infrastructure have been identified as the most cost-
effective policies to increase GDP growth and employment, increase poor households’ consumption,
and diversify diets to improve nutrition.152 For instance, it is estimated that each US$1 of public
spending on crop R&D raises consumption levels for poor households throughout the country by
US$1.50 and generates US$10 in agri-food GDP, improving livelihoods while contributing to economic
growth. Likewise, combined investments that complement each other in climate-resilient seed
technology, soil fertility improvement, crop protection (e.g., from disease and insects), and irrigation
can increase overall yields for different crops by up to 6.6%, in most cases counteracting or reducing
the effects of climate change.153
151 Personal communication MWRI 2022.

152 Thurlow, James; Holtemeyer, Brian; Kassim, Yumna; Kurdi, Sikandra; Randriamamonjy, Josée; Raouf, Mariam; Elsabbagh, Dalia; Wiebelt, Manfred; and
Breisinger, Clemens. 2020. Investing in the agri-food system for post-COVID-19 recovery: An economywide evaluation of public investments in Egypt. MENA
Policy Note 7. Washington, DC: International Food Policy Research Institute (IFPRI). https://doi.org/10.2499/p15738coll2.133773
153 For fruits and vegetables, potatoes, rice, and wheat these measures can counteract the adverse impacts of climate change, and even for some crops
such as maize, oilseeds, pulses, and sugar that will not return to the pre-climate change productivity level, these investments provide the largest returns.
Perez, Nicostrato D.; Kassim, Yumna; Ringler, Claudia; Thomas, Timothy S.; and ElDidi, Hagar. 2021. Climate change adaptation strategies for Egypt’s
agricultural sector: A ‘suite of technologies’ approach. MENA Policy Note 18. Washington, DC: International Food Policy Research Institute (IFPRI).
https://doi.org/10.2499/p15738coll2.134321
29
Ensuring food security will require that investments to improve productivity and reduce waste are
complemented by a shift in agricultural policy to realign incentives with climate objectives. Further, a
shift in policy will be needed to move resources away from subsidizing water-thirsty crops considered
important for food security (wheat, rice, and sugar beets),154 and provide incentives to grow crops that
are better suited to local conditions. Such a shift in policy would require a reassessment of Egypt’s
strategic crops and varieties, as well as its production practices, a revision of the costly subsidy-
supported strategy for wheat self-sufficiency,155 and a rethinking of the agri-food trade balance. In the
medium term, it will also be important to tackle agricultural land fragmentation through modernization
of the land and property registry, the development of a robust geospatial information system,
enhancement of the state land allocation and expropriation procedures, and the regulation of urban
expansion over privately-owned land (mostly agricultural).
Coastal Resilience
Complementary actions to strengthen the resilience of coastal areas and the coastal economy could
help avoid high costs and are therefore an urgent priority. For example, estimates suggest that by 2050,
climate change may bring about daily losses to tourism revenue in the Red Sea’s Sahl Hasheesh and
Makadi Bay in excess of US$350,000. Beach tourism infrastructure will need to be protected from
flooding to prevent these losses.156 Complementary public and private investment in nature-based
solutions (NbS) could promote cost-effective green infrastructure and ecosystem-based adaptation
(EbA) of the tourism infrastructure. Such tactics include natural barriers against SLR storm surges, the
reduction of coastal erosion, carbon capture, and mangrove ecosystem services. The Egyptian
government’s mangrove planting efforts in the Red Sea Governorate, along with the private initiative
led by HSBC Bank, WRI, WWF and a network of local partners through the Climate Solutions Partnership,
could be scaled up as public private partnerships to promote investment in NbS throughout Egypt’s
coastal zone. The cost benefit ratio of combining dikes and mangroves has been estimated to be 1.5
times higher than the ratio of dike-only protection,157 which highlights the potential of NbS as an
investment option to protect tourism infrastructure and urban areas on the Red Sea and Mediterranean
coasts. In addition, efforts to support a transition toward a diversified approach to tourism will be
important, including efforts to address structural weaknesses (e.g. unregulated development
contributing to irreparable damage to fragile coral reef ecosystems in the Red Sea; and poor waste
management and regulation contributing to large coastal and marine pollution load as reflected in Egypt
ranking third in plastic pollution (167 kg/km) in the Mediterranean region).158, encourage digital and
low carbon technologies, promote sustainable coastal tourism models that integrate recreation and
conservation, and develop other complementary ecotourism options that offer long-term stability to
coastal tourism.
Coordinated coastal zone management and marine spatial planning can help amplify the benefits of
investments in protective infrastructure. Various localized Integrated Coastal Zone Management (ICZM)
initiatives have been undertaken by the GOE to improve preparedness, build capacity, and enhance
coastal resilience, but actions remain fragmented. Early ICZM efforts have facilitated localized coastal
protection (e.g., coast of the Nile Delta), and rationalized land use (e.g., Fuka-Matruh coast). However,
154 Unlocking Egypt’s Potential for Poverty Reduction and Inclusive Growth. Egypt Systematic Country Diagnostic Update. World Bank (2021)
155 Shinan N Kassam and Boubaker Dhehibi. 2016. “Mechanization to Drive a Process for Fertilizer Subsidy Reform in Egypt.” Economic Research Forum
Policy Brief No. 22, December 2016.
156 Sharaan, M., C. Somphog, and K. Udo. 2020, “Impact of SLR on Beach-Tourism Resort Revenue at Sahl Hasheesh and Makadi Bay, Red Sea, Egypt: A
Hedonic Pricing Approach,” Journal of Marine Science and Engineering 8 (6): 1–13.
157 Naoko Kumano, Makoto Tamura, Tomomi Inoue, and Hiromune Yokoki, 2021. “Estimating the cost of coastal adaptation using mangrove forests
against sea level rise”, Coastal Engineering Journal, 63 (3) 263-74.

158 Heger, Martin Philipp, Lukas Vashold, Anabella Palacios, Mala Alahmadi, Marjory-Anne Bromhead, and Marcelo Acerbi. 2022. Blue Skies, Blue Seas:
Air Pollution, Marine Plastics, and Coastal Erosion in the Middle East and North Africa. Middle East and North Africa Development Report. Washington, DC:
World Bank. doi:10.1596/978-1-4648-1812-7. License: Creative Commons Attribution CC BY 3.0 IGO
30
ICZM remains fragmented and primarily focused on coastal protection infrastructure through hard
measures (e.g., sea walls, dikes, groins) and soft measures (e.g., dune stabilization) implemented by
Shore Protection Authority under the Ministry of Water Resources and Irrigation (MWRI). In the absence
of ICZM, the cost of addressing coastal risks could be significant. For example, coastal flooding in
Alexandria, which supports 40% of Egypt’s industrial capacity, is projected to result in annual losses of
between US$504 and $580 million by 2050.159 Coastal flood risk in Alexandria highlights the need for
a comprehensive ICZM to institutionalize coordination among national ministries, governorate- and city-
level agencies in 36 cities and urban bodies in the coastal zone. A comprehensive ICZM would
contribute to coordinated planning and management, budgetary savings, and the enhanced resilience
of coastal infrastructure to climate risk. This policy action would be in line with the updated NDC
adaptation ambitions, which include the development of a climate resilient Integrated Coastal Zone
Management Plan for the North Coast of Egypt linking land use development plans with coastal
protection works over the next 10-15 years.160 Coordination of marine activities using key marine
spatial planning (MSP) mechanisms is needed to conserve coral reefs, mangroves, and other marine
ecosystems through marine protected areas (MPAs).161 As part of the national blue economy strategy,
a coordinated MSP is also a priority in the Suez Gulf to coordinate multiple activities such as oil
extraction, coastal tourism, maritime transport and port infrastructure through effective planning,
coordination and sustainable use of marine resources.
Regulation can improve the resilience of the coastal economy while strengthening food security and
enhancing economic diversification. Fish production is projected to reach 5 million tons and provide
employment to over 1 million persons by 2030, and 7.6 million tons and 1.6 million persons by 2050,
driven strongly by aquaculture.162 Additionally, mariculture can enhance the resilience of capture
fisheries and strengthen the nutritional security and incomes of households. Mariculture of non-
traditional species such as bivalves, oysters, clams, seaweeds and multi-trophic culture systems could
be upscaled for habitat restoration as well as for targeting export markets.163,164 Analysis of the fisheries
of 156 countries, including Egypt, shows that maximum sustainable yield of fish stocks from 2012-
2100 is forecast to decline by 2.0% to 18.5%165 respectively, under the climate change impact.166 Full
adaptation, in contrast, could increase profit, harvest, and biomass by 27%, 16%, and 29%,
respectively, as compared to what the oceans provide today167 In the context of coastal tourism, Egypt’s
reef tourism revenue of about US$7 billion per year represents half of Egypt’s tourism revenue168 but
is projected to lose US$5.6 billion (about 80% of coastal tourism revenue) by 2100 due to the projected
loss of coral reefs to ocean warming and acidification169 The latest research demonstrates that Red
Sea coral reefs are less sensitive to thermal anomalies and have the capacity for rapid recovery after
bleaching events if no further stresses are imposed170 To prevent the loss of reef ecosystems, Egypt
159 Stephane Hallegatte, Colin Green, Robert J Nicholls, Jan Corfee Morlot, 2013, “Future Flood Losses in Major Coastal Cities, Nature Climate Change”, 18
August 2013
160 Egypt First Updated Nationally Determined Contributions, June 2022.
161 Egypt Environmental Affairs Agency, 2017. Egypt State of the Environment 2017 (in Arabic), 2018; Egypt Ministry of Planning and Economic
Development Egypt’s 2021 Voluntary National Review.

162 Chin Yee Chan, Nhuong Tran, Kai Ching Cheong, Timothy B. Sulser, Philippa J. Cohen , Keith Wiebe , Ahmed Mohamed Nasr-Allah, 2021. Future of
Fish in Africa: Employment and Investment opportunities, PLoS ONE 16(12): e0261615.
163 Harrison Charo Karisa, Ahmed Nasr-Allah, Diaa Al-Kenawy, Nabil Ahmed Ibrahim, Jeleel Opeyemi, Walid, Elsawy Aly, Alaa El Far, Seamus Murphy and
Michael Phillips, 2019. “Capturing value from Egyptian Blue Economy: Aquaculture and Fish Supply Chains,” World Fish.
164 Mariculture has been demonstrated through over 40 offshore tuna farms in the Mediterranean Sea and similar offshore marine cages for Cobia and
grouper (a native fish species) could be adopted for the Red Sea to protect the fragile environment.
165 While long-term GHG emissions in the RCP8.5 are considered overly pessimistic, the CMIP5 climate change scenarios with RCP8.5 provide useful (and
not implausible) high-warming scenario, which would be consistent with continued GHG emissions and high climate change sensitivity or positive feedback
from the carbon cycle.
166 Christopher M. Free, Tracey Mangin, Jorge García Molinos, Elena Ojea, Christopher Costello, Steven D. Gaines, 2019, “Realistic fisheries management
reforms could mitigate the impacts of climate change in most countries”.

167 Steven D. Gaines, Christopher Costello, Brandon Owashi, Tracey Mangin, Jennifer Bone, Jorge García Molinos, Merrick Burden, Heather Dennis,
Benjamin S. Halpern, Carrie V. Kappel, Kristin M. Kleisner, Daniel Ovando, 2018. “Improved fisheries management could offset many negative effects of
climate change,” Science Advances, 4: eaao1378.
168 Egypt Environmental Affairs Agency, 2016. Egypt Third National Communication submitted to UN Framework Convention on Climate Change.
169 Under RCP8.6 climate scenario. High Level Panel for a Sustainable Ocean Economy. Summary for Decision-makers: The Expected Impacts of Climate
Change on the Ocean Economy.

170 Monroe, A.A., Ziegler, M., Roik, A., Röthig, T., Hardenstine, R.S., Emms, M.A., Jensen, T., Voolstra, C.R., Berumen, M.L., 2018, “In situ observations of
coral bleaching in the central Saudi Arabian Red Sea during the 2015/2016 global coral bleaching event,” PLoS ONE 13, e019581.
http://dx.doi.org/10.1371/journal.pone.0195814.
31
should prioritize measures to protect and conserve coral reef systems (which would stabilize and
enhance tourism revenue), as well as regulation to prevent overfishing, illegal harvests and
unsustainable coastal and beach infrastructure development. Integrating the latest research into
adaptive planning of the Marine Spatial Planning and Marine Protected Areas of the Red Sea supported
by continuous monitoring offers scope for analyzing the risks of and opportunities for adopting
measures that enhance marine ecosystem resilience.
Complementary investments in the resilience of ports and logistics—with hazard monitoring and
modelling—can help avoid lock-ins of designs and operating models that cannot adapt to future risks.
Port infrastructure and operations are also sensitive to climate change impacts such as SLR, storm
surges and high-speed winds, which affect port performance through disruptions or damage to port
infrastructure. Analysis of port disruptions across 74 ports in 12 countries found that an increase in
storm surge of 1 meter or wind speed of 10 meters/second resulted in a 2-day increase in port
disruptions, with cascading impacts on supply chains.171, About 90% of Egypt’s trade is seaborne, with
large reliance on 15 commercial ports (out of over 60 ports with 197 terminals). Alexandria Port is the
largest port, through which 65% of the country’s trade passes. The capacity of seaports under Egypt
Vision 2030 is projected to grow. 172 Longer dwell times and inefficiencies in the unloading process
contribute not only to the cost of trade, but also to GHG emissions. Adaptive planning and investments
to improve the resilience of port infrastructure along with continuous monitoring and modelling to
assess climate risks are priorities. Adaptation also includes the use of technologies to enhance
resilience of port infrastructure. The GOE has taken steps in this area through efforts to
establish173sand dune dikes along five vulnerable hotspots within the Nile Delta and the Sectoral
Strategy for Ports Development Sector that focuses on deploying green port principles and reducing
pollutants. Moreover, the Advanced Cargo Information System—a blockchain-based technology
launched by Egypt on May 2022—improved processing times by over 50% through its automation of the
customs process and integration with the digital trade portal, Nafeza, which links the import and export
operations all of Egypt’s ports.
Cities
In cities, a focus on enhancing the resilience of infrastructure and services will require combining
ongoing investments with better planning to guide development away from the most high-risk areas
and to complement nature-based solutions. Egyptian cities are growing in unsustainable ways, as soil
surfaces are sealed over, green spaces are removed, and biomass and diversity are diminished. If well-
implemented, nature-based solutions have significant potential to enhance urban cooling and livability,
decrease air pollution levels, increase carbon absorption (GHG sinks), mitigate the destructive effects
of floodwaters, and manage sea level rise. Urban areas can be cooled effectively through increased
vegetation for shade and evaporative cooling and the use of more reflective materials. In newly built
areas, streets and buildings can be oriented to maximize shade and airflow. Lowering temperatures in
the cities can also bring savings in energy costs and prevent heat-related illnesses. Better land
management to restore protected areas is essential, especially in the context of desertification. In cities
that receive little rainfall, natural approaches to preserve vegetation can help manage water flows.
Nature-based solutions can assist with stormwater management, water treatment, rainwater
harvesting, thermal regulation, the enhancement of local biodiversity, and much more. Guiding urban
growth away from high-risk areas (such as flood-prone areas) can help minimize future damages and
preserving natural land can help implement the nature-based solutions highlighted above. If no action
171 Verschuur, J., Koks, E.E., and Hall, J.W. (2020). “Port disruptions due to natural disasters: Insights into port and logistics resilience,” Transportation
Research Part D: Transport and Environment, 85, 102393.
172 McCarron, B., Giunti, A. and Tan, S. (2018), Climate Costs for Asia Pacific Ports. HBC.
173 Enhancing Climate Change Adaptation in North Coast and Nile Delta in Egypt, UNDP Project. https://www.undp.org/egypt/projects/enhancing-climate-
change-adaptation-north-coast-and-nile-delta-egypt
32
is taken in cities, the costs from higher exposure to risks and the losses of arable and natural land will
be high. Urban growth modelling reveals that in the absence of a resilient and compact growth focus
(reference scenario), the results will be (i) a 35% increase in population exposed to a 1 in 100 years
return period pluvial flooding event by 2030, with an additional 1.1 million people living in flood-prone
areas, (ii) ~900 Km2 of additional land requirement, doubling the current built-up footprint of the 14
main cities, which today stands at 923 Km2, (iii) loss of 138 Km2 of natural land that is critical for cities’
adaptive capacity against climate change variability and change (flooding, emissions, pollution, heat
stresses), and (iv) loss of agricultural land, to the tune of 251.24 Km2, resulting in a decrease in
agricultural productivity and further reduction of an already scarce resource. The results for the
reference scenario of continued urban growth patterns by 2030 suggest that challenges will vary by
city; of the 14 cities studied, two will lose more than 30% of their natural land area, four cities more
than 60%, and six cities more than 90%.
Transport
Complementary actions to improve asset management, operation and maintenance can help improve
the resilience of connective infrastructure and the management of strategically important infrastructure
assets. Under the MiNTS Master Plan for Nationwide Transport System,174 Egypt is implementing an
ambitious infrastructure investment program, including highways, railways, and dry ports. These
projects represent an opportunity to build resilient infrastructure assets through better risk
assessments and improved design and risk-mitigating engineering measures such as adequate
drainage facilities and heat-resistant materials, among others. The operational continuity and resilience
of transportation network infrastructure in the event of climate and disaster events requires adequate
maintenance of the assets. Infrastructure asset owners (e.g., governorates, transport sector authorities)
can benefit from climate-aware asset management systems that enable the optimization of the lifecycle
costs of operating and maintaining infrastructure assets, to account for the risks of increasing and
intensifying climate events.
A focus on reforms that strengthen transparency and build regulatory authority capacity in railway
transport can improve resilience while fostering multimodality. Reforms that are already underway,
including the introduction of Public Service Obligation contracts and Multi-Annual Infrastructure
contracts, will improve the accountability of passenger rail operations and help improve financial
sustainability. Improved accountability and financial sustainability are necessary to ensure railways
remain available as an affordable means of transport for accessing economic opportunities and
services, especially for vulnerable groups including women, youth, and rural populations. Further, a
focus on improving the railway system can promote multimodality and avoid redundancy in logistics
and freight networks, both needed to build resilience in the face of increased weather disruptions due
to climate change. Improved railways will also help reduce the GHG emissions of the transport sector
by shifting freight transport from carbon-intensive trucks to lower-emission trains. The competitiveness
of railways has decreased across the last 15 years, due to the poor condition of railway infrastructure
and the Egyptian National Railways’ (ENR) lackluster attitude toward commercial freight transport.
Building on policy actions that have already been implemented, and to strengthen resilience and
mitigation, it is essential for the government to reform its relationship with ENR to facilitate private
sector participation in the railway sector. One clear recommendation is the establishment of an
Infrastructure Access Charging (IAC) regime so that private operators can access ENR’s railway network,
which will provide transparency and visibility for private investors to enter the market. The GOE should
assess the opportunities and hurdles for increasing the use of inland waterways for transport and build
the regulatory and planning capacity of the relevant authorities.
JICA, Almec Corporation, Katahira & Engineers International, & Oriental Consultants Co., Ltd., 2012. MiNTS – Misr national Transport Study – The
174
Comprehensive Study on the Master Plan for Nationwide Transport System in the Arab Republic of Egypt – Final Report.
33
3.2. Transitioning to low carbon development
In 2019, energy, transport, and industry (ETI) together accounted for about 80% of GHG emissions in
Egypt.175 Likewise, official data estimates that for 2015, the Energy sector, which includes transport
and industry emissions (65%), and Industrial Processes and Product Use (IPPU) (12%), together
represented 77% of emissions.176 Industry and transport also represent a high percentage of final
energy consumption, accounting for about 28% and 30%, respectively in 2019. In addition to reducing
the carbon intensity of energy supply and electricity production, the fastest path to a low-emissions
transition will require congruent and effective actions concerning these two major demand-side sectors,
along with the buildings sector. To highlight how actions in these sectors can contribute to putting Egypt
on a low carbon development path, this section builds upon results from both modeling and qualitative
analysis, with a focus on interventions in the energy, industry and transport sectors. The
decarbonization of Egypt’s power system was simulated using the World Bank’s in-house Electricity
Planning Model (EPM) tool, and a national transport emissions model based on the World Bank’s
ongoing analytical engagements for the transport sector (see Box 2 and Box 3 for additional details on
the modeling scenarios). Possibilities for reducing emissions in the industry sector were explored
following a bottom-up qualitative assessment, given the fragmentation of the industrial sector.
A move toward low carbon development can help prepare Egypt for the uncertainty caused by changing
markets, while also allowing it to take full advantage of the co-benefits of reduced emissions. The
shifting of international markets toward greener, low carbon alternatives creates additional uncertainty
for Egypt. As global markets move toward more stringent requirements in terms of carbon content and
the use of sustainable production methods (e.g., the European Union’s Carbon Border Adjustment
Mechanism (CBAM), and consumer preferences also begin to favor greener alternatives, preparing for
an uncertain future will require reducing emissions to strengthen the competitiveness of Egyptian
products and help manage the risks of increasingly “green” markets. Reduced emissions can also help
leverage new opportunities. Actions to reduce inefficiencies in electricity use in the industry, transport,
and logistics sectors in the short-term, and a move toward cleaner energy sources in the medium and
long term, can help local firms leverage opportunities in greener international markets and improve
their links to green global value chains by reducing the carbon content of products. But actions to
reduce emissions have benefits that go beyond strengthening competitiveness. For example, cleaner
transport in cities can deliver air quality improvements, leading to better quality of life and important
economic savings: in 2017, the cost of air pollution on health in the Greater Cairo area alone was
estimated to be about 1.4% of Egypt’s GDP.177
175 In 2019, CAIT data estimates that the contribution of these sectors to emission reached over 80%, with 74% of emissions coming from Energy (incl.
electricity & heat (32%), transportation (16%), manufacturing (11%), fugitive and other fugitive emissions (10%), building (5%)), and 8% from industrial
processes. Climate Watch. 2022. Washington, DC: World Resources Institute. Available online at: https://www.climatewatchdata.org.
176 Egypt’s First Biennial Updated Report (BUR), 2018.
177 Larsen, Bjorn. 2019, “Egypt: Cost of Environmental Degradation: Air and Water Pollution,” The World Bank.
34
Box 2. Energy Decarbonization Policy Scenarios
The World Bank reference scenario, referred to as the “Current Policies Scenario” (CPS), was designed to
reflect the electricity sector’s 2015-2021 transformation towards a clean energy pathway, described in
Section 2.3, and to continue the same trajectory to 2050. The sectoral reforms and efficiencies gained
through the reduction of growth in energy demand and shift towards a combination of gas and renewables
for supply has negated the need for coal-fired power plants as a technology option for development in the
CPS. The CPS also includes the GOE’s target of reaching a 42% share of renewable energy in the
generation capacity mix as a proportion of peak demand by 2035, which was then extrapolated out to
2050. Importantly, mitigation actions already implemented between 2015-2020 have been taken into
account in the CPS scenario.
Figure 12. Summary of Scenario Design
A CCDR Net-Zero (NZ100) pathway-based
scenario was then modeled to enforce a scaling
constraint to abate 100% of annual power
sector emissions by 2050 relative to the World
Bank reference (CPS) scenario, starting in
2030. Two intermediate “towards-zero”
pathways scenarios were modeled, considering
the abatement of 60% (NZ60) and 80% (NZ80)
by 2050, relative to the CPS scenario. These
decarbonization scenarios analyze alternative
clean energy development pathways for Egypt,
including their associated benefits for emission
reduction, and impacts to system costs and
investment requirements. Figure summarizes
the four scenarios modelled for the
development of Egypt’s power sector.
The growth of electricity demand in Egypt was

