RIYADH: New businesses and environmentally conscious companies stand to benefit from a new carbon credits mechanism set to be launched in Dubai during the upcoming UN Climate Change Conference.
The Dubai Financial Market announced its plans to launch a trial platform during the COP28 at the end of this month, aiming to contribute to the development of a low-carbon economy by providing a tool to assist companies in managing unavoidable carbon emissions.
In a statement, the DFM said that the platform would be developed in partnership with the Dubai Future Foundation. It emphasized the participation of reputable companies including Arqaam Capital, BHM Capital and EFG Hermes, as well as Emirates NBD Securities, all of whom have been approved as brokers on the platform.
Hamed Ali, CEO of DFM and Nasdaq Dubai, said: “Capital markets play a pivotal role in driving the development of a low carbon economy by facilitating project capital raising, enhancing price discovery and transparency, and centralizing liquidity.”
The platform, catering to qualified institutional investors, is scheduled to commence trading from Dec. 4 to 8, 2023, with the settlement of carbon credit transactions concluding on Jan. 10, 2024.
He added: “The launch of carbon credit trading represents a logical progression for DFM as a platform for ESG-focused themes and building on our existing track record.”
As the global economy accelerates its decarbonization, Ali stressed the demand for carbon project financing is poised to surge and the necessity to trade credits will grow in tandem.
He invited other Dubai businesses and project developers to join DFM in this pilot endeavor.
The initiative will witness the participation of 17 UAE-based companies and institutions including the Dubai Electricity and Water Authority, Dubai World and Dubai Municipality.
This will also encompass Dubai International Financial Centre, Emirates NBD Bank and Majid Al Futtaim.
Additionally, Shuaa Capital, Al Ansari Financial Services and Emaar Properties will also be part of the initiative along with Salik and Tabreed.
Credits traded on the DFM will originate from the Dubai Electricity and Water Authority and the company My Carbon, involving internationally accredited projects worldwide, with a focus on avoiding and reducing emissions.
“DEWA is leading in this aspect, and we’re delighted to play a pivotal role in DFM’s pioneering carbon pilot initiative, set to launch during COP28,” said Saeed Mohammed Al-Tayer, CEO of DEWA.
He added that their participation aligned with the UAE’s vision of building a green economy.
It also aimed to achieve the goals of the UAE Net Zero by 2050 strategic initiative, the Dubai Clean Energy Strategy 2050, and the Dubai Net Zero Carbon Emissions Strategy 2050.
Al-Tayer said the objective is to provide 100 percent of Dubai’s total power production capacity from clean energy sources by 2050.
The launch of this trading platform marks a significant step for Dubai in contributing to global efforts to combat climate change and transition toward a more sustainable and environmentally conscious economy.
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