DFM (Dubai Financial Market) is preparing to launch a pilot programme for trading carbon credits at COP28.
The comprehensive platform will explore the trading and utilization of carbon credits, providing a “mechanism to help companies manage unavoidable and residual carbon emissions while pursuing direct decarbonisation strategies,” according to DFM. Each carbon credit represents a tangible reduction in carbon emissions, offsetting one tonne of CO2 equivalent emissions.
As per the Taskforce on Scaling Voluntary Carbon Markets (TSVCM), the demand for carbon credits could increase significantly, potentially by a factor of 15 or more by 2030 and up to 100 by 2050. The overall carbon credit market is projected to exceed $50B in value by 2030.
DFM’s Carbon Credits Pilot Enlists 17 Leading UAE Companies
DFM’s pilot programme will involve 17 UAE companies, including Dubai Electricity and Water Authority (DEWA), DP World, Dubai Municipality, Dubai International Financial Centre (DIFC), Emirates NBD, Majid Al Futtaim, SHUUA Capital, Al Ansari Financial Services, Emaar, Salik, SEE Holding, FIVE Holdings, Gulf Cryo, and Tabreed, among others.
The pilot programme for institutional investors will commence from December 4 to December 8, with the offsetting period ending on January 10, 2024. DFM has collaborated closely with the Dubai Future Foundation for this initiative.
The transactions will be facilitated through five DFM brokers: Al Ramz Capital, Arqaam Securities, BHM Capital, EFG Hermes, and Emirates NBD Securities. Clearing and settlement processes will be conducted in US dollars by Dubai Clear and the Dubai Central Securities Depository (DCSD), with global daily price reference provided by leading pricing agencies such as OPIS, a Dow Jones company.
DFM will trade carbon credits supplied by DEWA and MyCarbon, sourced from internationally certified carbon projects verified by standard setters like VERRA or the UN’s Clean Development Mechanism. The exchange aims to include quality carbon credits from local DEWA projects in the pilot, according to Gulf Business.
Saeed Mohammed Al Tayer, MD and CEO of DEWA, praised DEWA’s leading role in the initiative, emphasizing its pivotal contribution to DFM’s carbon pilot during COP28. Hamed Ali, CEO of DFM and Nasdaq Dubai, highlighted the capital markets’ crucial role in driving the development of a low-carbon economy, inviting other Dubai businesses and project developers to join the pilot endeavour. ACX Abu Dhabi, an exchange and clearing house by ACX, has also recently gone live in the region, regulated by ADGM as the first jurisdiction to classify voluntary carbon credits as financial instruments.