modeled for this CCDR using a linear model that
considers the relationship between GDP growth
rates, electricity prices, and elasticity factors of Source: World Bank Team elaboration
price and income. Applying projected GDP
growth rates, the rise in energy demand was extrapolated from a 2021 base year that incorporated recent
trends in energy efficiency improvements, ongoing reduction of transmission and distribution (T&D)
network losses, future adjustments for increased electrification from electric vehicles (EVs) in the
transport sector, and the production of Low Carbon Hydrogen (LCH), which needs electricity for water
electrolysis. The former two trends contribute to reducing the growth in electricity demand, while the latter
two increase demand growth, together ensuring that recent policies announced by the government are
considered and reflected in the electricity demand projections used in the scenarios here presented.
The World Bank’s CCDR analysis suggests that the trajectory of current policies is not entirely conducive
toward low carbon development by 2050. Under current policies, Egypt will still meet its NDC
commitments by 2030, but after that, a gradual increase in annual power sector emissions would
follow, reaching 121 MT in 2050 (up from around 78 MT today), due to the growth in demand
compounded by a CPS energy mix. Achieving a low carbon trajectory requires greater ambition for
decarbonization than that stipulated by current policies. Figure 14 shows the growth of annual power
sector emissions under the CPS and NZ100 scenarios. Starting in 2030, the NZ100 pathway leads to
a 97% reduction in emissions, relative to the CPS, by 2050. Figure 14 also shows the GOE’s BAU
scenario power sector emissions per its updated NDC. As mentioned in Chapter 2, the GOE’s BAU
considers 2016 as a starting year of projections. As mentioned in Chapter 2, the BAU scenario hence
reflects continuation of the same development trends and practices that were followed by the country
before 2016 and does not consider actions taken between 2016 and 2022. Such actions are
considered by the Egyptian government as mitigation actions. As Figure 13 suggests, such a trajectory
35
would have led to considerably higher emissions today and into the future. Instead, the CPS scenario
considers important adaptation and mitigation actions taken between 2016 and 2022. This CPS
trajectory provides a reduction of 76% in emissions compared to the BAU presented in the recently
updated NDCs (Figure 13).
Egypt can be more ambitious over the next decade through a “no-regret” approach to decarbonization
efforts, given the overlap in investment needs between the CPS and NZ100 scenarios through 2030.
After 2030, Egypt can re-evaluate the path to follow, to identify the most suitable long-term low carbon
development pathway from 2030 onwards. Beyond 2030, the CPS requires up to US$113 billion in
cumulative investments by 2050. Achieving the NZ100 pathway requires US$96 billion (+85%) of
additional investment in electricity generation supply and storage over the 2030-2050 horizon (see
Figure 14). These results suggest that Egypt has significant flexibility to take immediate action now and
re-evaluate an optimal long-term decarbonization pathway beyond 2030.
Figure 13. Annual Power sector emissions 2016- Figure 14. Cumulative Investments Requirements
2050 by scenario
250 +85%
higher cumulative $209
billion
Cumulative CAPEX (undiscounted $billions
investments for
200 Net-Zero pathway
96
150 $113
billion
USD)
100
50 113 113
0
CPS NZ100
2022-2050
Source: World Bank Team calculations
Source: World Bank Team calculations.
The CPS scenario results indicate that there is no requirement to build new sources of carbon-emitting
generators from 2022 to 2030. By 2030, Egypt’s electricity generation mix in the CPS is dominated by
gas (79%) and supplemented by wind (8%), solar (5%), and nuclear (7%) energy. In 2050, continuing to
follow the current policies trajectory in the CCDR modeling shows there will be a small decline in the
share of gas to comprise 66% of the energy generation mix, coupled by a modest growth of renewables
to a 27% share. Achieving a low carbon development pathway by 2050 in the NZ100 scenario indicates
the need to deploy a significant share of Wind (43%) and Carbon Capture and Storage (CCS) Gas (35%)
to the energy generation mix, supplemented by Solar PV (15%) and 23 GW / 136 GWh of battery energy
storage system (BESS) capacity.178 Figures 15 and 16 chart the change in installed capacity and energy
generation mix by scenario.
178 Uncertainties in prices and technological feasibility of CCS and battery capacity are already included in the modeling exercise and result in these
investments appearing only after 2035.
36
Figure 15. Power system installed capacity by Figure 16. Energy generation mix by scenario in
scenario, 2050 2050
Source: World Bank Team calculations Source: World Bank Team calculations
Achieving a deeper decarbonization pathway toward 100% (NZ100) in the electricity sector will require
the deployment of Carbon Capture Utilization and Storage (CCUS) and Battery Energy Storage System
(BESS) technologies, beginning in 2035, along with the early retirement of older plants. Egypt’s power
system will undertake carbon reduction efforts under the backdrop of excess existing thermal capacity
in the system, increasing the marginal costs of abatement for each unit of emissions. The power sector
model used for this CCDR, considers an early retirement on an economic basis starting in 2026. Given
the context of Egypt’s current excess thermal capacity in the system, this is essential for the move
toward a lower carbon path when pursuing pathways of NZ60 and beyond.179,180 The NZ100 scenario
modeled an early economic retirement of up to 7-10 GW of older Combined Cycle Gas Turbines (CCGT)
starting in 2031, due to the need to displace generation from emitting sources with no-carbon
alternatives.181 Achieving deeper decarbonization targets will begin to deploy CCUS technology on a
least-cost basis182 in 2035, which is expected to then play a significant role in marginal abatement
efforts as a run up to full decarbonization by 2050.183
Achieving the level of required investment in Egypt’s electricity sector will only be possible with more
robust policies to catalyze private investment, improvement of the regulatory framework and strategic
planning of public finance. To mobilize more private capital, the government needs to provide a clear
and predictable regulatory framework such as cascading down the emission reduction targets to
specific sectors and subsectors designing necessary policy actions to achieve them, and to leverage
public finance, including climate finance, to provide the needed incentives and strategically de-risk and
catalyze private investment. This can offer confidence to private sector developers and “crowd in”
financing from the private sector and new international sources.
To support the transition to this new path, a long-term vision complemented by short-term actions in
the three high-emission sectors (energy, transport, and industry) can help maximize the short-term
benefits of emission reductions and build a solid base for a fast transition to low carbon development.
The full transition to clean energy in Egypt is in progress and will take time. A combination of actions to
179 The NZ100 scenario requires significant early economic retirements of combined-cycle gas turbine (CCGT plants), starting with 8GW in 2026, up to 13
GW by 2030, and 17 GW by 2040. In the NZ100 scenario, is assumed that not only can these plants not produce electricity at a competitive cost – they
are also essential to decommission early to meet abatement targets in the system. It is important to keep in mind that this exercise is based on least-cost
optimization and does not take into account economic or social costs of the transition.
180 NWFE program recently launched suggest the government is considering decommissioning of 5 GW of twelve inefficient thermal power plants by 2025.
181 The EPM least-cost planning tool findings suggests some older thermal plants in Egypt’s power system are inefficient and not economical to continue
operating. The model has the option to retire those plants on an economic basis starting in 2030, in all scenarios, including the CPS.
182 Capital costs are assumed to fall from 2,800 USD/kW in 2020 to 2,350 by 2030, and 2,050 by 2050.
183 CCUS technology is assumed to capture 90% of the emissions from CCGT generation.
37
lay the foundation for such a transition and to help Egypt realize short-term benefits is needed. Such
portfolio interventions would require (i) accelerating the renewable energy transition to strengthen
competitiveness in the long-term; (ii) reducing emissions in the oil and gas sectors for immediate
emission reduction; (iii) tackling inefficiencies in the production and use of energy for electricity and
industry; (iv) reducing emissions in the transport sector to strengthen competitiveness and livability,
and (v) taking synergistic actions across adaptation and mitigation efforts and increasing the use of
digital technologies.
Often termed as the “first fuel,” energy efficiency is one of the largest and cost-effective options to
mitigate climate change. However, due to the financial and other barriers that the energy efficiency
market transformation faces, the scale of uptake and implementation of energy-efficient measures
remains considerably low in Egypt even though targets have been well laid out through the Second
National Energy Efficiency Action Plan NEEAP-II. Across the last few decades, the focus of energy
efficiency development has been on addressing some of the barriers—technical, awareness, capacity,
regulatory, policy, institutional, and market-based—through policies and regulations. It is of course vital
for the government to facilitate the implementation element of energy efficiency by establishing
systems and infrastructure, based on robust institutions and governance frameworks, to strengthen
the enforcement of these policies and regulations. That said, the challenges to the energy efficiency
market transformation remains the financial constraint associated with the higher or incremental
upfront costs of the measures, coupled with higher transaction costs and larger risk perception. More
creative financing tools like introducing the Energy service Companies (ESCO) model might help
overcome this upfront cost barrier, provided that appropriate regulatory schemes, incentives, and
business models are put in place.
3.2.1. Accelerate the transition to renewable energy
A significant scale-up of Renewable Energy (RE) in the medium- to long term is needed for Egypt to
move to a low carbon path. This should include efforts to expand the energy storage systems like battery
storage and hydro storage. Considering the high contribution of the energy sector to Egypt’s emissions
(64.5%),184 and the current surplus of gas-based generation capacity (21 GW), a transition to clean
energy sources in the medium- to long term will be at the core of the country’s move to a low carbon
path of development. The benefits of accelerating action beyond the Egypt Integrated Sustainable
Energy Strategy (ISES) 2035 target in renewable energy electricity generation capacity are not limited
to the move toward a low carbon path and the opportunity to leverage Egypt’s natural advantages. It
will constitute an important transformation to enhance energy security, to lower domestic demand for
natural gas, by diversifying the generation mix currently dominated by natural gas. Scaling up RE will be
feasible -and contingent- on a plan for the gradual decommissioning of thermal power plants based on
efficiency, O&M costs and lifetime expiration considerations.
Despite important advances, RE integration for electricity generation remains behind. The GOE has
taken decisive action to reduce emissions from electricity generation. Emission intensity for generation
dropped by 13% between 2016 and 2020 (the grid emission intensity declined from 0.528 in FY16/17
to 0.458 in FY19/20)185, thanks to an increased share of RE, the incorporation of new thermal
powerplants, and the introduction of energy pricing reforms that broadly encouraged energy efficiency
in downstream sectors.186 Emissions reductions were significantly driven by an increase in the use of
natural gas. Egypt has doubled its overall electricity generation capacity (from 32 GW in 2014 to 58.8
GW in 2021), as it shifted from a net importer of natural gas to a net exporter in 2018 (LNG exports
184Egypt’s First Biennial Updated Report (BUR), 2018.

