Dubai Financial Market (DFM) has announced the launch of a pilot platform for trading carbon credits, set to commence during the 28th session of the Conference of the Parties to the United Nations Framework Convention on Climate Change (COP28).
This move solidifies the leading role of the financial market as a regulatory platform to facilitate capital collection for projects, carbon credit trading, and secure asset management.
The initiative aligns with the United Arab Emirates’ government goal of achieving carbon neutrality by 2050.
The pilot platform will serve as an integrated space for exploring the buying, selling, and utilization of carbon credits, providing mechanisms to assist companies in managing unavoidable carbon emissions.
Each carbon credit represents a reduction in carbon emissions equivalent to one ton. The trading period for qualified institutional investors will run from December 4 to 8, 2023, with the settlement of carbon credits completed by January 10, 2024.
More than 17 major Emirati companies, including Dubai Electricity and Water Authority, DP World, Dubai Municipality, Dubai International Financial Centre, Emirates NBD, Majid Al Futtaim, Shuaa Capital, Ansari Financial Services, Emaar Properties, Salik, SEI Holdings, Gulf Cryo, among others, will participate in the platform.
Dubai Financial Market worked closely with the Dubai Future Foundation as a project partner.
Carbon credits traded on the Dubai Financial Market will come from internationally accredited carbon projects worldwide, including initiatives for carbon avoidance, reduction, and removal.
All projects have been verified by globally accredited rating agencies, the Vera program, or the United Nations Clean Development Mechanism.
High-quality carbon credits from Dubai Electricity and Water Authority projects will also be included in the pilot platform.
Saeed Mohammed Al Tayer, CEO of Dubai Electricity and Water Authority, expressed the authority’s pride in being a pivotal player in this groundbreaking initiative, reinforcing their commitment to building a sustainable green economy in the UAE.
The move aligns with the UAE’s strategies for climate neutrality, clean energy, and carbon neutrality.
The initiative reflects Dubai’s commitment to reducing climate change impacts and achieving its 2030 emission reduction strategy.
It also complements various initiatives, including the Mohammed bin Rashid Al Maktoum Solar Park, the world’s largest single-site solar energy project with a planned capacity of 5,000 megawatts by 2030.
Hamed Ali, CEO of Dubai Financial Market and Nasdaq Dubai, emphasized the crucial role financial markets play in developing a low-carbon economy by facilitating capital for projects, enhancing efficiency, accuracy, and transparency in determining the fair market value of assets. The launch of the carbon credit trading program is a significant addition to Dubai Financial Market’s commitment to environmental, social, and corporate governance practices.
In response to the pilot platform for carbon credit trading, Dawood AbdulRahman Al Hajiri, Director-General of Dubai Municipality, stated that Dubai and the UAE continue to strengthen their leading position in climate action, establishing globally recognized practices for sustainable development and resource management.
The collaboration between Dubai Municipality and Dubai Financial Market in the carbon removal path reflects the municipality’s commitment to sustainable practices and reducing environmental impacts, contributing to Dubai’s position as a global hub for green innovations and opportunities in sync with achieving 100% clean energy for Dubai by 2050.
It’s noteworthy that the Voluntary Carbon Markets Taskforce (VCM) report anticipates significant growth in carbon credit demand in the coming years.
The report suggests that demand may grow by a factor of 15 or more by 2030 and by a factor of up to 100 by 2050. The report also forecasts the value of the carbon credit market to exceed $50 billion in 2030.
