World’s first regulated carbon credit trading exchange to launch in UAE

Abu Dhabi Global Market (ADGM) has partnered with AirCarbon Exchange (ACX) to create the world’s first carbon trading exchange and carbon clearing house in Abu Dhabi.

ADGM is set to become the first jurisdiction globally to regulate carbon credits and offsets as emission instruments, and to issue licences for exchanges to operate both spot and derivative markets. The regulatory framework will also allow corporates to trade and finance carbon credits like conventional financial assets, increasing participation in global carbon reduction and offset programmes, a statement said.

Highlighting continuous efforts to deliver impactful world-leading innovation, ADGM and Air Carbon Exchange will launch the world’s first regulated carbon trading exchange and clearing house #inAbuDhabi. pic.twitter.com/IMjouuxQhl

— مكتب أبوظبي الإعلامي (@admediaoffice) March 29, 2022

Expected to launch in 2022, ACX will be established as a recognised investment exchange (RIE) and regulated by ADGM, aiming to offer a regulated transparent price discovery mechanism. In addition, ACX also targets to set up a regulated recognised clearing house (RCH) – to be known as ACX Clearing Corporation – for the purposes of custodising, clearing and settling commodities and commodity derivatives.

ACX intends to initially use its distributed ledger technology within a traditional commodity trading construct to create tokenised carbon credits for spot trading. Later, it plans to offer carbon credit futures as commodity derivatives for trading. All digital tokens will be custodised by the RCH, settled and cleared using the RCH’s blockchain smart contracts.

ACX aims to extend its trading platform offering to include clean energy products, in addition to carbon credits.

Ahmed Jasim Al Zaabi, chairman of ADGM, said: “This initiative reinforces ADGM’s commitment and ongoing efforts to cement its position as a leading international financial centre and world-class global commodities and carbon trading hub. We are excited to be partnering with ACX to enable and facilitate trading of high-quality carbon credits, and in that aspect, encourage more companies to reach their decarbonisation goals. As the first country in the Gulf to commit to net zero by 2050, this new trading platform is a further extension of Abu Dhabi’s drive to support sustainability ambitions and underlines ADGM’s focus on carbon neutrality as an international financial centre.”

William Pazos, managing director and co-founder of ACX & Kevin Iwanaga, COO MENA Region, said: “Abu Dhabi and by extension ADGM, are an integral part of ACX’s global expansion. Our recent partnership with the Deutsche Börse Group, expansion into Brazil and our already well advanced full exchange and clearing application in ADGM complement each other to deliver a truly global marketplace from the heart of the MENA region.”

In January, ADGM announced that it had achieved carbon-neutrality by offsetting its carbon emissions in 2021.

Read: Abu Dhabi Global Market becomes world’s first carbon-neutral international financial centre

Last year, the UAE became the first nation in the Middle East and North Africa to announce a plan to achieve net-zero emissions by 2050.

Read: UAE eyes first net zero by 2050 goal among major petrostates