185Government of Egypt estimates
186It should be noted that electricity system optimization analysis to reach various GHG reduction targets was carried out based on estimated average
heat rates for gas and fuel oil thermal generation plants considering their average age and benchmark rates from publicly available sources
38
reached 6.8 million tons in 2021) and rose its power exchange to 1,591 GWh in FY21/22 through
interconnections with neighboring countries. While these actions are in line with the objective to
transition into a regional energy export and trading hub, Egypt’s energy strategy has not explicitly
incorporated increasingly pertinent clean energy transition elements or the strategic role of the smart
grid (with the opportunity to increase penetration of digital technologies in the energy system). The
opportunities missed by not driving RE integration more vigorously include more significant decreases
in the carbon intensity of its energy mix, enhanced system resilience and energy security, and a
strengthening of its position as a clean energy hub.
Price distortions remain an important constraint to the acceleration of RE in energy generation. The
GOE has carried out significant adjustments to natural gas prices for residential and industrial users
across the past five years. Nevertheless, power generation from natural gas still benefits from gas
supplied at a cross-subsidized price of US$3.25 per MMBTu, compared to US$5.75 per MMBTu for
industrial uses.187 The artificially low price of gas for energy generation could act as a disincentive for
the integration of RE. Although RE integration has accelerated in the last decade, the share of non-
hydro RE in the total energy mix is just 5% (10,202 GWh generated from wind and solar compared to
total generation of 204,794 GWh), still well below its potential.
The integration of RE provides opportunities to reduce exposure to external price shocks, shift domestic
use of surplus gas production to value chains with higher value added, and potentially expand exports.
In FY19, local consumption of natural gas reached 2,181.7 billion standard cubic feet (Bscf), mostly
used in electricity generation and industry (electricity - 62.3%; industry - 22.5%; petroleum, gas
derivatives and petrochemicals - 10.1%; residential and CNG - 5.1%). As of 2021, consumption
remained stable (2,185.2 Bscf). Domestic production, however, which reached a peak of 2,394 Bscf in
2021, is expected to decline starting in 2023 and into the medium term, temporarily returning Egypt to
a net-importer status before once again picking up its upward trend. Subject to domestic natural gas
priority needs and essential power generation system resilience and optimization considerations, the
integration of RE into Egypt’s energy mix could deliver significant climate transition and adaptation
benefits, while potentially reducing power sector, balance of payments and fiscal exposure to
international gas price shocks. Subject to domestic production and internal power generation and other
demand trends, it may also eventually allow for the shifting of surplus domestic natural gas use to
higher value-added products (e.g., petrochemicals and fertilizers) and increased exports as part of
Egypt’s strategy to become a key player in the regional energy trade.
Table 2. Investment Needs and Economic Costs: Net-Zero 100% Pathway, 2022-2050
NPV, deviation between CPS and NZ100
$ billion Change
Capital costs for new generation and storage +34 +77%
Gas -10 N/A
Solar +1 +10%
Wind +24 +234%
Nuclear 0 N/A
Storage +5 +347%
CCS-Gas +15 N/A
Variable operational and maintenance costs +4 +36%
fixed operational and maintenance costs +6 +23%
Total System Costs +44 +54%
187 In October 2021, the gas price to industrial customers was raised to US$5.75 /MMBTU from US$4.5 (28% increase), those prices were reduced earlier
to help the industry sector face the COVID19 pandemic challenges.
39
Minus fuel cost savings -16 -12%
Net total system costs +29 +10%
Source: World Bank staff analysis based on power sector modeling.
To scale up RE, Egypt needs to enable private sector investment by laying the groundwork for
competition in the energy sector. Egypt has successfully mobilized private sector investments in the
power sector, but majority of investments are still channeled through public financing, whether through
government bond offerings or loans/grants from bilateral and multilateral development financing
institutions.188 The full transition toward clean energy would need to be driven by the private sector
because the scale of investments—even for a NZ60 scenario, let alone the NZ100 scenario—are several
times the CPS anticipated investments. As mentioned above, the electricity sector will require the
deployment of CCS and Battery Energy Storage System technologies after 2035 and this effort will need
to be led by the private sector. The private sector can respond to the needs, but the foundations for
increased private investment have to be in place through enabling policy reforms and incentives. Total
system costs of the NZ100 scenario amount to US$44 billion between 2022 and 2040 (See Table 2
above). Taking into account the fuel cost savings, the net investment needs are estimated at US$29
billion. To ensure that the sector is attractive to the private sector, Egypt needs to introduce key reforms,
ensure rational cost-based energy tariffs, and improve the efficiency and financial viability of the
electricity distribution companies. A first step to reform the sector is the full implementation of the new
Electricity and Renewable Energy Laws. Reviewing the tariff system is important to ensure financial
confidence and sustainability for private investments, while protecting affordability of the service.
Today, current average end-user tariffs are only about a third of the real cost of energy generation.
3.2.2. Reduce emissions in the oil and gas value chain and lower carbon
intensity of the energy supply mix
Given the contribution of oil and gas to Egypt’s overall emissions, and the availability of cost-effective
short- to medium-term solutions, decarbonization of oil and gas value chain operations is a national
priority for energy transition and adaptation, not only from a climate perspective but also from a
strategic, economic and development standpoint. Egypt’s oil and gas sector operations are estimated
to have generated more than 1 Mt of methane emissions in 2021189, roughly equivalent to 25 MtCO2e,
of which vented methane accounted for 60%, fugitive emissions for 26%, and incomplete flaring of
natural gas for 12%, with the balance represented by other, smaller sources. These are estimated to
have increased to 15-20 MtCO2e in 2021, of which 5.5 MtCO2e were derived from gas flares.190,191
Likewise, in 2015 official data estimated that oil and gas sector operations generated 0.8 Mt of
methane emissions.192,193 Implementing a transformative program to modernize the oil and gas sector
is included among the mitigation pathways outlined in Egypt's updated NDC.194 Absent a detailed, asset-
by-asset detection and measurement campaign of GHG emissions from the full oil and gas value chain
including upstream, midstream and downstream, and integral satellite, aerial and ground level
measurements the sector’s contribution to Egypt’s CO2 and methane emissions inevitably relies so far
on informed estimates. The abatement of CO2 and CH4 (methane) emissions and other
decarbonization measures in oil and gas production can contribute to lowering the carbon intensity of
energy supply and provide an early lever to help meet NDC commitments.
188 Enabling Private Investment and Commercial Financing in Infrastructure. World Bank Group (2021).
189 According to Egypt’s First Biennial Updated Report (BUR) oil and gas sector operations were estimated to have generated 0.8 Mt of methane emissions
in 2015.
190 Figures for 2021 obtained from the WB Global Gas Flaring Reduction Partnership (GGFR) and the IEA Global Methane Tracker
191 According to official sources, 6Mt of CO2 emissions (3% of the energy sector emissions) were estimated to derive from gas flaring and other combustion
uses in production, treatment, processing, storage, compression, transport and refining operations in 2015. World Bank calculations based on data from
the Annex C table of the First Biennial Updated Report (BUR).
192 Egypt’s First Biennial Updated Report (BUR), 2018
194 Ibid.
40
As compared to the uncertainties surrounding fuel-switching, leveraging opportunities to reduce the
carbon footprint and carbon intensity of the oil and gas, and gas-to-power value chains could bring
significant emission reductions in the short- to medium-term, would be cost effective and could result
in significant environmental co-benefits. Such efforts can also contribute to lowering the carbon
intensity of energy production (oil, gas and power) and the carbon competitiveness of energy-intensive
exports in anticipation of the adoption of carbon taxes and CBAM mechanisms in export markets. Based
on average natural gas prices from 2017-2021, the IEA estimates that almost 45% of global oil and
gas sector methane emissions could be avoided at zero or negative net cost, as the cost of mitigation
is often lower than the market value of the gas that is captured. The IEA also estimates that it is possible
to avoid more than 70% of methane emissions using existing technologies. Methane abatement actions
tend to fall on the lower end of the decarbonization cost curve. International benchmarks indicate that
energy efficiency, gas recovery and asset integrity improvements have an average abatement cost of
US$10 – US$20 per ton of CO2e over the estimated lifespan of the investment due to the incremental
revenues and savings from lower energy consumption. There are several levers available to address
the carbon footprint of sector value chain operations, including energy efficiency (EE) measures;
electrification and integration of RE energy; gas flaring reduction; abatement of CO2 and methane
venting and leakage along the oil and gas value chain; development of carbon capture and storage
(CCS) projects; and Demand Side Management (DSM), including the implementation of digital solutions.
Such measures can also improve service reliability and resilience and optimize the operation of energy
systems.
Egypt has significant carbon capture and storage (CCS) potential for emission reduction in the oil and
gas, power generation and industrial sectors, including the development of low carbon blue
hydrogen.195,196 The existence of potential CO2 sinks in depleted natural gas reservoirs located close
to oil and gas production operations and industrial sites with significant concentrations of CO2
emissions offer an opportunity for the development of CCS hubs. Three potential CCS hubs that will
merit further assessment for their technical, economic and commercial viability have been recently
identified: Cairo, Ain Sokhna/Suez, Damietta and Alexandria197. The Ain Sokhna/Suez hub alone has
the potential to capture almost 20 MtCO2 per year at cost of US$35 to US$120 per ton. The economic
and commercial feasibility of CCS projects is normally dependent on the adoption of supporting
mechanisms like carbon taxes and green finance facilities, CCS associated with the production and
processing of natural gas, where naturally occurring reservoir CO2 is produced and separated, is the
lowest-cost application of CCS today, costing between US$15 and US$25 per ton of CO2.198 According
to the Global CCS Readiness Index, Egypt’s readiness to deploy CCS is still low199 with only oil and gas
sector-specific regulations currently in place.200 Further assessment of the potential for CCS
development and the supporting policy and regulatory framework, financing mechanisms and capacity
development needed for implementation is therefore required to determine the technical, economic,
and commercial feasibility of CCS prospects.
Reducing emissions in the oil and gas sector value chain through private sector investment will require
a clear policy and regulatory framework and close consultation and coordination with private operators
to establish decarbonization and carbon-intensity targets, measurement standards, and reporting
requirements. Policy development should begin with a granular inventory of decarbonization
opportunities in the sector’s upstream, midstream, and downstream operations and a determination of
195 Decarbonizing Natural Gas using CCUS Technology, World Bank, fothcoming.
196 Global CCS Institute https://co2re.co/FacilityData
197 High-level CCUS Hubs Screening Assessment for Algeria and Egypt, World Bank, April - June 2022
198 Naturally occurring CO2 dissolved under pressure in underground oil and gas reservoirs tends to separate (evaporate) under lower pressures above
ground during production and processing. The proximity of depleted natural gas reservoirs to still active oil & gas operations presents cost-competitive
opportunities for reinjection of captured CO2.
199 https://www.iea.org/commentaries/is-carbon-capture-too-expensive.
200 Decarbonizing Natural Gas using CCUS Technology, World Bank, forthcoming.
41
the location, volume, intensity and concentration of CO2 and methane emissions, including an
assessment of energy efficiency gaps, power, heat and combustion processes in operations, gas flaring
reduction, and emissions from venting and leakages of methane. The subsequent development of a
Marginal Abatement Cost Curve (MACC) and the development of a short- to medium-term action plan,
can inform the prioritization and sequencing of low-hanging fruit interventions and practical measures
to lower the carbon intensity of operations, including the selection of optimal technologies, identification
of costs, and the assessment of the commercial feasibility of applicable efficiency, mitigation and/or
abatement options and of CCS opportunities. The MACC would also provide an indication of the needs
and space for required state and private sector investment. Complementary actions will be needed to
comply with high environmental standards for planned investments in decarbonization and to properly
ensure the readiness of the policy options to address and manage associated risks.
3.2.3. Reduce inefficiencies in the use of energy for electricity and industry
Actions are needed to reduce inefficiencies in the use of energy in the electricity and industry sectors
through technology, innovation, and regulatory reforms.
Energy
Inefficiencies in the use of energy in electricity generation come from a combination of subsidies and
technical challenges. The GOE launched a comprehensive energy policy reform including energy subsidy
phase-out and reforms for the electricity and oil and gas sectors that were initiated in July 2014 and
expected to be completed in FY2024/25. Completing the move initiated during the last decade to fully
remove energy subsidies is a crucial step to address inefficiencies.201 In the long term, energy subsidy
cuts are likely to improve growth perspectives and household welfare.202 In the short term, targeted
response of cash transfers should be continued and scaled up in parallel with the phase-out of energy
subsidies.203 The reduction of transmission and distribution (T&D) losses also presents an opportunity
for decarbonization and can be supported by digital technologies in the energy system. T&D losses have
increased over the past years and were estimated to be responsible for about 23 Mt of CO2 emissions
in 2019.204 While Egypt’s transmission system losses are comparable to those of many EU countries,
distribution losses205 are very high, primarily driven by a sharp increase in commercial losses. Reducing
T&D can lead to important energy savings and emission reductions. However further understanding of
the main reasons and volumes commercial losses is still needed. A focus on deployment of smart
meters can improve the control over the distribution network and contribute to enhancing the
understanding of the challenges. Even simple pre-paid meters can help improve the collection rates
and thus enhance the financial sustainability of the sector while also contributing to manage demand.
Remaining subsidies in the energy sector suggest that the real value of the negative externalities from
fossil fuels, such as the health impacts of air pollution, is not being recognized. For Egypt, sizable explicit
subsidies remain in the electricity sector and in diesel for transport. The order of magnitude of these
subsidies is large: electricity subsidies for industrial and residential users are around US$8 billion, while
diesel subsidies are around US$4 billion. This US$12 billion total (about 3% of GDP) would alone
finance most of the annualized adaptation investment needs for cities (see Chapter 4). The magnitude
of implicit subsidies is even larger, notably for diesel and other oils (e.g., jet fuel, heavy fuel oil). The
201 Before this program, energy subsidies constituted 6% of Egypt’s GDP in 2012/13. Between 2014 and FY2017/18, energy subsidies dropped to 3.4
percent of Egypt’s total GDP and by FY2019/2020 they account for only 0.3% of total GDP. Egypt First Updated Nationally Determined Contributions, June
2022.
202 Clemens Breisinger, Askar Mukashov, Mariam Raouf, Manfred Wiebelt (2019), “Energy subsidy reform for growth and equity in Egypt: The approach
matters,” Energy Policy, Volume 129.

203 As a reference, the percentage of cash-transfers (Takaful and Karama) in total income was 6% of income for the poorest decile and 1% on average in
FY21 (FIA tool). World Bank (2022) Poverty, Jobs and Climate Change. Egypt’s CCDR Background Note.
204 Assuming grid emission factor of 0.53 t CO2/MWh.
205 Distribution Companies (DCs) losses include commercial losses and technical losses.
42
externality cost of local air pollution represents the lion’s share of the implicit subsidies granted to fossil
fuels. Climate change accounts for 4% of GDP in terms of implicit subsidies.
Industry
Improving energy efficiency across the industrial sector can help make headway in decarbonizing the
sector while strengthening its export competitiveness. Global markets are increasingly demanding
greener and lower carbon content products. Egypt needs to be ready to respond to such changes. In
2020, while only 4.3% of firms in Egypt reported that their end consumers require environmental
certificates or adherence to environmental standards as a requirement for doing business with those
firms, the percentage is higher for large firms206 and exporting firms, at 16% and 12% respectively.
There is still little awareness among the industrial sector: one third of firms report that they monitor
CO2 emissions, 18% monitor energy consumption, and 16.8% have adopted measures to enhance
energy efficiency.207 These data suggest that most firms do not see energy efficiency as a priority
compared to other investments. Egypt is already taking steps to increase awareness about the
importance and impact of energy efficiency, and is moving toward decarbonization of the industrial
sector through energy efficiency measures ranging from stronger minimum energy performance
standards for motors and drives to requiring the adoption of waste heat recovery systems in industries.
The Ministry of Trade and Industry (MTI) is working on an integrated approach to support market reforms
through consumer awareness campaigns, finance and financial delivery mechanisms that ease the
upfront costs of energy efficient motors, and capacity building, including through the establishment of
13 technological centers.
Energy service companies (ESCOs) can play a critical role in implementing energy efficiency in
industries. To achieve even more ambitious outcomes, energy efficiency will need to be coupled with
additional efficiency measures and energy use optimization in water, material use and waste
management. In the initial stages, private ESCOs can implement energy efficiency through energy
savings performance contracting that takes the form of either shared or guaranteed savings models
across industry, Micro, Small, and Medium Enterprises (MSME), building, and public sectors (municipal
street lighting, water pumping, etc.). To trigger a longer term, more fundamental market transformation
toward large-scale implementation of energy efficiency projects across sectors, the creation of a public
Super Energy Service Company (Super ESCO) will be required. International good practices in
establishing Super ESCOs could inform practices and determination of the best model for moving
forward.208 A Super ESCO approach could further enhance the use of non-financial policy measures
such as green certificates for industrial plants that implement EE/RE projects.
Accelerating the uptake of energy efficient motors through awareness and enforcement of decree
463/2020209 could strengthen competitiveness while reducing emissions. Effective implementation of
high efficiency motor standards (such as the “IE3” efficiency class on the International Electrotechnical
Commission’s (IEC) international performance rating scale) could help save the industry sector nearly
US$560 million210 and has the potential to mitigate up to 9 million tons of CO2 in cumulative emissions
by 2031.211 But as mentioned above, there is little awareness across the industry sector. Improving
206 Large firms refer to firms with over 100 employees. Egypt Enterprise Survey (2019-2020)
207 Egypt Enterprise Survey: Green Module, World Bank (2019-2020).
208 Super ESCOs are typically governmental entities created to serve the public sector,
develop the capacity of private ESCOs, and facilitate project financing.
For nascent energy services markets, Super ESCOs help aggregate projects and drive down transaction costs through standardization. For an overview of
ESCO and Super ESCO issues, see World Bank (2018) Transforming Energy Efficiency Markets in Developing Countries: The Emerging Possibilities of Super
ESCOs https://openknowledge.worldbank.org/handle/10986/30385
209 Decree 463/2020 was supported by the IFC's Smart Technology and Energy Efficiency Production Program (STEP)
210 The USD$560 million is the cumulative net present value of savings and takes account equipment and operating costs over the equipment lifetime and
a 5% discount rate. The calculations were conducted at the onset of the Smart Technology and Energy Efficiency Production Program (STEP), using the
Lawrence Berkeley National Laboratory Policy Analysis Model System (PAMS) impact analysis model, and were based on 2016 energy prices and tariffs
and quote savings at 2031.
211 Ibid.
43
awareness of the potential savings and ensuring that the standards supported by the decree are
enforced, could help accelerate the sector’s EE transition.
Further, to enable industry carbon competitiveness it will be necessary to reduce non-tariff barriers.
Current import tariffs seem to support the move toward greener trade, as tariffs on environmental goods
and services are comparatively low. However, non-tariff barriers are extensive, with price controls and
technical barriers to trade affecting most environmental goods. This challenge is particularly
pronounced for imports of renewable energy products, products related to the management of solid
and hazardous waste, and recycling systems.212 Reducing these barriers will be important to support
the private sector as a domestic and international solution provider that is able to offer innovative
products and services, while also reducing the environmental footprint of economic activity in Egypt and
strengthening private sector resilience to climate events.
Egypt has an extensive network of industrial and investment zones that can be leveraged to facilitate
greater resource efficiency and reduce emissions in the industrial sectors. Investment in common
infrastructure to support cleaner energy, water treatment and re-use, and waste reduction and re-
purposing will help achieve economies of scale for such solutions and also raise awareness in industry
about the business case for investing in cleaner technologies.
3.2.4. Reduce emissions in the transport sector
Progress toward a low carbon transition of the transport sector can enhance livability and productivity,
while strengthening the competitiveness of goods. Carbon emissions from the transport sector have
been rising and are projected to continue to increase. Well-designed, low carbon public transport
systems can improve safety and security, increase access to employment opportunities and services,
and build the economic and social resilience of women and vulnerable groups. Associated reductions
in congestion and air pollution can also increase labor productivity in cities. A low carbon transition in
the freight and logistics sector could help strengthen competitiveness by improving the sector’s
efficiency and lowering costs for shipping goods, including agricultural products. Improving railways to
make them competitive for freight transport, including through connectivity improvements to ports and
neighboring countries, will be a cornerstone of strengthened regional integration in a region
characterized by market fragmentation, while also delivering climate co-benefits. Finally, reducing
emissions in the transport sector can contribute to lowering the carbon content of final goods,
increasing competitiveness in carbon-conscious markets.
Priority actions to achieve the transformational scenario would include adopting pricing interventions
and awareness-raising programs to manage demand; integrating multimodal transport systems; and
improving the fleet composition, in addition to continuing investment in low carbon infrastructure. The
analysis conducted for this report suggests that several policy actions are important to help reduce
emissions in the transport sector. First, to realize the climate benefits of ongoing investment projects,
the GOE can build the capacity of transport authorities, with an initial focus on developing and then
implementing a national transport sector strategy that coordinates government-wide transport
programs for a low carbon transition of the sector, and increasing its resilience. Second, to deliver wider
social benefits, the GOE could adopt soft measures that influence behavior, in parallel with the hard
investments already underway.213 See Box 3 below for additional details on the transport analysis and
a description of the scenarios considered.
212 Among the 1,924 non-tariff measures on EGs, imports of renewable energy (REP) and management of solid and hazardous waste and recycling systems
(MSHW) face 614 NTM and 394 NTMs, which cover more than half of total NTMs.
213 Hegazy, M., 2022. Egypt transport policies 2014-2021. Arab Reform Initiative. Available at: https://www.arab-reform.net/publication/egypt-transport-
policies-14-21/
44
Box 3. The World Bank’s Transport Emissions Analysis
The World Bank’s transport sector emissions analysis emphasizes policy and regulatory opportunities to
reduce sector emissions toward 2050. The analysis complements Egypt’s First Updated Nationally
Determined Contributions (NDC),214 which focus on investment projects that drive a low carbon modal
shift from private passenger and freight vehicles to mass transit. The World Bank reference “Current
Policies Scenario (CPS)” reflects the GOE’s low carbon transport vision, including the ambitious
sustainable transport investment projects listed under Egypt’s First Updated NDC. The CPS further
accounts for policies and strategies, such as Zero/Low Emission Vehicles transitions (the CNG fleet size
reflects the GOE target of 620,000 CNG cars by 2024; Cairo Transport Authority target of 2,269 CNG
vehicles by 2025; and 50% of new cars to be EV by 2050). The CPS also includes retirement of aged
vehicles, such that no imports of secondhand passenger vehicles are allowed by 2030, and the vehicle
survival curve is adjusted to reflect the removal of 80% of 20-year-old vehicles by 2040. Finally, the CPS
modeled urban public transport investment (rail, bus, BRT) assuming a 2% mode shift from cars to public
transport by 2040 as a result of the investment projects. 215
Our analysis includes a High Ambition scenario to assess the potential carbon emissions abatement of
transport policy and regulatory options. This scenario includes more ambitious transitions compared to
the CPS, in terms of the transition to Zero/Low Emissions Vehicles (earlier shift to EVs, with all new cars,
motorcycles, buses, and minibuses being EV by 2045, and a lower uptake of CNG because EVs would
dominate the fleet). With respect to the retirement of aged vehicles, the High Ambition scenario included
no imports of secondhand motorcycles, vans, trucks, cars, buses, or minibuses by 2030, a 15% reduction
in energy consumption for new cars and vans, and a 10% reduction for buses and trucks by 2030. Further,
the High Ambition scenario accounted for complementary policy options including urban congestion
charging, traffic management and drivers’ training for eco-driving, rural and intercity bus development,
railways electrification, and logistics consolidation. Finally, the High Ambition scenario modeled urban
public transport investments such as those required to achieve the replacement of 80% of urban
microbuses with buses by 2050, and a 4% mode shift from cars to public transport by 2045.
The World Bank CCDR Transport Analysis modeled the sector’s carbon footprint based on passenger and
freight transport activities in road, rail, waterborne and air travel modes. The model projects travel
demand and emissions through 2050, based on socio-economic and sectoral trends in population, GDP,
vehicle stock, motorization, location of demand (urban, rural, and intercity), fleet capacity and occupancy,
mileage, and changes in vehicle efficiency, among others. Taking into account both direct and indirect
emissions for urban, non-urban, and highway locations, the model accounts for different power train and
fuel options as appropriate to each mode (e.g., diesel, CNG, and electric for buses; and gasoline, CNG,
and electric for private cars) as well as age (or vintage), for different vehicle classes, energy consumption,
and emission factors for different fuels.
With full implementation of the current policy and regulatory framework (Current Policy Scenario),
carbon emissions from transport and related sectors are projected to reach 88 MtCO2e in 2030 and
136 MtCO2e in 2050. The update NDCs projects under the Business As Usual (BAU) scenario the
transport sector’s carbon emissions216 to exceed 124 MtCO2e in 2030. The World Bank’s transport
emissions analysis suggests that the full implementation and enforcement of current policies and
strategies would lead to an emission trajectory that is considerably lower than that provided by the BAU
in the update NDCs, with emission levels that are 29% and 66% percent lower in 2030 and 2050
respectively. As shown in Figure 17, the CPS emission projection for 2050 would still lead to an increase
of 111% as compared from the 2016 emission levels. Electrifying 50%217 of new vehicles of all classes
is ambitious in light of technological, macroeconomic, market, and other risks. However, the benefits
of this move can be high, representing about 73% of carbon emission abatement218 under the Current
Policy Scenario (Figure 18) by 2050. Regarding the public transport sector, the aggregate capital
214 Egypt First Updated Nationally Determined Contributions, June 2022

