Dubai: The Dubai Financial Market – currently running through one of its best years in terms of stock trades – is getting into ‘carbon credits’.
A pilot program is being run to allow trading in carbon credits and which will debut during the upcoming COP28 event in Dubai. This would allow companies manage ‘unavoidable and residual carbon emissions’ while at the same time pursue direct decarbonization strategies.
One carbon credit can help offset 1 ton of CO2 equivalent emissions. These credits essentially mean that the buyer can emit carbon dioxide or other greenhouse gases up to a certain extent within their project. They can sell unused credits to another company that might need them.
Taken together, the purpose is to get companies to bring down their greenhouse emissions.
This effort led by DFM not only brings together issuers and key market participants, but also offers a strategic exploration of the effectiveness of carbon credit trading
Start of DFM trading
The DFM pilot program for institutional investors will start December 4 and run through to December 8. They can buy and sell credits during this period and the ‘offsetting period’ ends on 10th January 2024.
The first run will see more than 17 UAE companies, including Dewa, DP World, Dubai Municipality, Dubai International Financial Centre (DIFC), Emirates NBD, Majid Al Futtaim, Al Ansari Financial Services, Emaar, Salik, Gulf Cryo and Tabreed.
DFM has worked with Dubai Future Foundation as a partner for the pilot. The transactions will be executed through 5 DFM brokers - Al Ramz Capital, Arqaam Securities, BHM Capital, EFG Hermes and Emirates NBD Securities.
"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,” said Hamed Ali, CEO of DFM and Nasdaq Dubai.
“The launch of carbon credit trading represents a logical progression for DFM as a platform for ESG-focused themes and building on our track record.
As the global economy accelerates its decarbonization, the demand for carbon project financing is poised to surge and the necessity to trade credits will grow in tandem. We invite other Dubai businesses and project developers to join us.
Supplying the carbon credit
The carbon credits traded on DFM will be from DEWA and MyCarbon, and come from ‘internationally certified carbon projects’ worldwide and include carbon avoidance, reduction and removal initiatives.
All projects have been verified by ‘standard-setters’ such as VERRA or the UN’s Clean Development Mechanism (CDM). DFM will also bring on quality carbon credits from local Dewa projects for admission to the pilot.
“This initiative is a true testament of our commitment to climate change mitigation and the Dubai Carbon Abatement Strategy 2030 to reduce carbon emissions by 30 per cent by 2030,” said Saeed Mohammed Al Tayer, Managing Director and CEO of Dewa.
Our commitment helps strengthen Dubai's position as a global laboratory for the latest leading sustainability practices - while providing the necessary elements to achieve Dubai’s goal of 100% clean energy by 2050