The largest oil producer in the UAE is setting up a desk to trade carbon credits as it prepares for a world in which companies are held to account for the pollution they produce.
Abu Dhabi National Oil Co. (ADNOC) intends to create the credits from its own emissions-reduction projects as well as those of other industries in the country, according to two people with knowledge of the matter.
The credits would then be available to offset potential carbon taxes levied on exported products that contribute to emissions, according to the people who asked not to be identified discussing operational matters.
Oil producers like the UAE and OPEC leader Saudi Arabia are establishing carbon trading markets due to the need for greener economies as buyers move away from traditional energy sources. Abu Dhabi and Dubai in the UAE and the Saudi capital of Riyadh are looking to attract companies and banks to develop and trade in the nascent markets.
The new carbon desk is part of Adnoc Trading, established in 2020 as a wholly owned subsidiary of the government oil firm, and deals in crude and liquefied natural gas. Aleksi Parkkila joined Adnoc Trading from Trafigura Group in January to head its Carbon Business Origination team, according to his LinkedIn profile.
Adnoc’s trading businesses “continue to grow their operations to cover more products, markets, and geographies”, the company said in response to a request for comment about the new initiative. Adnoc said it doesn’t comment on individual employees.
Businesses can offset the carbon they produce by buying credits linked to projects that reduce or avoid planet-warming emissions. However, offset models have faced criticism because it’s hard to prove they deliver the climate benefits they claim. Some experts also say it’s more important to cut emissions than to offset them.
The UAE will host the United Nations’ next round of climate change talks - known as COP28 - in Dubai in November.