215 The World Bank. Greater Cairo Mobility Assessment and Public Transport Improvement Study, forthcoming.
216 The Government of Egypt NDC, transport sector includes domestic navigation, rail, and road.
217 Launched in 2019, Egypt E-Mobility Strategy which emphasizes strengthening local manufacturing set a target of increasing market share of private
EVs in Egypt to 50% by 2040.

218 CPS assumed electricity generation GHG intensity of 0.147 kgCO2e/MJ in 2020 and annual change of -2.8% through 2050 to align with the CCDR
energy analysis.
45
investment needed to meet government ambitions for CNG buses and electric bus uptakes is estimated
at US$5.4 billion and US$12.6 billion, respectively, by 2050.219
Figure 17. Transport Sector Emission Projections by Figure 18. Carbon Emission Abatement by
Scenario, 2016-2050 Transport Policy Options, CPS and High Ambition
Scenarios
400
Egypt NDC BAU 100% 0% Logistics Consolidation
6%
350 3%
0%
Rail Electrification
Current Policies Scenario (CPS)
300 80%
Rural & Intercity Bus
Annual Emissions (MT)
Investment
High Ambition
250 CNG & EV uptake
-66% 73%
60% 63%
From Egypt Traffic Management &
200
NDC BAU to Eco-Driving
CPS Urban congestion
150 charging
40%
Walking & cycling
investment
100 -55% 0% 3% Highway Road-user
1%
0%
3% Charging
11%
20%
50 Fleet Renewal
From CPS to 7% 19%
High Ambition, 3% Urban PT investment
0 2050 6% 2%
2026
2040
2016
2018
2020
2022
2024
2028
2030
2032
2034
2036
2038
2042
2044
2046
2048
2050
0% 1%
Parking pricing strategy
CPS High Ambition
Source: World Bank Team calculations Source: World Bank Team calculations
Through additional investments, increased uptake of new technologies, and demand-side interventions
(High Ambition Scenario, or HAS), Egypt could achieve further reductions in transport sector emissions,
down to 61 MtCO2e in 2050 or abatement of 55% from the Current Policy Scenario (Figure 17). Figure
18 shows the carbon emission impact of policy options assessed under the HAS. Renewal of the old
fleet is projected to contribute to 19% of the carbon emissions abatement impact of the HAS but would
require building the capacity of regulatory institutions to strengthen monitoring and enforcement of
laws and regulations mandating the retirement of aged vehicles. Egypt can also accelerate the renewal
of the old fleet by extending its successful carbon financing program to scrap and replace high-mileage
commercial vehicles. Strategic street parking pricing, traffic management (Intelligent Transport
Systems, traffic signaling, etc.), and well as eco-driving training programs for divers can in aggregate
contribute 4% of the High Ambition Scenario’s carbon emissions reduction impact (Figure 18), while
also delivering road safety co-benefits that protect human capital.
Regulatory interventions to promote sustainable logistics (e.g., logistics coordination, freight

