East and North Africa

BOX 3.10

Successful Pollution Abatement Projects in the Middle East and North Africa

Egypt and Lebanon, with international support, have implemented pollution abatement projects that support businesses in transitioning to cleaner industrial production. The Egyptian Pollution Abatement Programme (EPAP), initiated by the Ministry of Environment with support from international organizations such as the World Bank, has been in effect since the early 1990s. It was rolled out in three phases, with the latest one launching in 2015. The project’s main goal is to set up a framework that encourages cleaner industrial production by providing loans to companies for pollution-reducing investments. The third phase, EPAP3, includes a bank credit line up to €120 million to finance the pollution abatement projects of public and private enterprises; a grant facility (€20 million) to soften the terms of the granted loans; and a technical assistance program with €6 million to strengthen the capabilities of the various stakeholders (AFD, n.d.). Similarly, the Lebanon Environmental Pollution Abatement Project (LEPAP)a was set up in 2014 in cooperation with international organizations such as the World Bank and the Italian Agency for Development Cooperation and provides free technical assistance to industrial enterprises in the form of national and international consultants. Furthermore, LEPAP includes a financial mechanism that provides concessional loans supported by the Banque Du Liban through commercial banks, which have interest rates close to zero. These loans are provided for a period of seven years with a two-year grace period, and LEPAP also supports companies in the preparation of technical specifications and the fulfillment of technical requirements for their projects.

Projects financed by these initiatives have been successfully expanded and scaled up. EPAP has financed over 35 subprojects to improve pollution abatement. The program has an astonishing track record for completed projects, with projects that received assistance leading to significantly reduced emissions. For example, in the course of the project’s second phase, air pollutants of financed subprojects were reduced by 91 percent on average, with SO2 emissions being reduced by 84 percent and particulate matter (PM) emission by 94 percent. Similarly, wastewater pollution of the financed projects was almost completely eliminated, with average decreases in wastewater effluents of 98 percent (World Bank 2015).

For LEPAP, as of September 2019, six industrial plants have applied for loans, and three of them have already received loans worth around US$3 million, with the other ones applying for loans amounting up to US$2 million. Additional financing is planned to increase the number of projects to 20–25 public and private enterprises and provide them with loans and technical assistance to address pollution emissions in a cost-effective manner.

a. For more information, see the LEPAP website: http://lepap.moe.gov.lb/.

adopt more efficient practices, apply end-of-pipe pollution abatement, and conserve energy inputs. The revenues can then be used to advance other development policies such as ones enhancing critical infrastructure or supporting businesses to update their production facilities.

An efficient emission taxation scheme requires an effective monitoring and administration system as well as stringent enforcement mechanisms. This effort requires technological solutions to measure emissions of GHGs and other air pollutants as well as regulatory changes that are necessary for the imposition of the tax in the existing tax framework. Taxes on carbon emissions are the most widely used form of emissions taxation, with carbon taxes present in various European countries (for example, France, Ireland, Spain, and the Nordic countries) as well as in Argentina, Japan, Mexico, South Africa, and a large number of Canadian provinces.

Trading emissions. An alternative way of limiting emissions from energy-production-related and industrial sources is the implementation of an emissions trading system (ETS). Such a trading system would allow companies causing more emissions to choose to invest in necessary technology upgrades immediately or postpone them to a more suitable time by buying carbon certificates from other, less-polluting companies. One of the first and largest carbon trading systems is the cap-and-trade program set up by the US state of California (box 3.11).

With the introduction of its national ETS, China could overtake the EU as the world’s biggest carbon market; however, the initial version of China’s ETS will cover only coal- and gas-fired power plants. In some countries, several carbon pricing systems coexist. For example, several European countries are part of the EU ETS and have national carbon taxes, and Germany launched an additional national ETS for heating and transportation fuels starting in 2021 leading to price hikes in the latter of around 10 percent. Middle-income countries such as Kazakhstan and Mexico have already implemented or are scheduled to implement an ETS, and Brazil, Indonesia, Pakistan, and Turkey are currently considering doing so and have initiated studies for their specific design (World Bank 2021b). This showcases the potential of such systems at a country or subregional level for the Middle East and North Africa as well. Hence, it is recommended that governments in the region consider implementing ETSs and commence assessments for their feasibility and ideal design.

Targeting PM explicitly. Recently, the Indian state of Gujarat launched a pilot program in the industrial city of Surat that, like a traditional ETS, allots a fixed number of permits to plants but specifically targets PM air pollution. It is the world’s first cap-and-trade scheme that does so and, if successful, it is planned to be scaled up to cover all of Gujarat and perhaps other states in India. It also serves as an international