Dubai Monetary Market (DFM) at the moment introduced the introduction of a pilot program for buying and selling carbon credit, scheduled to debut at COP28. This transfer positions the monetary market on the forefront of local weather motion as a regulated platform the place undertaking capital elevating, carbon credit score buying and selling and safekeeping are explored in assist of the UAE Authorities’s internet zero by 2050 objective.
The pilot shall be an built-in platform to discover the buying and selling and use of carbon credit, offering a mechanism to assist corporations handle unavoidable and residual carbon emissions whereas pursuing direct decarbonization methods. Every carbon credit score symbolizes a tangible discount in carbon emissions, with one credit score offsetting one ton of CO2 equal emissions.
DFM will begin the pilot program for institutional traders who can purchase and promote with buying and selling ranging from December 4th to December eighth, 2023, with the offsetting interval ending on tenth January 2024. The inaugural pilot will see the lively participation of greater than 17 esteemed UAE corporations, together with Dubai Electrical energy and Water Authority (DEWA), DP World, Dubai Municipality, Dubai Worldwide Monetary Centre (DIFC), Emirates NBD, Majid Al Futtaim, SHUUA Capital, Al Ansari Monetary Providers, Emaar, Salik, SEE Holding, FIVE Holdings, Gulf Cryo and Tabreed amongst others.
DFM has labored intently with Dubai Future Basis as a associate for the pilot. The transactions shall be executed by way of 5 DFM brokers, specifically Al Ramz Capital, Arqaam Securities, BHM Capital, EFG Hermes and Emirates NBD Securities. Clearing and settlement processes shall be dealt with in USD by Dubai Clear and the Dubai Central Securities Depository (DCSD), with international every day value reference supplied by main pricing businesses akin to OPIS, a Dow Jones firm.
The carbon credit traded on DFM shall be equipped from DEWA and MyCarbon, coming from internationally licensed carbon initiatives world wide that embrace carbon avoidance, discount and removing initiatives. All initiatives have been verified by well known customary setters akin to VERRA or the UN’s Clear Growth Mechanism (CDM). DFM is happy to carry high quality carbon credit from native DEWA initiatives for admission to the pilot.
HE Saeed Mohammed Al Tayer, MD & CEO of DEWA, stated: “DEWA is main on this side, and we’re delighted to play a pivotal position in DFM’s pioneering carbon pilot initiative, set to launch throughout COP28. Our lively participation aligns with the imaginative and prescient of our smart management, in constructing a inexperienced financial system in UAE, and attaining the targets of the UAE Internet Zero by 2050 strategic initiative, the Dubai Clear Power Technique 2050, and the Dubai Internet Zero Carbon Emissions Technique 2050 to offer 100% of Dubai’s complete energy manufacturing capability from clear power sources by 2050.
This initiative is a real testomony of our dedication to local weather change mitigation and the Dubai Carbon Abatement Technique 2030 to cut back carbon emissions by 30% by 2030. To attain these targets, now we have launched many initiatives and initiatives, most notably the Mohammed bin Rashid Al Maktoum Photo voltaic Park, which is the most important single-site photo voltaic power undertaking on this planet based mostly on the IPP mannequin with a capability of 5,000 megawatts by 2030.
This collaborative effort led by DFM not solely brings collectively issuers and key market members, but additionally affords a strategic exploration of the effectiveness of carbon credit score buying and selling and its catalytic contribution to the UAE affluent inexperienced future.”
Commenting on the carbon credit score pilot program, Hamed Ali, CEO of DFM and Nasdaq Dubai, stated: “Capital markets play a pivotal position in driving the event of a low carbon financial system by facilitating undertaking capital elevating, enhancing value discovery and transparency, and centralizing liquidity. The launch of carbon credit score buying and selling represents a logical development for DFM as a platform for ESG-focused themes and constructing on our current monitor file. As the worldwide financial system accelerates its decarbonization, the demand for carbon undertaking financing is poised to surge and the need to commerce credit will develop in tandem. We invite different Dubai companies and undertaking builders to hitch us on this pilot endeavor.”
Eng. Dawood Abdulrahman AlHajri, Director Common Dubai Municipality, stated:
“Dubai and the UAE proceed to solidify their place as regional leaders in local weather motion by way of adopting worldwide practices to cement sustainable improvement and defend sources for future generations. Dubai Municipality’s partnership with DFM on carbon emissions discount displays our dedication to sustainable practices and accountable city improvement.
This dedication extends to lowering greenhouse gasoline emissions and carbon footprints throughout numerous sectors. It additionally covers pioneering environmental initiatives, sustainable environmental ecosystems, complete sewage therapy and waste administration. Our dedication helps strengthen Dubai’s place as a worldwide laboratory for the newest main sustainability practices, whereas offering the mandatory parts to realize Dubai’s objective of 100% clear power by 2050. We consider that Dubai’s carbon credit buying and selling platform can play a significant position in attaining local weather neutrality by 2050, unlocking new alternatives for sustainable improvement and consolidating Dubai’s place as a worldwide hub for inexperienced financial system improvements and alternatives.”
In accordance with the Taskforce on Scaling Voluntary Carbon Markets (TSVCM), the demand for carbon credit might multiply by an element of 15 or extra by 2030 and as much as 100 by 2050. In mixture, the carbon credit score market is projected to surpass $50 billion in worth by 2030.
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