consolidation, accelerated investment in and operation of intermodal facilities, and charges to push
freight from road to rail) can have lasting impacts. Freight transport regulatory authorities can also be
strengthened to deploy logistics transport solutions that would incentivize the consolidation of carbon-
intense truck traffic, which represent 6% of the HAS emissions reduction potential (Figure 18).
Introducing Highway Road User Charging linked to the carbon footprint of each respective vehicle class
219See Egypt CCDR National Transport Emission Analysis background paper (The World Bank, 2022) for details. CPS assumed the current trajectory of
CNG and electric vehicles will continue, i.e., 50,000 new CNG cars added per year, and no substantial addition of EVs. CPS accords with the government
target of 620,000 CNG cars by 2024 and extrapolate thereafter until 2050. For buses, the analysis extrapolated CTA target of 2,269 CNG buses by 2025
and extrapolated thereafter until 2050. Further, the Current Policy scenario reflects the GoE’s target of 50% of new cars to be EV by 2040, for buses,
minibuses and vans. EV uptake of medium and heavy trucks was assumed to delay other vehicle classes. The analysis also assumed that by 2050, the
shares of EVs in new vehicles will be maximum 50%. The estimates assumed capital cost of CNG buses at US$179,200/vehicle, and Battery Electric Bus
at US$ 236,200, both of which include exercise tax and remain constant until 2050. The analysis assumed additional fleet to be acquired to meet projected
travel demand to be served by the bus sector, unconstrained, and discounted at 6%. CNG fueling stations are excluded from the analysis. E-Bus investments
include fleet and import tariff. The analysis focuses on capital investment needs, and the lifecycle feasibility and Total Cost of Ownership assessment is
beyond the scope of this study.
46
can would contribute 3% of the HAS carbon abatement impact. These interventions are cost effective
and can mobilize private capital, especially if they leverage emerging technologies such as mobile app-
based management solutions and digital payment systems. To achieve policy objectives, the GOE’s
focus should be on building the capacity of authorities to design adequate schemes and regulate private
operators effectively. Where suitable, it is essential to ensure that privately operated transport services
can collect commercial fees, as opposed to being viewed as Public Service Obligations. Essential next
steps to attract private investment for this transformation include simplifying the sector’s complex
institutional structure, introducing transparent regulations, and designing both an integrated
multimodal freight transport strategy and an integrated mass transit strategy.220
Egypt can facilitate the transition of public transport vehicles to low/no emission alternatives by
focusing on building the capacity of regulatory institutions to fully realize development benefits and
increase private sector participation. Figure 18 shows that a more ambitious uptake of electric vehicles
of all classes, complemented by a transition to CNG, represents 63% of the High Ambition Scenario’s
carbon emissions abatement impact.221 Affordability and the need for motorization management
present important challenges for private vehicles. An initial focus on moving toward a low/no emission
bus fleet can bring important co-benefits including air pollution reduction, improved access for
vulnerable populations, and job creation (if coupled successfully with policy and regulatory interventions
to create a sound domestic industry). Therefore, public transport is an appropriate focus for policy
interventions. The aggregate capital investments needed to switch the public transport (bus) fleet to
CNG and electric buses under the HAS would total US$5.4 billion and US$48.7 billion, respectively, by
2050.222 Achieving a modal shift from cars to low carbon transport modes will be essential in parallel
with the uptake of a low/no emission fleet. The magnitude of the needed investment suggests that the
government should focus on mobilizing private investments by mitigating investors’ perceived policy,
regulatory, and technical risks. Policy priorities in this regard should include strengthening institutions
to effectively manage E-Mobility transitions and the consolidation and more effective regulation of
informal public transport operators, which otherwise may compete with and hinder the financial viability
of a CNG and electric bus fleet.
The transition toward low emission vehicles needs to go hand in hand with the RE transition and
capacity building of regulatory institutions to fully realize the development benefits of a low carbon
transition. Low carbon transition of the transport sector and acceleration of the RE transition are
processes that should happen in tandem and can be mutually reinforcing, in terms of benefits. The GOE
has active initiatives to partner with, among others, private entities to establish green hydrogen plants
from renewable sources. Researching and piloting hydrogen fuels, for example for long-haul trucks,
trains and ships, and supporting the roll-out of fueling networks in Egypt’s unique context would be a
sensible approach to prepare for future uptakes. For Egypt to be prepared for the transition, it will be
important to for the GOE to assess potential opportunities for policy instruments such as taxation and
incentive schemes.
3.2.5. Take synergistic actions across adaptation and mitigation
While mitigation and adaptation may sometimes appear as divergent paths toward greener
development, there are many adaptation actions that can make headway toward mitigation goals while
220 Enabling Private Investment and Commercial Financing in Infrastructure, World Bank Group (2018).
221 High Ambition Scenario assumes electricity generation GHG intensity of 0.147 kgCO2e/MJ in 2020 and annual change of -6.5% through 2050, as per
Abdallah, L., El-Shennawy, T. Evaluation of CO2 emission from Egypt’s future power plants. Euro-Mediterr J Environ Integr 5, 49 (2020).
https://doi.org/10.1007/s41207-020-00184-w.
222 See background paper on National Transport Emission Analysis background paper for details. The high ambition scenario assumes earlier shift to EVs
with cars, motorcycle, bus and minibus being EV by 2045, which accords with nearly all cars on the road being electric by 2060. This scenario sees a lower
uptake of CNG vehicles in later years, as EVs dominate. All new medium and heavy trucks are electric by 2050. The estimates assumed capital cost of
CNG buses at US$179,200/vehicle, and Battery Electric Bus at US$236,200, both of which include exercise tax and remain constant until 2050. The
analysis assumed additional fleet to be acquired to meet projected travel demand to be served by the bus sector, unconstrained, and discounted at 6%.
The assessment assumed away operation and maintenance costs.
47
also better preparing Egypt for an uncertain future. Actions at this intersection in agri-food, water and
urban development provide a no-regret pathway toward a low carbon future. Egypt should not miss the
opportunity to achieve the potential mitigation co-benefits of adaptation actions that can strengthen
the country’s position in international markets and global dialogues, and prepare for when carbon
markets provide new possibilities.
A focus on food and water systems is needed to strengthen climate adaptation, but it can also play a
significant role in supporting a low emission path. Climate-smart technologies in agriculture can
strengthen long-term resilience by preserving water and increasing agricultural productivity. For
instance, the introduction of drought-tolerant maize varieties in 13 Sub-Saharan African countries has
led to farmers reporting yields that are 20% to 30% higher than those of traditional varieties.223
Desalination is one of Egypt’s adaptation strategies being considered, with expansion plans to reach a
capacity of 6.4 million m3/day by 2050. This translates to a contribution of 2.33 BCM annually by 2050.
While this amount represents only 4% of the current 55.5 BCM Egypt relies on for total water available
coming into the country, it would be an important source of water for drinking, industry and tourism that
would be available regardless of climate impacts, droughts or man-made changes in Nile runoff.224 But
Egypt will require approximately 600 MW of incremental energy generation capacity to meet the needs
of desalination.225 Meeting this energy demand will require corresponding developments in the
generation, transmission and storage infrastructure feeding the desalination plants. To mitigate the
impact of additional energy requirements, Egypt should consider using excess capacity in the system
wherever feasible, creating transmission infrastructure and wheeling mechanisms to ensure that RE
supplies can be used for operations. This may also involve building bulk water storage capacity in
conjunction with desalination plants to allow flexibility in operations during times of day when RE is
available.
Energy generation from wastewater treatment (WWT) could be a triple win for Egypt and attractive for
private sector investment. According to plans from Egypt’s Holding Company for Water and Wastewater,
between 2020 and 2030, the capacity for secondary treatment and tertiary treatment is expected to
be doubled from 5 BCM (secondary treatment) and 0.3 BCM (tertiary treatment) to 10 BCM and 0.58
BCM, respectively.226 As Egypt expands its wastewater treatment capacity, it has an opportunity to
achieve a triple win. First, the treated wastewater can be reused in agriculture or other sectors, thereby
expanding the available water from a non-conventional source. Second, the process helps capture
methane, one of the most harmful GHGs, which accounts for 85% of the emissions from wastewater
treatment.227 Third, there is significant potential to generate energy from biogas produced during WWT,
which could help meet a sizeable share of the energy required for wastewater treatment. Wastewater
Treatment Plants (WWTPs) serving more than 10,000 people may be financially viable for energy
generation. Further, research shows that the cost of power from biogas tends to be lower than grid-
supplied power, which makes an even stronger case for such investments and increases financial
viability for the private sector.228
Despite the complex interplay between water and energy challenges, the goal of increasing water
availability is achievable, and can be reached while also reducing emissions by over 5 million tons of
CO2. Table 1 illustrates the effects on GHG reduction and increased water availability through the
implementation of different wastewater treatment, water supply and renewable energy use policies, as
223 CGIAR Research Program on Climate Change, Agriculture and Food Security, “CCAFS Big Facts - Drought-tolerant maize boosting food security in 13
African countries,” https://ccafs.cgiar.org/bigfacts/#theme=evidence-of-success&subtheme=crops&casestudy=cropsCs2
224 Global Water Intelligence (2020), “Egypt outlines $15 billion desalination programme”. Vol 21, Issue 10.
https://www.globalwaterintel.com/global-water-intelligence-magazine/21/10/general/egypt-outlines-15-billion-desalination-programme
225 Based on financial projections by the World Bank.
226 Based on discussions with HCWW and the MHUUC.
227 Egypt’s First Biannual Update Report for the UNFCCC, 2018.
228 Vazquez Alvarez,Victor; Buchauer,Konrad. (2015)
48
well as their effect on decreasing desalinization needs. The ambitious scenario, which considers the
implementation of additional policies that shift investments towards better demand management and
efficiency improvements, can result in an emissions reduction of over 5 million tons of CO2 compared
to the BAU scenario.229 Water savings from these measures could be used to meet organic growth
demands for energy in existing cities and minimize the need for expensive investments in desalination.
The High Ambition scenario focuses on improved demand management, better energy efficiency, and
a reduction in the amount of non-revenue water (NRW, which would reduce the need for investments
in water treatment (including desalination and WWT). Savings from avoided investments in water and
WWT are prioritized for NRW reduction, improved demand management and energy generation from
WWT with a lower investment envelope than what is required for current policies.
Table 3. Proposed actions and emissions in the water-energy sector under different scenarios for 2050
WB Reference
Current Policy High Ambition
Scenario
Policy Scenarios
Measures aligned with
Current levels Additional policy measures
Water Strategy 2037
Quantity Cost Quantity Quantity
Cost (USD Cost (USD
(MtCO2 (USD (MtCO2 (MtCO2
billion) billion)
(2050)) billion) (2050)) (2050))
$14.30 -
Emissions 5.67 $25 1.51 $19.1 0.43 - 0.53
$23.30
Water policies of the three scenarios
• Introduction of water
supply norms that range
Present per capita between 150 lpcd and
• Drinking water production
levels for water 400 lpcd for different
per person is reduced by
Drinking water supply & current categories of rural and
20% of the applicable
production Non-Revenue urban settlements with a
norms
Water (NRW) until target to bring average
• NRW reduced to 20%
2050 allocation to 242 lpcd by
2037
• NRW comes down to 20%
EE measures are
Current norms lead to implemented in WWTPs,
savings in water production: leading to a 25% reduction
6.4 million
Desalination 1/3 of the water savings in energy consumption per
m3/day by 2050
could be used to replace m3 of water treated. 1/3 of
desalination the water savings could be
used to replace desalination
• 100% population with
• 100% of access to water and
wastewater is sanitation
treated before • 100% of wastewater is • 100% of wastewater is
discharging treated before discharging treated before discharging
• Very few WWTPs • Very few WWTPs are • About half of WWTPs are
Wastewater
are retrofitted retrofitted with equipment retrofitted with equipment
with equipment for generating energy from for generating energy from
for generating sludge sludge; potentially
energy from generating between 15%-
sludge 45% of the WWTP’s energy
requirement
Energy grid
0.3 0.1 0.05
(MtCO2/MWh)
Methodological Note: The figures used for WB Reference scenario calculations are: (i) Water Production from CAPMAS 2021; (ii)
NRW from EWRA 2017-18; (iii) Wastewater generation from CAPMAS 2021; (iv) Desalination capacity considered at 6.4 million
229 See methodological note in Table 3.
49
m3/day by 2050 as per national plans; (v) Energy demand for desalination: 3.75 kwh/m3, 3 kwh/me (after 5 yrs); 2.25 kwh/m3
(after 20 years). Energy grid assumptions are consistent with WB energy model. Calculations for the Current Policy Scenario and
the High Ambition Scenario use the same data sources, but are modified by efficiency factors listed in the “water policies in three
scenarios” portion of the table. Costs are listed for each scenario and are not cumulative across scenarios.
An initial focus on low carbon cities can help accelerate progress toward ambitious GHG mitigation
goals and support adaptation while enhancing livability and productivity. Cities contribute about 80%
of Egypt’s direct GHG emissions230, while Greater Cairo contributes almost 50% of GDP. Interventions
in cities to manage urban form, improve connectivity and enhance the sustainability of service delivery
not only provide a path for adaptation and improved resilience, but also a way to strengthen Egypt’s
contribution to reducing emissions. These actions would go in line with Egypt's updated NDC and its
ambition to promote sustainability in existing and new buildings and urban developments, and also
increase resilience in cities. Moreover, low carbon cities also deliver significant co-benefits, including
health gains and job creation.231 A focus on green and resource-efficient buildings can ensure that the
expected 4.4 - 4.5 million additional residential units and the 23 - 24 million m2 of commercial buildings
(offices, hotels, retail establishments, etc.) that will be required by 2030 do not create additional
emission burdens. A focus on establishing and updating standards and leveraging existing certifications
(such as the EDGE certification), to reduce energy and water consumption as well as GHG emissions,
can foster private sector participation in this sector while contributing to emission reduction and more
efficient use of water and energy in cities.232
Sustainable waste management practices focusing on resource recovery maximization and circularity
can build resilience and accelerate the transition to low carbon. Given that waste generation is coupled
with Egypt’s population, economic and per capita income growth trajectories, the waste generation in
major Egyptian cities is anticipated to increase by 68% between 2021 and 2030, from ~12 million tons
annually to ~21 million tons. Waste generation is anticipated to grow at a faster rate due to the
combined effect of urban population increases in cities as well as the coupling of per capita waste
generation rates with rising incomes. Given existing service delivery levels, increasing waste generation
will result in a significant volume of mismanaged waste, to the tune of 135 million tons between 2021
and 2030 in the BAU scenario. Egypt's updated NDC also identifies as one of its ambitions an increase
in the efficiency of the waste system and valorization of waste through materials and energy recovery.233
The organic content (56%) in the mismanaged waste has a bio-energy resource potential of ~650
million Nm3/annum of biogas, which is currently unrecovered. This is a lost opportunity, especially
considering the increasing energy demands of urbanization. Similarly, ~51 million tons of mismanaged
plastic will be produced between 2022 and 2030 because of poor municipal waste management
systems, which can further increase Egypt’s contribution to marine litter. Moving up the waste
hierarchy234 implies both a reduction in waste generation and re-introduction of material resources into
230 World Bank staff calculations using EDGAR emissions data combined with information on urban extents. Crippa et al., 2021. “Global Anthropogenic
Emissions in Urban Areas: Patterns, Trends, and Challenges. EDGAR data is a global dataset and is based on based on mapping of emitting activities and
corresponding emissions factors that are in line with IPCC guidelines. The EDGAR data provides emissions of GHGs and air pollutants for all anthropogenic
emitting sectors, following the IPCC categories, namely 'energy-industry' (which includes the combustion in the power and non-power generation industries,
fugitive emissions, fuel production, refineries and transformation industries), 'residential' (which includes small scale combustion), 'transport' (which
includes both road and non-road transport), 'waste' (which includes solid waste disposal and waste water treatment) and 'other' (which includes all
emissions not included in the other categories such as industrial process emissions (e.g. cement production, iron and steel production, non-metallic
minerals production, non-ferrous metals productions, chemicals production), solvent use, indirect emissions for N2O, etc.). EDGAR data provides Scope 1
emissions spatially across types of settlements. City emissions are aggregated overlaying information on urban settlements with the EDGAR data.
231 The co-benefits from moving toward a low carbon path has been recognized globally with more than 700 cities having signed a pledge to ‘implement
immediate actions to cut emissions in half within the next decade and reach net zero carbon emissions globally by 2050’https://www.c40.org/news/cities-
committed-race-to-zero/. For more examples on co-benefits from investments in cities see https://www.c40knowledgehub.org/s/article/Climate-
Opportunity-More-jobs-better-health-liveable-cities?language=en_US.
232 EDGE, a green building certification system for emerging markets created by the IFC. EDGE is a measurable way for builders to optimize their designs,
leading to a more investment-worthy and marketable product. The EDGE software shows within minutes how committing to a few practical energy and
water-saving options improves building performance at little or no cost. The numbers are brought to the forefront to reveal the most economically viable
path to building green. EDGE focuses the certification process on technical aspects that yield meaningful results. This makes it easier for developers to
build a portfolio of innovation that attracts new customers and boosts brand equity.
234 The Waste Management Hierarchy principle has been widely adopted internationally to guide sustainable waste management practices. It is founded
on a principle of not discarding waste, unsafely, in the environment, but rather trying to reduce the amount of waste ultimately disposed.
50
the economy. The Circular Economy concept235 focuses on enhancing recycling and resource recovery
while also providing livelihood and economic opportunities to leverage local supply chains. But making
headway in this direction will require a comprehensive reform of the solid waste management (SWM)
sector to: (i) strengthen the institutions that regulate, manage and enforce the provision of SWM
services; (ii) build the infrastructure and systems needed to provide adequate local services in an
environmentally, climate change mitigation conducive, and socially sustainable manner; (iii) set up
funding mechanisms that will allow financially sustainable systems to operate; and (iv) raise awareness
and support from the public at large to expect and demand adequate services. A transformation of the
sector is possible in the medium term but will require strong leadership at the national, sub-national
(Governorate) and local government levels and clear, achievable targets. The 2020 ratification of the
Waste Management Law236 by the GOE is an initial step toward sustainable waste management but will
require measures to ensure enforcement and efforts to establish a supporting integrated policy
landscape.
Attention to how cities grow can help save time and improve livability through decreased travel times,
limited congestion, and reduced pollution. A BAU city expansion scenario suggests an expected 24%
increase in per capita daily travel distances between 2020 and 2030, from 13.6 km/capita/day to ~17
km/capita/day, increasing by a total of 15,480 billion VKTs. Increased travel distances hinder
accessibility to and inclusivity in key services and jobs, and increase emissions. ILO estimates suggest
that in African countries, a reduction in worked hours due to heat stress will result in productivity losses
of about 2.3%, the equivalent of 14 million full time jobs.237 Empirical evidence from global studies
further suggests a significant drop (~30%) in productivity as temperatures increase from 26C to 31C238,
while the productivity of heavy outdoor work could decline by 26.1% from current levels under the RCP
8.5239 climate scenario.240 Nature-based solutions have been shown to be cost effective. For example,
in the United States, across 52 coastal defense projects, nature-based solutions were estimated to be
two to five times more cost-effective at lowering wave heights and increasing water depths compared
to engineered structures.241 In cities, nature-based solutions serve as GHG sinks while also enhancing
resilience to climate change hazards such as heat stress and flooding, contributing to clean air and
delivering as much as five times cost effectiveness when compared to engineered solutions.242
Similarly, integrating low carbon and energy efficiency levers such as energy efficient technologies,
pumping systems, and efficient processes into infrastructure and service delivery choices across public
transport, water supply, wastewater management, and street lighting can result in dramatic GHG
reductions while also lowering the fiscal burden on governments and citizens through reduced
electricity bills.
235 It is an expression of an economic model that highlights business opportunities in the management of wastes and promotes incentives to reduce the
amounts of waste disposed. It aims to maintain and prolong the life of products/materials, and to extract maximum value from them for as long as
possible to avoid ultimate disposal.
236 Waste Management Law No.202 of 2020.
237 Working on a warmer planet: the impact of heat stress on labor productivity and decent work, ILO (2019).
238 Wyndham CH (1969), “Adaptation to heat and cold,”. Env Res 2, 442-469.
239 While long-term GHG emissions in the RCP8.5 are considered overly pessimistic, the CMIP5 climate change scenarios with RCP8.5 a provide useful
(and not implausible) high-warming scenario, which would be consistent with continued GHG emissions and high climate change sensitivity or positive
feedback from the carbon cycle.
240 Seung-Wook Lee et. al (2018). Effects of climate change-related heat stress on labor productivity in South Korea
241 Seddon Nathalie; Chausson Alexandre; Berry Pam; Girardin Cécile A. J.; Smith Alison and Turner Beth. 2020, “Understanding the value and limits of
nature-based solutions to climate change and other global challenges,” Phil. Trans. R. Soc. B3752019012020190120
http://doi.org/10.1098/rstb.2019.0120
242 Gregg et, al (2021): “Benefit Accounting of Nature-Based Solutions for Watersheds: Guide.”
51
4. Growth, Equity, and Financial Implications
Main messages
• Policy and institutional framework changes will be essential to facilitate investments in climate action.
A mix of policy instruments, including carbon pricing, regulation and taxation, can reduce the amount
of additional investment required, but a sizable flow of investments is still needed.
• The growth impact of climate-related investment can be positive, but financing should be carefully
managed by balancing sources (taxes, debt, reprioritization), spreading investments out over time, and
tapping relevant markets.
• A fiscal framework with integrated climate policy options would create a path to remove current carbon
subsidies and price distortions, which could finance some adaptation investments and incentivize
decarbonization.
• Enabling the transition toward a low carbon, climate-resilient economy will require:
o Levelling the playing field for private sector participation, which would support a transition toward
green, resilient and inclusive development. For climate action, the private sector has an essential
role to play as a financier, innovator, and provider of services to reduce inefficiencies and foster
innovation across sectors in water management, desalination, SWM, transport, and urban
development. Private participation across sectors would be supported by leveling the playing field
in infrastructure pricing, and international green markets, where the development of adaptation
standards and tools would reduce investment risk and the introduction of incentives would speed
the transition to greener productive processes and services. Public institutions must continue to
play the strategic role they have in driving climate priorities and action, while also creating climate
governance frameworks that include government, SOEs and other public sector entities.
o Strengthening green finance, which is key to achieve Egypt’s sustainable goals and is also
recognized by the NCCS 2050. To boost green public investment, Egypt needs to enable
coordination among the central government, different levels of government, and the broader
public sector. Strengthening public investment management, developing a strategy for the use
of public finance, public-private partnerships, and private finance for green investments defining
a disaster risk financing strategy, establishing more transparency in emissions reporting, and
leveraging innovative green financial instruments are key first steps.
o Embracing a people-centered green transformation, which should ensure a focus on the most
vulnerable through income support, reskilling and upskilling. Such a focus would provide these
groups with mechanisms to adapt to the economic and natural shocks and transitions, supported
by well-targeted and adaptive social protection systems, strategies to reskill and upskill human
capital for current market needs and upcoming green jobs, and awareness-raising to encourage
“green” behavior.
The current macroeconomic outlook illustrates the limited financing space available for climate action
within the fiscal framework. The economic slowdown at the start of the pandemic put pressure on
reserves and the current account.243 Egypt has a complex debt structure, with large refinancing needs:
60% of the country’s public debt is at maturity of one year or less.244,245 Despite an improved
government debt trajectory, the debt-to-GDP ratio remains high and is expected to have increased to
91% in June 2021.246,247 Likewise, the overall country fiscal deficit is forecasted to widen to 7.9% of
GDP in FY2021/2022 due to needed measures to mitigate the effects of global economic
developments, including the Ukraine crisis, soaring international prices, and monetary tightening, all of
which are driving up the cost of government purchases, subsidies, and interest payments.
243 IMF Country Focus: Egypt: Overcoming the COVID Shock and Maintaining Growth (July 2021)
https://www.imf.org/en/News/Articles/2021/07/14/na070621-egypt-overcoming-the-covid-shock-and-maintaining-growth
244 African Development Bank (2021) African Economic Outlook. https://www.afdb.org/en/countries/north-africa/egypt/egypt-economic-outlook
245 The domestic portion of debt remains predominantly short-term, making it subject to refinancing and interest rate risks. External debt on the other hand
is mostly medium- to long-term and remains largely on concessional terms. However, the recent increase in the share of foreign currency-denominated
debt (last estimated at 25.1 percent of total government debt at end-FY2020/21) is raising exchange rate risks. Financial Sector Development and Stability
Policy Loan (P178324), Program Document. Forthcoming.
246 World Bank. Egypt’s Economic Update. October 2021.
247 If fiscal consolidation resumes and growth remains firm over the medium-term, the government debt-to-GDP ratio is projected to decline to 91.5 percent
by end-FY2022/23 and further to 87.2 percent by end-FY2023/24. Financial Sector Development and Stability Policy Loan (P178324), Program Document.
Forthcoming.
52
Adverse global economic developments are a significant new shock to Egypt's macroeconomic
environment. Soaring international commodity prices and tightening global financial conditions have
been aggravated by the war in Ukraine. These unfavorable developments have contributed to large-
scale portfolio outflows from emerging markets, including Egypt. Egypt’s trade and tourism relations
with Russia and Ukraine compounded pre-existing weakness in external inflows.248 The adverse global
economic developments have also been fueling domestic inflation, causing the net export deficit to
widen, and exerting pressures on fiscal accounts.
The government's initial adjustment to the shock focused on relieving pent-up stress on the exchange
rate and real incomes, while over the longer-term, a more diverse export base will be needed. In March
2022, the CBE allowed the exchange rate to depreciate overnight by around 16% to stem the widening
trade deficit and the increasing pressures on external accounts. It also raised policy rates by a
cumulative 300 basis points between March and May 2022 to curb inflation and contain portfolio
outflows. Simultaneously, the government announced an income support package to partially alleviate
the impact of associated price increases, through hikes in public sector wages, pensions, tax measures,
and expanding the coverage of cash transfer programs. It is worth noting that these macroeconomic
policy adjustments also reflect the need to address structural weaknesses in the Egyptian economy
that result in the below-potential performance of non-hydrocarbon exports of goods and services as well
as foreign direct investments (FDI), which in turn contribute to the chronic trade deficit and render the
country susceptible to such external shocks.249
Over the medium term, the government debt-to-GDP ratio is expected to resume its downward
trajectory, but risks to debt sustainability will leave little room for debt-financed climate investments.
Declining debt is expected under the reference scenario, which assumes continued fiscal consolidation
that will sustain the primary surplus of at least 1.5% of GDP. In addition, debt reduction is expected to
be supported by favorable debt dynamics (as the real GDP growth rate is projected to exceed the real
interest rate—notably in light of the forecast uptick in inflation—at least through FY2022/23). The
factors that will dilute debt reduction efforts include: (i) expected domestic monetary tightening250 (in
light of rising domestic inflation, as well as the tightening of global financial conditions as advanced
economies unwind their accommodative monetary policies; thus, making it more difficult for emerging
markets, including Egypt, to access international debt markets on favorable terms) and (ii) continued
extra-budgetary transactions that will necessitate additional debt issuance (although these are
expected to gradually decline over the medium term as a percent of GDP).
This CCDR takes an adverse primary balance shock scenario as the starting point for analysis of
additional climate investments from a debt sustainability perspective, given the increased economic
uncertainty driven by fears of a global recession. A complementary interpretation would be that the
CCDR looks at the resilience of the debt to a primary balance shock if additional debt-financed climate
investments are made following the recommendations in this report. The additional climate spending
by Egypt as a result of the recommendations in this report is parameterized as a permanent increase
of 1% of GDP in public spending, financed 50/50 between higher debt and revenue mobilization. A
climate shock that comes on top of a primary balance shock assumes an additional increase in public
investments by 0.5% of GDP annually, targeted to a combination of adaptation and mitigation actions
against climate change. This is over and above a global recession adverse scenario primary balance
shock, posting a deficit in FY2023/2024, before starting to balance again and then rebound to a
surplus through FY2026/2027. In the modelling for this analysis, this combination of primary balance
248World Bank: Egypt Overview, Update March 16, 2022 https://www.worldbank.org/en/country/egypt/overview

