The carbon credits traded on DFM will be supplied by DEWA and MyCarbon
The Dubai Financial Market (DFM) on Thursday said it will launch a pilot program for trading carbon credits at the COP28 event set to take place in the city later this month.
More than 17 UAE companies, including Dubai Electricity and Water Authority (DEWA), DP World, Dubai Municipality, Dubai International Financial Centre (DIFC), Emirates NBD, Majid Al Futtaim, will participate in the project, DFM said in a statement.
The pilot will explore the trading and use of carbon credits, providing a mechanism to help companies manage unavoidable and residual carbon emissions. Each carbon credit offsets one ton of CO2 equivalent emissions.
Carbon credits, or carbon offsets, are permits that allow holders to compensate for emissions of carbon dioxide or other greenhouse gases.
DFM will commence the pilot program for institutional investors who can buy and sell with trading between December 4 and December 8, 2023, with the offsetting period ending on January 10, 2024.
The carbon credits traded on DFM will be supplied by DEWA and MyCarbon, and come from ‘internationally certified carbon projects’ worldwide and include carbon avoidance, reduction and removal initiatives, DFM said.
The transactions will be executed through five DFM brokers, namely Al Ramz Capital, Arqaam Securities, BHM Capital, EFG Hermes and Emirates NBD Securities.
Clearing and settlement processes will be handled in UD dollars by Dubai Clear and the Dubai Central Securities Depository (DCSD), with global daily price reference provided by leading pricing agencies such as OPIS, a Dow Jones company.
Hamed Ali, CEO of DFM and Nasdaq Dubai, said: "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, 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 in this pilot endeavor.”
The Abu Dhabi Global Market, which teamed up with AirCarbon Exchange (ACX) last year to create a fully regulated carbon-trading exchange and clearing house in the emirate, began live trading in October.
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