249Unlocking Egypt’s Potential for Poverty Reduction and Inclusive Growth. Egypt Systematic Country Diagnostic Update World Bank (2021).
250The CBE has already raised key policy rates by 300 bps since March 21, 2022 and is expected to raise them further over the coming months. WB staff
estimates indicate that the budget deficit widens by 0.1 percent of GDP for every 100 bps increase in interest rates.
53
and climate shocks results in a primary deficit worth 1.5% of GDP in FY2023/2034, and even as the
primary balance reverses into a surplus, it remains at 0.5% of GDP throughout the forecast horizon.
The path of the debt after the primary balance shock and the additional 0.5% of climate-related
spending pushed much closer to the point where it stabilizes but does not decline, increasing the risks
to debt sustainability and market access. Under this augmented shock, the debt-to-GDP ratio initially
stabilizes at 92.7% in FY2022/2023—24, and then declines over the forecast horizon, albeit at a slower
rate compared to the reference scenario; reaching 87% by FY2026/2027, 9.7 percentage points higher
than its ratio under the reference scenario.
Investment scenarios derived from Electricity Planning Model (EPM) have a relatively small
macroeconomic impact relative to the benefits in terms of emission reductions. EPM’s well-specified
investment requirements are well suited to analysis of their macroeconomic impact in the
Macroeconomic and Fiscal Model (MFMOD-CC). Analysis done for this report (detailed in a background
paper) shows that external financing of EPM investments leads to a generally small negative effect on
GDP relative to baseline, with the effect peaking at around 1% below baseline in 2050 and little
variation across the scenarios (levels of emissions reduction) in the GDP impact: the decline is nearly
the same for the 60, 80, and 100% emissions reduction scenarios. The very small GDP decline
illustrates the standard crowding out channel and does to take account of the broader rationale to
undertake these investments. The impact on GDP through this single channel is due to the
macroeconomic equilibrium where higher capital inflows are mirrored in a trade balance adjustment
which slightly reduces GDP; there is not a positive output effect because the EPM investments are
generally replacing brown power with green, but not of themselves increasing output. If investments
are tax-financed, there would be a more negative impact for households (because more of the
investment will be financed via domestic savings) and for GDP due to the higher tax burden and higher
costs of capital.
To realize the adaptation and mitigation benefits of climate action, policy and institutional change and
investments will be needed. These will involve trade-offs between the present and the future and
between different groups in society at various points in time. Policy changes can reduce the investment
needs: for example, energy and water tariffs and/or regulation can reduce demand growth and thus
future investment needs. Nonetheless, a sizable flow of investments is warranted given Egypt’s
circumstances (urbanization and poverty patterns, dependence on the Nile, role of natural gas). This
will have macroeconomic implications in terms of fiscal and external balances and the time profile of
consumption and debt; in general, higher investment will involve modestly lower consumption over the
next 10 years. The macroeconomic impact of climate-related investment can be accommodated by
spreading investments out over time and by tapping relevant markets. This will require a combination
of fiscal space created by domestic revenue mobilization, improved quality of spending including
reprioritization of investment, and an integrated financing strategy that blends public debt with other
financing modalities including external and private finance. A carbon tax could be considered as an
option emerging from the integration of climate change considerations into the macro-fiscal framework,
including distributional considerations. This would lay out a path to remove current carbon subsidies
and price distortions, which would incentivize decarbonization through market-driven improvements in
allocative efficiency while adding to fiscal space.
Modelling of the agriculture sector within a macro-structural model of the overall economy shows that
there are modest GDP reductions relative to the baseline in drought years, but significant negative
drought impacts on the trade balance and employment. In a drought scenario (approximate 20% water
reduction from High Aswan Dam, GDP falls by around 1% in the impact year, with the impact tapering
off in subsequent years. However, with consideration of the additional effects of reduced water access
on the broader agri-food sector, total exports could fall by around 5%, and imports would rise to offset
54
lower domestic food production, compounding the deterioration in the trade balance. Perhaps most
importantly, there would be a sizable impact on jobs, especially in Upper Egypt, given the importance
of the agricultural sector for employment, especially of the vulnerable population. There is uncertainty
about the range of impacts due to the sizeable role of the informal sector.251
The negative impacts of reduced water access on the macroeconomy via agriculture can be effectively
addressed through specific adaptation investments. Model analyses project a reduction in net
agricultural production value amounting to US$1.65 billion per year if water supplies from the High
Aswan Dam are significantly reduced from 55.5 to 45.5 billion cubic meters per year. Investments in
irrigation modernization amounting to US$2.01 billion would not only even out this potential damage,
but add US$0.86 billion in value per year if water supplies can be restored to previous levels of 55.5
billion cubic meters. Annual investments already planned by the GOE amount to US$1.6 billion covering
(i) canal rehabilitation, (ii) mesqa (tertiary canal) improvement, and (iii) field irrigation modernization
targeting some 3.7 million feddans (1.5 million ha). Additional annual investment needs amount to
US$0.37 billion for the installation of improved water level and flow control systems (SCADA), as well
as the upgrading of groundwater monitoring and management systems. While significant in absolute
terms, this annual investment is equivalent to just 6% of Egypt’s total annual public expenditure of
US$35 billion per year. Technical assistance and institutional strengthening are estimated at US$142
million. The payoff from these investments depends on the implementing of recommended major
institutional and policy reforms also discussed in Chapter 3, such as a water allocation policy, to
strengthen ongoing efforts under the NWRP.
While macro modelling of investments in cities was not included in this report, an assessment of
investments needs in the 14 main cities suggests that while financing needs for transformative
adaptation and mitigation actions in cities are estimated at US$11.7 billion, avoided costs could be
four times that amount. A transformative scenario, including actions on information and information
systems, investments, improvements in urban planning, water and waste management, and resilience
of infrastructure, suggests that the financing cost of these actions is less than the expected costs of no
action. The scenario integrates cross-sectoral analysis (e.g., urban expansion, city planning and basic
service management), core climate change risk and GHG emissions of the 14 cities. Details of the policy
levers and expected gains are further explained in
Box .
251Currently, the macroeconomic modelling of agriculture is pending a more precise parameterization of the economic cost of reduced water supply on
sector and aggregate GDP. GTAP-BIO would show much larger economic impacts than a macro-structural model.
55
Box 4. A combination of policy and investment levers in cities can contribute to GHG
mitigation; an approximately 18% reduction (~50.5 million tons) of annual GHG emissions by
2030, compared to following current urbanization trends
As discussed in Chapter 1, a large portion of emissions takes place in cities. Analysis done for this report
assess the investment needs, costs avoided, and associated emission reductions from targeted
interventions to strengthen climate resilience in cities. In particular, the impact of adaptation, efficiency
and mitigation measures focused on cities and including infrastructure provision and service delivery
options listed in the table below. For this analysis, the starting point assumes that urban growth trends
continue with no significant changes made in urban policy. Also, the existing levels of service delivery gaps
persist during the modelled time frame across each of the sectors. The policy levers considered in the
transformation scenario are the following:
Nature-based • Shift to sustainable nature-based solutions to enhance resilience against
solutions (NbS) flood hazards and heat stresses (urban cooling systems through green
spaces)
Green building & • Mainstream levers for resilient and green buildings and housing in a
EE calibrated manner
• Promote EE retrofits for existing buildings and roof-top solar capacity
additions
Spatial planning, • Compact city development with sustainable and efficient land-use
land use & • Climate-risk-informed spatial planning – urban densification and
connectivity regeneration
• Integrated spatial and mobility planning – Transit Oriented Development
(TOD), modal shifts, and other instruments
• Electric Vehicles (EV) penetration and Non-Motorized Transportation (NMT)
solutions through integrated city planning
Urban water • Urban water use rationalization and improved demand-side management
management • NRW reduction and efficient systems
• Resource efficient systems for wastewater management – circular
approaches for industrial and agricultural usage
Solid waste • Adopt waste hierarchy principles to decouple waste generation from
management & urbanization and economic growth – focus on resource recovery (including
resource circularity energy), recycling and reuse
• Prevent open burning and dumping of waste – shift to safe disposal
systems
• Strengthen municipal waste management systems in an integrated manner
• Promote plastics recycling and implement policy levers for upstream
circularity
Mitigation & • Adoption of ICZM plan with focus on planning, regulation and mitigation and
adaptation to SLR adaptation priorities applicable to all urban and rural economic activities of
risks the coastal zone
• Protection of up to 38% of the high-risk, low-elevation coastal zone is a long-
term priority to protect costal zones economic activities.
The total investment needs between 2022 and 2030, are estimated to be USD$105 billion (at 2022 real
prices), of which
• US$5.6 bn is for NbS and Strategic Storm Water Drainage (SWD) network,
• US$32.4 bn for Integrating green housing & EE with urbanization,
• US$1.65 bn for urban water rationalization & sustainable wastewater management,
• US$57 bn for urban Mobility and landform changed,
• US$8.4 bn for waste management & resource circularity
An additional US$4.35 bn (at 2022 prices) is cumulatively needed to meet the O&M needs of the
infrastructure created over the period 2022-30. The annual financing needs (annualized capex based on
service life of assets), as shown in the figure below, of the transformation scenario are estimated at
USD$11.7 billion, with annual economic benefits—considering economic costs avoided—reaching 4.3
times the financing needs. Action across waste management and resource circularity provides wider
benefits in terms of avoided economic and productivity costs. In terms of mitigation, the transformative
scenario anticipates a reduction of ~50.5 MT of GHG annually compared to the starting point (13.6 MT
from NbS and strategic actions in the SWD network; 16.1 MT from actions integrating green housing & EE
56
with urbanization, including better urban mobility and management of urban form; 5.5 from urban water
rationalization and sustainable wastewater management; and 15.4 from waste management and
resource circularity investments).
Source: Resilient Cities and Coastal Economies. Egypt CCDR Background Note. World Bank (2021).
Efficient public spending on human development sectors will also be needed to enable the transition.
The level of spending in these sectors is inarguably low. Social assistance spending, for instance, has
remained unchanged at an average of 4% of GDP since the 2016 reforms and, while cash transfers are
gaining more weight, they remain small. Moreover, in health and education, increased spending has
corresponded to a decline in real terms. Financial allocations do not meet increasing needs brought by
population growth, nor respond to other changes in population dynamics. These rigidities present a
challenge given flexibility will be required for local services to adapt and respond under increased
uncertainties brought by climate change. Public expenditure on the key social sectors reveals a
longstanding paradox of high aggregate spending but low salaries, pensions, and transfers at the
individual/household level. Taken together, these shortcomings have affected the quality of public
social services, which are consequently not fully utilized. This leads to the paradoxical situation of the
private sector responding to a gap in core public service provision, while the public sector is
simultaneously active in commercial sectors.
4.1. Create the enabling environment needed to support the transition

toward a low-carbon and climate resilient economy
Mainstreaming climate change in core public sector operations is critical to enable successful climate
change adaptation and mitigation. Egypt’s Green Financing Framework is an important step toward
supporting climate investments, but further progress in allocating public spending toward climate-
57
responsive projects depends on integrating climate in public financial management systems.
Specifically, climate change impacts and the fiscal impacts of climate change policies must be
integrated in fiscal plans and budgets (including both capital and recurrent budget processes), and
coordination must be ensured across government at the central level and sub-central levels, as well as
with the broader public sector receiving off-budget financing. The current dual budgeting system creates
a disconnect between budget maintenance and the allocation of resources to investments in line with
strategy documents (e.g., Vision 2030). The institutional and governance frameworks for public
investment management should also be strengthened, through comprehensive and standardized
requirements and methodologies for project preparation, selection, prioritization, and implementation.
These requirements and methodologies should reflect climate objectives. Increased coordination
between MoPED and MoF in the selection and allocation of financing is needed, including strengthening
allocation at the subnational level to better reflect local priorities and ensure alignment with climate
action. In addition, a strong public investment management system requires a focus on existing assets,
not only on the flow of new projects. Egypt’s public assets are prone to climate risks, underscoring the
need to improve asset management to facilitate climate resilient capital assets and avoid stranded
assets.
Further, government needs to play a steering role in identifying priorities for climate investments and
attracting private sector participation. The government is best placed to identify the sectoral, spatial,
and distributional trade-offs of climate investments and set priorities based on the country’s climate
change risks and adaptation and mitigation objectives. Sensitizing line ministries, local governments,
and financial institutions to green financing is needed so they can also help promote public and private
sector engagement on and investment in green infrastructure, technologies, and value chains that
contribute to mitigation and adaptation solutions. The monitoring, reporting, and verification (MRV)
systems highlighted in Chapter 2 can help assign emission reduction impacts to investment projects
and through that, help leverage international markets for additional green financing.
Strengthening the governance framework for SOEs will facilitate climate action and private sector
investment. The widespread presence of SOEs across the economy affects competition and market
contestability. Based on publicly available OECD and Egyptian records, only China may have more SOEs
than Egypt. The presence of SOEs in almost every sector in Egypt contributes to the private sector's
perception that it is competing on an uneven playing field, which deters private domestic and foreign
investment.252 Recent amendments to the SOE law enhance governance, disclosure, transparency, and
accountability for some SOEs. Nonetheless, the sustained growth of state-owned enterprises, and the
complex framework in which they operate, feeds private sector uncertainty. To improve overall
productivity but also to support climate action and foster private participation in the transition toward
a sustainable and resilient growth model, the legal framework regarding SOEs should be reformed to
(i) enhance the oversight and transparency of the financial operations of SOEs and Economic
Authorities; (ii) clearly separate the state’s role as owner from sector regulator, and (iii) bring the
regulatory arrangements for these entities in line with those that govern their private sector
competitors.253 The pending publication of a state ownership policy will be an important opportunity to
provide clarity in these areas.
Specific regulation can be introduced to include climate performance targets and ensure climate
change ambition is included in SOEs corporate strategy. This would both complement Egypt’s current
initiatives to improve SOE governance and align with expectations as the government moves toward
increasing private ownership in SOEs. SOEs should also follow through with the recommendations
highlighted throughout Chapter 3. For example, industrial SOEs should pay water tariffs that are
252 Country Private Sector Diagnostic: Creating Markets in Egypt, IFC, (December 2020).
58
reflective of water scarcity, and the government should ensure that they are compliant with standards,
such as those regarding motor efficiency.
The private sector has an important role to play—as a financier, innovator, and provider of climate-
friendly goods and services—but also as contributor to and affected party of climate impact. Egypt’s
fiscal space, while recovering from COVID-19, still faces high risks to the debt outlook arising from the
level, maturity, and currency structure. These risks underscore the need to leverage private financing
for adaptation and mitigation actions. It is key to engage private sector expertise, sophisticated
technologies, and/or the establishment of private and public-private financing schemes to reduce
inefficiencies in water management, scale up desalination, and increase energy generation from SWM.
Likewise, the introduction of measures that enable private sector adoption of green technologies and
that provide tools and services to help firms mitigate the risk of asset damages or supply chain
disruption will be pivotal to meet changing demand patterns, alleviate pressure on natural resources,
and build resiliency to climate hazards.
The private sector can help strengthen the climate resilience of infrastructure, including transport;
initial actions focusing on urban areas can help reduce costs, advance mitigation, and maximize
returns. Low carbon municipal waste and water management, energy-efficient retrofits of buildings, and
green urban transport represent a minimum of US$38 billion in investment opportunity for the private
sector in Egypt between 2020 and 2030, including green and resilient infrastructure and supporting
decarbonization of diverse sectors.254 In the transport sector, potential projects include fleet capacity,
replacement with low/no emission fleets, non-motorized transport promotion, dry ports, cargo
terminals, bus rapid transit, and light rail. Owners of incumbent transport infrastructure assets (e.g.,
railway and highway authorities) can also use innovative financing mechanisms such as asset recycling
to modernize systems. To enable private investment in municipal Solid Waste Management (SWM), the
Ministry of Environment and the Ministry of Local Development should explore ways to leverage the
Waste Management Regulatory Authority’s budgetary appropriation and develop tools for active private
participation in SWM, particularly in treatment and disposal facilities for all types of waste. Finally, the
significant potential to generate energy from biogas through WWT, as well the lower cost of power from
biogas as compared to grid-supplied power makes wastewater treatment a strong and viable case for
private sector participation.
Developing standards, as well as adaptation and resilience taxonomies, and making climate risk and
vulnerability data widely available can help direct private sector investments towards adaptation and
resilience. The government can guide and strengthen private investment toward building resilience by
developing and enforcing standards, including building and water codes. For example, to take
advantage of the economic and adaptation potential of green and resource-efficient buildings,255 Egypt
could complement existing standards and design-focused certifications with building performance
rating systems and certificates such as the EU’s Energy Performance Certificates, which help measure
and monitor buildings’ energy performance. Moreover, greater granularity in the mapping of climate
risks and weather forecasts against key sectors and competitiveness assets, including the national
databases of firms, would help firms improve resilience planning and insurance companies design
appropriate insurance products. In agriculture, for instance, the development of information systems
for investors, including information on water resource available, soil quality, and Information
Communication and Technology or other services available, would reduce investment risk while
ensuring sustainability. Finally, introducing financial products such as disaster risk insurance and loan
254 US$38 billion represents the minimum investment. “A Green Reboot for Emerging Markets,” IFC, Guidehouse Insights, 2020.
255Building green could range from savings of 0.5% to 12% in additional costs. Green buildings can decrease operational costs by up to 37%, achieve
higher sale premiums of up to 31% and faster sale times, have up to 23% higher occupancy rates, and have higher rental income of up to 8%. Green
Buildings, A Finance and Policy Blueprint for Emerging Markets, IFC, 2019.
59
assistance for recovery and rebuilding are needed to boost climate resilience while allowing firms and
households to manage residual risk.
Reducing inefficiencies in how resources are valued, as mentioned in Chapter 3, is needed to ensure
the attractiveness of key sectors to private investors, while also freeing up fiscal space for more climate
action. Completing the transition away from fossil fuel subsidies and making headway on a new tariff
model in the water sector, as discussed in Chapter 3, are essential to increase attractiveness for the
private sector. For example, in desalinization, the incremental capex requirement over the next 10 years
is expected to be US$3.45 billion, in addition to the operation and maintenance outflow of US$390
million per annum by 2032.256 While private sector financing is one of the options for mobilizing the
required investments, the current water tariffs are not sufficient to cover regular operation and
maintenance costs, increasing the risk for investors.257 To mobilize the private sector, Egypt should
consider a combination of financing options including viability gap funding, annuity models, and
guarantees for scaling-up desalination within an affordable fiscal envelope. The same holds true for the
transport sector (as also mentioned in Chapter 3).
Public-private partnerships are one mechanism to mobilize the private sector in such public
investments. Egypt’s PPP Law No. 67 of 2010 permits authorities to enter into PPP contracts for all
infrastructure and public services projects, to include the construction, financing, and maintenance of
such projects.258 However, according to Egypt’s 2020 Country Private Sector Diagnostic, very few PPP
transactions closed in Egypt over the past few years. Amendments approved in 2021 to the 2010 law
help to integrate PPP screening into the public investment management process. Once the inter-
ministerial committee contemplated in the amended law is established, the government will need to
develop and publish the executive regulations, particularly those related to unsolicited proposals and
direct contracting. Additionally, to strengthen the alignment between the PPP law and Egypt’s climate
commitments, secondary regulations should be introduced to integrate environmental sustainability
and climate resilience into PPP processes.
International trade, including new trade rules and preferences shifting toward lower-carbon-content
goods, will generate transition risks and opportunities for Egypt’s economy, and actions to facilitate this
transition can help avoid future losses. Aggregate impacts on Egypt from the European Union’s NDCs
and their implementation through the EU’s Carbon Border Adjustment Mechanism (CBAM) are expected
to be small (0.6% decline in real income, 2.6% decline in outcome, and 0.3% decline in imports and
exports by 2030).259,260 However, losses can be expected in a small number of sectors, and with the
implementation of the EU’s NDCs, there will be a sharp reduction in fossil fuel demand, resulting in a
decline in output in 2030 for Egypt. This decline in fossil fuel demand means that the main contributors
to the reduction of output will be the industries of gas power (output reduction of 15% or US$52
billion)261 and electricity transmission (output reduction of 5% or US$22 billion). Projected exports
losses will be the highest in the electricity transmission, oil, and chemical (including fertilizers) sectors,
with declines of 8.3%, 4.3%, and 3.9% respectively. These impacts underscore the importance of taking
the steps highlighted in Chapter 3 to decarbonize the oil, gas, and electricity sectors.
256 Climate Change and Water-Food Energy Nexus. Background Paper for Egypt CCDR, World Bank (2022).
257 Egypt: Enabling Private Investment and Commercial Financing Infrastructure, World Bank.(2018).
258 World Bank 2018 https://documents1.worldbank.org/curated/en/588971544207642729/pdf/132784-v2-WP-PUBLIC-Final-Report-Egypt-InfraSAP-
English.pdf.
259 Various scenarios are explored to better understand the long-term quantitative impacts of collective NDCs and the EU CBAM on Egypt’s economy. The
respective scenarios were implemented in an Environmental Impact and Sustainability Applied General Equilibrium (ENVISAGE) Computable General
Equilibrium (CGE) model. Full results available in World Bank (2022) Boosting Green Growth of Egypt’s Private Sector. Egypt’s CCDR Background Note
260 The CBAM is linked to the EU Emissions Trading System (ETS). The sectors covered by the existing EU ETS include power and heat generation, energy-
intensive industrial sectors and aviation within Europe. The CBAM modelling conducted only includes the products currently covered by CBAM namely
cement, aluminium, fertilizer, electricity production, iron and steel. If CBAM is extended to additional product categories and/or additional countries adopt
CBAM, the effects on Egypt will likely be larger. Note for example that automobile, aeronautic and electric industries are neither covered by the EU ETS nor
are they considered energy/emission intensive activities (using broad definitions). The EU has not imposed a carbon price on light manufacturing sectors,
nor discussed an imposition of CBAM on them.
261 All values use 2014 US dollars.
60
The private sector in Egypt and abroad is recognizing the market opportunity that the transition to a
green economy offers, but non-tariff barriers to environmental goods and services may merit review.
The nascent and growing “clean tech” innovation scene in Egypt is evidence of the opportunities seen
by the private sector. This is also evidenced by emerging exports of environmental goods (EG) and
services. Start-ups in areas such as recycling, biowaste, and soil sensor technology are also emerging.
Some Egyptian firms have been able to enter the international market for environmental goods, but
export levels remain low; Egypt’s exports of EGs peaked at US$126 million in 2015 and declined to
US$76 million in 2020. Egypt has a lower EG export CAGR than that of the global EG market, and of
benchmark countries such as Tunisia, Turkey, Vietnam and Malaysia. The private sector’s knowledge
of feasible clean technologies and ease of access to those clean technologies are important levers in
the transition to low carbon. Egypt has initiated several programs that contribute to enabling the
transition by creating demonstration effects.262 In terms of sourcing the actual technologies, many of
these technologies are available in the international market. While Egypt’s import tariffs on
environmental goods and services are comparatively low, non-tariff barriers are extensive and may
merit review.
A carbon tax, implemented within the framework of the Medium-Term Revenue Strategy and with
complementary measures in place to ease regressive impacts, could help reinforce the positive impacts
of sector-specific actions on the wider economy and provide resources to complement private sector
investments in adaptation and mitigation. The impact of a carbon tax on growth and distribution
depends on how the additional revenues are used. If revenues are used to reduce other tax rates in a
way that stimulates investment, such a tax could be growth-enhancing. If the additional revenues are
applied to transfers, adverse distributional impacts can be mitigated or even improved upon.
A basic analysis of carbon tax impacts for Egypt suggests that a carbon tax can help increase revenue
by up to 3% by 2033, but detailed assessments on economic, social and environmental implications
would be needed before implementation. This is a standardized methodology for the initial simulation
of carbon tax impacts, including distributional impacts. It is best used as a quick diagnostic and for an
overview of the scale of impacts, which can then be used to identify areas where comprehensive follow-
up analysis of poverty, social, and sectoral impacts is needed. For Egypt, the CPAT model uses data
from the 2019 household survey. It is important to note that CPAT is a tool to inform climate-fiscal
reforms (carbon taxes, subsidy reform, revenue spending etc.). It is not a tool for decarbonization / net
zero analysis. The CPAT analysis for this report suggests that a carbon tax set at $25 per ton of CO2,
along with a fossil fuel subsidy phaseout, could increase revenue as a share of GDP by up to 3% by
2033 if applied to all carbon fuels used in different sectors and industries.263 The associated spending
would generate additional growth over the baseline of around 0.5% per year (to a total of 6.3% in the
medium term). If the tax is gradually raised from US$25 to US$75 with a pro-poor mix of revenue
recycling, the growth effect rises to 1%. Another study on Egypt suggests that if hypothetical carbon tax
revenue is used to finance a reduction in tax rates on domestic sales, it could have a progressive
distributional effect, with low-income households benefiting disproportionately from this type of
policy.264 It is important to note that complementary policies, including social protection and those
highlighted above regarding SOEs, must be in place in order for a carbon tax to be effective and
262 Examples include with the help of international partners such as the Egyptian Pollution Abatement Program, the Green Value Chain Program, and the
Industrial Energy Efficiency Project to avail information, finance and technical support to firms that would like to invest in upgrading. Such programs play
a vital role in enabling.
263 The study assumes the use of revenue to increase government spending (20%) to invest in renewable energy (40%) and for cash transfers/income tax
cuts (50%).
264 In this study of the impact of carbon taxation we consider the introduction of a carbon tax at a uniform final rate of US$20 per ton of CO2 emissions on
refined petrol and natural gas. As a share of GDP, the carbon tax revenue rises gradually from 0.4 %in the first year to about 2.1% in the long-run equilibrium.
An expansionary impact is possible (+2% of GDP in the model) if the carbon tax revenue is used to reduce other distortionary taxes, Abeer Elshennawy &
Dirk Willenbockel, 2021. "The Effect of a Carbon Tax on The Egyptian Economy: A General Equilibrium Analysis," Working Papers 1525, Economic Research
Forum, revised 20 Dec 2021.
61
additional analysis on the economic, social and environmental impacts would be required to inform the
implementation of such instrument.
A strategy to implement carbon credit markets under article 6 would be critical to ensure alignment
with Egypt’s NDCs and national development priorities, as well as to provide certainty to the private
sector seeking to invest in carbon credit generating projects. Of particular relevance would be to define
the sectors allowed to monetize carbon credits in international markets avoiding strategic sectors for
Egypt’s current and future NDC pledges. Components of the strategy should include: i) a policy
framework defining the roles and responsibilities of government entities in carbon credit markets, as
well as the corresponding legal and regulatory frameworks; ii) the development of a national registry
system with a monitoring, reporting and verification (MRV) system; iii) a framework for project
certification aligned with international standards and credible to international demand for carbon
credits; iv) a framework ensuring environmental and financial integrity of the carbon credit market (the
latter would include the market regulations and architecture from a financial perspective). The strategy
would need to be developed gradually as the market grows, including institutional capacity building in
the relevant government entities, such as the Ministry of Environment, the Ministry of Finance and the
Financial Sector Regulatory Authority. Finally, the carbon credit markets strategy would need to be
coordinated with Egypt’s planned strategy to access international blended finance for national strategic
projects linked to NDCs.
4.2. Mobilize finance to build resilience to climate and support the

transition to low carbon
To implement the needed adaption and mitigation actions, it will be necessary to mobilize private
finance to complement public investments to build resilience to climate. Some milestones have been
achieved in green finance in recent years, but more financing will be necessary to implement the priority
actions highlighted in this report. Stronger actions to ensure that public investments and expenditures
are aligned with climate action can provide the right signals to the private sector and help leverage
additional resources.
The banking sector’s high exposure to transition-sensitive industries deepens transitional risks. These
sectors include, among others, construction; oil, gas and petrochemical; iron and steel; and real estate.
Oil, gas and petrochemical alone represent 16% of banks’ total credit exposure to the largest 100
borrower customers in the public and private business sectors. These three industries are likely to be
particularly vulnerable to transition risks, since the energy transition toward cleaner options is a core
element of mainstreaming climate change into the development agenda. The banking sector also has
some exposure to the tourism and agriculture sectors, which are also vulnerable to physical climate
risks such as prolonged droughts, heat waves and flooding.
Leveraging the private sector for climate action will require deepening green finance and enhancing
climate financial risk management through better monitoring and public access to climate information.
A recent stress test conducted by the Central Bank of Egypt (CBE) suggests that increases in
temperature driven by climate change could lead to a decrease of up to 50% in the weighted credit risk
rating for high-risk sectors (e.g., agriculture, tourism, and tobacco) and up to 25% for medium-risk
sectors (e.g., construction, oil and natural gas, and petrochemicals). The stress test also identified
possible operational risks stemming from physical damage to assets from increased natural disasters
and disruptions to banks’ supply chains. To better manage climate-related financial risks, they much
be regularly assessed and monitored. To promote the integrity of green finance instruments, the
Financial Regulatory Authority (FRA) is developing a sustainability disclosure framework (ESG KPIs) that
62
would first apply to the largest firms.265 To boost transparency and allow growth in the demand for and
supply of green finance, an important first step would be the endorsement of the Environmental
Sustainability Standards prepared by the Ministry of Environment, as those standards would support
the development of a green taxonomy for the financial sector. The second steps both have to do with
building transparency. In the short term, financial institutions should be required to collect and report
climate-related risk information as part of their regular reporting practices. In the medium term, national
disclosure and reporting standards that are aligned with international best practices should be in place
for financial institutions’ public disclosure.266 Lastly, to strengthen the contribution of infrastructure to
Egypt’s NDCs and facilitate the mobilization of private sector financiers seeking ESG assets, the
authorities could consider aligning PPP project screening and structuring with ESG criteria as is done in
the financial sector.
Further efforts are needed to develop and expand the availability of financial instruments that can help
government, households and firms manage residual risk. Despite Egypt’s high vulnerability to climate
change, overall insurance penetration in the country was just 0.7% of GDP in 2019,267 and plans for
the development of a catastrophe insurance market have been delayed due to COVID-19. A Disaster
Risk Finance strategy and ex-ante pre-planned financial response instruments would help reduce the
economic, fiscal, and social impact of climate events. In the short term, Egypt could begin by drafting
financial preparedness plans, developing disaster risk insurance products (such as natural catastrophe
insurance), and developing risk transfer products such as partial credit guarantee schemes to act as a
back stop to extreme climate events.
Finally, the development of a systematic strategy on structured finance and private placement
instruments linked to green finance can help bridge the financing needed for climate action. Financial
sector authorities, such as the CBE and the FRA, have taken important steps to develop the institutional
and governance framework for sustainable finance and raise awareness about risks, including through
the recent publication of the CBE’s Guiding Principles for Sustainable Finance in July 2021, the
publication of technical papers on sustainable finance policies and strategies, and the creation of a
new FRA think-tank and training center on sustainable finance. To build on previous success, Egypt
could consider tapping the international green capital market again, while working on strengthening
issuer capacity, reducing barriers to entry, and increasing awareness in order to promote demand for
green and sustainable debt and loans in the domestic market. As a next step, Egypt could leverage
existing initiatives and momentum on securitization of future cashflows and on private equity and
venture capital (PEVC) to finance MSMEs. For example, Egypt could explore replicating efforts seen in
Colombia of creating a climate change blended finance platform for infrastructure.
4.3. Ensure a focus on the most vulnerable

The poor and vulnerable face locational, asset, and human capital disadvantages that deepen the
challenges they already face. In cities, the poor are more likely to live in hazardous sites and slums,
have higher exposure to air and water pollution and congestion, and lack green amenities. Further, poor
households do not own many assets, nor do they have the right skills to enable them to cope with
shocks, self-insure and adapt. While a high share of the poor is located in rural areas (67% in 2017),
poverty has been urbanizing. Between 2015 and 2017, while the share of urban population remained
relatively stable, the share of the poor living in urban areas increased by 6 percentage points. In 2019,
about 30% of Egyptians were living in poverty and another 30% had consumption levels very close to
265 FRA issued a decree in July 2021 on mandatory ESG disclosure for EGX-listed firms and NBFS companies.
https://enterprise.press/greeneconomys/esg-reporting-is-coming-to-egypt-in-2022
266 Disclosure requirements could include, for example, guidance on publishing the approach to climate risk in firms’ annual financial reports requirements
for additional climate or ESG/climate risk reporting, and data quality expectations, in line with the recommendations of the Task Force on Climate-Related
Financial Disclosures (TCFD).
267 This is just under the emerging market average of 1.3% and far below the global of average of 6.2% (Insurance Federation of Egypt annual report 2020,
www.ifegypt.org/).
63
the poverty line, making them vulnerable to fall into poverty if they experience income or expenditure
shocks. Furthermore, women are also more vulnerable to climate change due to their low access to
income opportunities, higher engagement in the agriculture sector, limited productive assets and
access to services, and limited social capital and voice in decision-making. The differential impact on
women is also recognized in the NCCS 2050, which includes a sub-goal on helping them adapt to
climate change. The poor are also at increased risks from the transition to a low carbon economy, since
they are more engaged in informal, agricultural, and “brown” activities.268 It is estimated that about
40% of Egypt’s employment share is concentrated in brown sectors, and 58% in yellow sectors. For
example, sectors like construction and transport sectors are identified as brown sectors, and crop and
rice are identified as yellow sectors, with a large potential for emissions reduction. At the same time,
these sectors employ a large share of poor (47% in crops and rice and 12% in construction) and informal
workers (28% in crops and rice, and 17.4% in construction).
With the climate impacts on food prices and availability expected to be large, gradually reforming the
food subsidy program can contribute to strengthening food security, enhancing resilience of the most
vulnerable to the impacts of climate change, and reducing the fiscal burden. Climate change will likely
impact food prices in a context where Egyptian households spend almost 40% of their disposable
income on food. Wheat, a key food staple that represents 35-39% of per capita caloric consumption in
Egypt, is highly susceptible to variations in international markets, since 62% is imported. A US$25
increase in global wheat prices is expected to increase the Egyptian government’s wheat imports bill by
approximately USD$128 million per year. This is equivalent to a 10% increase over the original budget
for wheat imports for the Egyptian Food Subsidy Program, which represents 1.4% of GDP annually and
accounted for more than 32% of total social assistance spending in FY2020. While food subsidies
generate significant anti-poverty impacts given their large coverage amongst the poor, evidence shows
that the program has higher costs and lower effectiveness than other social assistance schemes.
Importantly, the program still has substantial leakages to higher income groups, despite recent efforts
by the government to gradually reduce leakages. Accordingly, in comparison to the Takaful & Karama
Programme (TKP) cash transfers, for instance, Egypt’s food subsidy programs score lower in terms of
effectiveness.269 To achieve better adequacy and larger efficiency gains, it would be necessary to make
coverage, adequacy and the efficiency of targeting more stringent. The options for reforms include: (i)
raising the adequacy of food subsidies for the poor; (ii) adjusting the food voucher system; (iii) gradually
moving from food vouchers to cash; and (iv) assessing the impacts of a general price increase of bread.
Simulations indicate that improvements in the program’s targeting would have positive impacts for the
poor, slightly negative impacts for non-poor households, and a very important positive fiscal impact.270
If the cost savings from these reforms are channelled into higher investments, longer-term growth
benefits would eventually outweigh short-term welfare losses.271
The adaptation interventions needed for cities may raise costs, which would disproportionately impact
the most vulnerable, suggesting the need for supporting mechanisms for the urban poor to mitigate
these effects. The investments needed in public transport, housing, and waste management in urban
areas are expected to result in higher consumer prices in the short term. Households spend around 4%
268 Brown sectors are identified as those emitting significantly more GHG emission than the world’s median for such sector. Yellow sectors are identified
as those sectors emitting a more GHG emission than the world’s median for the sector. See background note on World Bank (2021), Jobs for a Green,
Resilient, and Inclusive Recovery.
269 For instance, the share of the population receiving the ration card and bread subsidies in 2019/2020 reached 76% and 60% of households in the top
two deciles, respectively. On the other hand, 86% of Takaful & Karama beneficiaries are amongst the poorest 40% of households. Egypt Social Public
Expenditure Review. World Bank. (2022).
270 Breisinger, Clemens; Kassim, Yumna; Kurdi, Sikandra; Randriamamonjy, Josée; and Thurlow, James. 2021. Food subsidies and cash transfers in Egypt:
Evaluating general equilibrium benefits and trade-offs. MENA RP Working Paper 34. Washington, DC: International Food Policy Research Institute (IFPRI).
271 The analysis suggests that the faster growth from eliminating food subsidies is not enough to offset the slower growth caused by expanding cash
transfers. Raising taxes to finance cash transfers for poor households leads to a small, but persistent, decline in consumption amongst nonpoor
households. However, the large deceleration in economic growth, caused by government borrowing to finance this program would lead to larger welfare
losses for nonpoor households over time (and smaller welfare gains for poor households). Breisinger, Clemens; Kassim, Yumna; Kurdi, Sikandra;
Randriamamonjy, José; and Thurlow, James. 2021. Food subsidies and cash transfers in Egypt: Evaluating general equilibrium benefits and trade-offs.
MENA RP Working Paper 34. Washington, DC: International Food Policy Research Institute (IFPRI). https://doi.org/10.2499/p15738coll2.134427
64
of their consumption on transport (2017/2018). A simulation of the short-term impacts of an increase
in public transport costs272 predicts a small reduction in consumption—less than 1%.273 Investments in
waste management may also translate into higher prices, but these are not expected to have significant
direct distributional implications. Investments impacting housing costs, however, could have larger
welfare implications for the poorest households, which are more likely to be renters and for which rental
costs comprise about a quarter of total expenditures.274 The impacts would depend on the ability of
households to switch to cheaper options, but on average, a 20% increase in housing rents could
increase urban poverty by about 1 percentage point and the welfare loss in terms of consumption would
range between 1.8% (poorest decile) to 0.45% (richest decile). Actions that provide well targeted
support to affected households will be needed to minimize the impacts on the most vulnerable.
Examples include targeted interventions to ensure affordability of urban services and guarantee that
housing options are available for low-income populations.
Raising residential water services tariffs and removing electricity subsidies will also have distributional
impacts, but careful design and sequencing of the appropriate support mechanisms will protect the
poor. A simulation of the impact on household welfare of removing the remaining energy subsidies
suggests the impacts on poverty are small, leading to an increase in the poverty rate of about half a
percentage point,275 with relatively higher impacts in rural areas.276 Further, water expenditures
represent only about 1% of households’ total expenditures (HEICS 2017/18), with only minor
differences across deciles: while the lowest decile spends 1.5% on water, the top decile spends 1%.
Raising water cost by 20% would lead to a very small increase in poverty (one tenth of a percentage
point), suggesting there is scope for raising residential electricity and water tariffs while ensuring
inclusion.277 As tariffs are revised, it would be important to target affected households to ensure no one
is left behind, and that any increases in poverty, however small, are avoided. Complementary analysis
to identify those affected to provide targeted and effective support would be important.
Equipping Egyptians with in-demand skills will be a critical element in implementing the move toward a
low carbon development path and in fostering better overall labor market outcomes. Decarbonization
of industries, of water, agriculture, and food production, and of the transport and energy sectors
requires the introduction of new technologies and approaches. Achieving Egypt’s targets for renewable
energy and energy efficiency could translate into 2 million additional new job opportunities between
2020 and 2050,278 which is equivalent to about 2.2% of the unemployed in 2020.279 But critical
workforce skills are weak in Egypt, stressing the need for skilling and upskilling of the labor force.
Despite a high unemployment rate and a relatively small formal economic sector, employers encounter
difficulties in finding employees with suitable skills. About 19% of employers in Egypt identified lack of
skills as a key barrier to their competitiveness and growth.280 The skills of the current Egyptian
workforce underperform on the Global Competitiveness Index (GCI), where Egypt ranks 99 out of 141
countries.281 The skills of the future Egyptian workforce rank even lower, at only 133 out of 141
272 Estimation of a 5 to 20% price increase.

273 The impact will be twice as larger for the poorest deciles, with poverty losses of about 0.5 percentage points in the most severe scenario.
274 In 2017/18, 43% of urban households in the poorest decile rented their place of residence, compared to 23 percent in the richest decile.
275 Household spending is between 5% (poorest deciles) to 3% (richest deciles) of the total consumption in energy, according to Household Income,
Expenditure, and Consumption Survey 2017/2018. Poverty, Jobs and Climate Change. World Bank (2022). Egypt’s CCDR Background Note.
276 This impact would be higher in poorer rural households, with a poverty change of about .56% in rural households compared to .35 in urban households.
Poverty, Jobs and Climate Change. Egypt CCDR Background Note.

277 Using the Household Income, Expenditure, and Consumption Survey (HIECS) 2017-2018 The analysis models effects on increase of water prices
between 5% to 20%, through all the income deciles. Poverty, Jobs and Climate Change. Egypt CCDR Background Note. World Bank (2022)
278 About 67,000 new jobs per year including jobs gained,
279 These results come from the WB’s CEEAT Employment Assessment Tool for estimating direct, indirect and induced jobs of clan energy transition The
Employment Benefits of An Energy Transition in Egypt, November 2021 (from the Clean Energy Jobs and Skills Regional ASA lead by Energy, including
Egypt).
280 Egypt: Enterprise Survey, World Bank (2016).
281 The following indicators are aggregated into a composite score to measure current workforce skills: (i) extent of staff training; (ii) quality of vocational
training; (iii) skill set of graduates; (iv) digital skills among active population; and (v) ease of finding skilled employees. Some of the indicators are based
on official statistics, others from the Executive Opinion Survey of the World Economic Forum. See World Economic Forum, 2019, World Economic
Competitiveness Report 2019: Egypt Profile, p. 200, http://www3.weforum.org/docs/WEF_TheGlobalCompetitivenessReport2019.pdf
65
countries.282 In addition, Egypt’s score on digital skills is 4.7 out of 7, below the MENA average,
indicating a substantial room for improvement.
For Egypt to reach full potential in the transition, climate skills are critical. The transition toward greener
technologies will both create and destroy jobs, and it will also demand a different set of skills from those
available in the economy. Reskilling/upskilling within existing jobs will be needed, especially in low-
skilled jobs, which tend to require more environmental awareness or simple adaptations to existing
work processes (e.g., for waste collectors). Most low-skilled occupations that will be lost during the
transition are expected to be reallocated with some reskilling. At the medium-skilled jobs level, there
will be some new occupations and substantial changes to the content of existing occupations (e.g., AC
technicians). Job destruction will likely have the greatest effect on male workers in mid-skill
occupations.283 To ensure that women have access to the new jobs created, specific measures need
to be introduced to train them. Most of the completely new types of occupations created will be among
high-skilled jobs, which will require a completely different set of technical knowledge and skills and thus
require new upskilling programs or specialized university degree programs (e.g., solar and hydrogen
engineers, energy-efficient building architects). Understanding which skills will need to be developed,
as well as which sectors will lose more jobs and which will benefit from a move to higher-skilled jobs,
may facilitate the transformation that is required.
Education and increased awareness can also encourage positive behavior to strengthen adaptation
and mitigation efforts. Efforts to build green skills and increase awareness can open the door for
behavioral changes, which can complement the technological transition and reduce the costs of
emission reduction. Because consumption patterns are often the result of social interactions and
norms, investments in education and awareness can help shape behavior, contributing to reducing
residential emissions.284 Empirical analysis suggests, for example, that behavioral norms have the
power to amplify the impacts of a carbon tax.285 Given the large scale of Egypt’s education system,
efforts such as the ones promoted by the Ministry of Education and Technical Education (MOETE) and
the World Bank286 to train teachers on awareness of climate actions can contribute to reshaping
behavior and promote enrollment in green skills-driven tertiary education programs. This is in addition
to the MOETE’s efforts to incorporate climate change concepts in the new curriculum under ongoing
sector reform being rolled to grade 5 in 2022/2023 (reform was launched in 2018).
282 The GCI is the product of an aggregation of 103 simple indicators, derived from a combination of data from international organizations as well as from
the World Economic Forum’s Executive Opinion Survey. Indicators are organized into 12 pillars: Institutions; Infrastructure; ICT adoption; Macroeconomic
stability; Health; Skills; Product market; Labor market; Financial system; Market size; Business dynamism; and Innovation capability. The 2019 edition
covers 141 economies. http://www3.weforum.org/docs/WEF_TheGlobalCompetitivenessReport2019.pdf
283 Skills for Green Jobs Update 2018, ILO (2018).
284 Niamir, L., Kiesewetter, G., Wagner, F. et al. (2020), Assessing the macroeconomic impacts of individual behavioral changes on carbon emissions,”
Climatic Change 158, 141–160 (2020). https://doi.org/10.1007/s10584-019-02566-8

285 Bryan Bollinger and Kenneth Gillingham (2012) “Peer Effects in the Diffusion of Solar Photovoltaic Panels (with Bryan Bollinger),”
Marketing Science (2012), 31(6): pg. 900-912.

286 MOETE has already taken steps in this direction by building climate awareness in the Teachers’ Continuous Professional Development (CPD) Framework.
With the World Bank support, the CPD framework includes performance standards associated with climate awareness and will guide the development and
delivery of teacher training modules to incorporate climate awareness training.
66
5. Summary of Priority Actions
Figure 19 and Figure 20 provide a summary of priority actions identified in this report for the short term
(need to start in the next 1 to 3 years) and the medium term (more than 3 years) as a roadmap for Egypt
to strengthen resilience and adaptation, and make headway in the transition to a low carbon
development path. Detailed steps that can be taken to make headway in this direction are outlined in
the Annex, and an indication of investment needs for some priority actions are highlighted in the Annex.
To implement these actions, additional financing will be required, and improving the institutional
framework and ensuring a central role for the private sector to support the transition and help leverage
additional resources is a must. The transition must be just and leave no one behind, and for that a
focus on the most vulnerable and building human capital should be at the heart of any action. Additional
detailed actions to be taken along these lines are provided in the Annex.
67
Figure 19. Priority Actions in the Short Term
Priority Actions
Strengthen Resilience and Adaptation
Enhance efficiency in the way Provide better information and Enhance resilience and
resources are used and information and increase reduce the risk of stranded
allocated based on their true awareness about climate change assets through
value impacts for collective action complementary actions
• Implement wastewater resource • Develop a comprehensive, multi- • Modernize irrigation systems
circularity stakeholder disaster risk management • Improve connectivity/logistics
• Rationalize urban water use plan (drought/flash flood) infrastructure resilience
• Enable public-private partnerships for • Strengthen information for • Enhance the operational efficiency
green investments in infrastructure and preparedness through an integrated and performance monitoring of
utilities hydro-meteorological system existing wastewater treatment
• Establish a water allocation policy • Strengthen climate risk sensitivity in plants
coupled with a drought risk mitigation local planning systems and • Establish resilient storm water
system development plans (with flooding, heat, management systems with
• Rationalize urban residential water SLR as priorities) integrated NBS
tariffs • Develop robust city-level early warning • Develop and implement a climate-
• Develop a national policy and city-level systems for floods (pluvial, coastal, and resilient trade logistics strategy
strategies to guide urban growth away fluvial), heat waves, and other climate
from high-risk areas change impacts/natural disasters
• Mainstream digital information systems
Transition to a Low Carbon Development Path
Accelerate the Reduce Reduce inefficiencies in Reduce Take synergetic
transition to emissions in the the use of energy for emission in the actions across
renewable energy oil and gas value electricity and industry transport sector adaptation and
• Reform the sector and lower • Remove distortionary subsidies • Develop a mitigation
electricity sector and reduce T&D losses Sustainable
and ensure cost the carbon • Monitor energy and water use, Transport Vision
• “Green” desalination
• Equip wastewater
recovery intensity of the water treatment and re-use by • Facilitate multimodal
treatment plants with
• Increase the RE- energy supply industrial sub-sector urban transport
biogas capture systems
base integration • Leverage the industrial zones • Adopt soft measures
• Enable private mix to demonstrate the business that encourage the
• Implement “green”
Reduce carbon building and EE across
investment through case for circularity shift from cars/trucks
intensity of energy mix municipal services
regulatory reforms • Put in place the quality to low carbon modes
and exports through: • Undertake a
assurance infrastructure for of transport
• decarbonization of comprehensive reform
green certifications • Lay the foundations of the SWM sector
oil & gas production
• Enact policies to support for increased private • Develop bio-energy
(in anticipation of circularity e.g. plastic-focused participation in the
carbon taxes and resource recovery (bio-
EPR policy for prioritized plastic transition toward low CNG, bio-methane, etc.)
CBAM measures in waste streams and upstream carbon vehicles
export markets) for bio-waste policy to
plastic circularity incentivize bio-energy
• abatement of CO2 • Remove bottlenecks to the use
and methane applications for bio-
of alternative fuels by cement waste streams
emissions along the companies
oil & gas value chain
Supporting Actions
Create an enabling environment: Ensure a focus on the most
Mobilize finance: Complete a vulnerable: Assess the social impact
Enact executive regulations for Create a central repository of data on climate and disaster risk financing of climate change and development
amended PPP law; incentivize energy, water, WWT, and reuse of assessment; develop risk finance and create an action plan response;
green certifications; review non- industrial subsectors; integrate climate instruments; reform transfers to create an institutional framework for
tariff barriers on environmental into fiscal planning, budget preparation include performance on green and linking initiatives for green skilling;
goods; leverage industrial and and execution; strengthen capacity at climate-smart investments while build partnerships with private sector
investments green zones; assess national and local level for climate-smart improving local capacities for training and upskilling, including g
challenges to the private sector actions with focus on women; improve
and reach out to leaders to flexibility of social protection system to
strengthen partnerships respond to shocks
68
Figure 20. Priority Actions in the Medium and Long Term
Priority Actions
Strengthen in the
Resilience andMedium and Long Term
Adaptation
Strengthen Resilience and Adaptation
Enhance efficiency in the way Provide better information and Enhance resilience and reduce
resources are used and allocated information and increase the risk of stranded assets
based on their true value awareness about climate change through complementary
• Scale up reuse of treated wastewater to impacts for collective action actions
supplement agricultural water for • Amend the national environmental
• Develop and implement a climate-
selected crops law and national environmental
resilient trade logistics strategy
• Implement investments to promote assessment system to strengthen
• Develop and launch transport asset
wastewater resource circularity the process of assessing and
management systems of
• Support upstream circular interventions managing social impacts and risks
arterials/highway assets for corridors
• Support implementation of bio-waste to • Mainstream climate risk sensitivity
of strategic importance, optimizing
bio-energy projects at the local level on (flooding, heat, SLR on priority) in
lifecycle operation and maintenance
a PPP basis local planning systems and
costs and resilience
• Reform land management for better development plans
• Mainstream nature-based solutions,
agricultural outcomes and efficient • Improve city-level early warning
covering green & blue infrastructure,
urban expansion systems for floods (pluvial, coastal,
as part of urban form across key cities
and fluvial), heat waves and other
climate change/natural disasters • Implement “green” building and EE
across municipal services
• Enhance the operational efficiency of
existing wastewater treatment plants
Transition to Low Carbon Development

Accelerate Reduce emissions in Reduce Reduce emissions Take synergetic
the transition the oil and gas value inefficiencies in in the transport actions across
to renewable sector and lower the the use of energy sector adaptation and
energy carbon intensity of the for electricity and • Execute policy/ mitigation
energy supply mix industry regulatory reforms and • Transition to higher
Reduce carbon intensity of • Foster acceptance of investment program to levels of the “waste
• Carry out needed
energy mix and exports by: blended cement and enable pricing hierarchy” and
analysis to assess
• developing a prioritized action alternative raw interventions to plastics circularity
the benefits and
plan and Marginal Abatement materials encourage shift from • Implement EPR
costs of
cars to sustainable models, cost recovery
introducing a Cost Curve for selected oil & • Introduce Carbon
gas value chain assets transport & monitoring systems
carbon tax and Capture and Storage
• developing a policy, regulatory (CCS) in large • Introduce Sustainable for plastic waste
developing a
(carbon intensity standards, industrial plants such Logistics and Freight • Develop a roadmap to
carbon credit
adoption of detection, as iron and steel and reforms improve climate
market
measurement and reporting petrochemicals • Introduce Sustainable resilience and
standards, adoption of Logistics and Freight financial sustainability
abatement targets), and PSP- Investment Program
enabling contractual framework
for sector decarbonization
Supporting Actions
Create an enabling environment: Mobilize finance: Ensure Ensure a focus on the
Develop & test existing and new Mainstream CC and green adoption of international most vulnerable:
blended finance instruments to objectives into core sustainability standards by Identify skills needed
leverage finance; develop a government functions and financial institutions; through a labor market
systematic strategy on structured public sector operations; keep consider integrating information system; invest
finance and private placement strengthening subnational climate related financial in skills considering
instruments linked to MSMEs; capacities for climate smart risks into supervisory international standards for
create a green taxonomy for the actions (planning, budgeting, framework education of technicians
financial sector and investment)
69
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Country Climate and Development Report: Egypt

Rights and Permissions

1.1. Progress in development outcomes has been considerable, but

5 Egypt's Biennial Updated Report (2018).

Percentage of Working-Age Population

pace with population growth.

1.2. Increasing climate risks could exacerbate the existing development

Temperature change (C)

Gridded Multivariate Climate Dataset. Sci Data 7, 109 (2020). https://doi.org/10.1038/s41597-020-0453-3

1.3. Future water availability is uncertain, bringing challenges for

2100, compared to a loss of 0.3% with a 1.5°C increase.

warming to 1.5 or 2.0 °C.”

57 Egypt First Updated Nationally Determined Contributions, June 2022

CO2eq per capita (~47% increase from 1990).

Institute. Available online at: https://www.climatewatchdata.org.

thermal plants (90% of installed

term for the integration of RE in the -5

Coal, 2.8% Transport,

1.5. Growing urban population puts additional stress on services and

a total national emission of 351,192.48 Gg C02e.

“Global Anthropogenic Emissions in Urban Areas: Patterns, Trends, and Challenges.”

Reclamation, Egypt, 2017).

Available at: http://www.oceanpanel.org/sites/default/files/2019-12/expected-impacts-climate-change-on-the-ocean-economy-executive-summary.pdf

Stud Mar. Sci. 25:100498. doi: 10.1016/j.rsma.2018.100498.

2.1. An ambitious climate change policy

118 A feddan is an Egyptian unit of area equal to 1.038 acres

2.2. Coordination, capacity and robust MRV to enable effective climate

Putting in place climate-sensitive governance and institutional frameworks to mainstream climate

implementation of the Waste Management Law no. 202 of 2020

2.3. Egypt’s Updated Nationally Determined Contributions (NDC)

3.1. Strengthening resilience and adaptation

A focus on improving information, reducing inefficiencies and strengthening resilience of infrastructure

Reducing losses of scarce resources

for non-food crops such as forage and fiber crops.

Indicators database, 2016.

Allocation of resources according to their value

3.1.2. Provide better information and information systems and increase

A comprehensive, multisectoral drought risk management system is needed to link hydro-

Irrigation and Agriculture

151 Personal communication MWRI 2022.

against sea level rise”, Coastal Engineering Journal, 63 (3) 263-74.

Development Egypt’s 2021 Voluntary National Review.

reforms could mitigate the impacts of climate change in most countries”.

Change on the Ocean Economy.

The growth of electricity demand in Egypt was

3.2.1. Accelerate the transition to renewable energy

184Egypt’s First Biennial Updated Report (BUR), 2018.

matters,” Energy Policy, Volume 129.

3.2.4. Reduce emissions in the transport sector

214 Egypt First Updated Nationally Determined Contributions, June 2022

EVs in Egypt to 50% by 2040.

Regulatory interventions to promote sustainable logistics (e.g., logistics coordination, freight

3.2.5. Take synergistic actions across adaptation and mitigation

229 See methodological note in Table 3.

248World Bank: Egypt Overview, Update March 16, 2022 https://www.worldbank.org/en/country/egypt/overview

4.1. Create the enabling environment needed to support the transition

4.2. Mobilize finance to build resilience to climate and support the