Emirates launches first digital carbon exchange platform
Abu Dhabi Global Market (ADGM) and AirCarbon Exchange (ACX) have teamed up to work on leading projects and one of them, which they have just created, is the first carbon trading exchange. It is a pioneering chamber in all its aspects and gives the Gulf States an innovative and leading character, which is increasingly making its presence felt in the international market.
This new exchange will aim to trade carbon, one of the most precious natural resources and one of the most widely used in various products. The market will be established in Abu Dhabi, the country's capital, and according to ADGM's statements, the leading company will become the first jurisdiction in the world to regulate the trading of this element as an emission instrument.
To do so, anyone wishing to purchase the commodity will have to apply for a series of licences for exchanges to operate in both spot and derivatives markets. This regulation will allow businesses to sell and finance carbon credits as conventional financial assets.
"This is an important global milestone and another world first for Abu Dhabi. This initiative reinforces ADGM's commitment and ongoing efforts to consolidate its position as a leading international financial centre and world-class global commodities and carbon trading hub. We are excited to partner with ACX to enable and facilitate the trading of high quality carbon credits," said ADGM Chairman Ahmed Jasim al-Zaabi.
On the other hand, the director and co-founder of ACX, William Pazos commented on his company's desire to start operating in this project. "We are excited to work within a dynamic and forward-looking ecosystem such as ADGM," said the director.
Carbon markets are a major attraction for companies involved in this sector and in recent years, the volume of such business has grown by around 30%. According to data from November 2021, the rapid growth of the sector has raised its value to more than USD 1 billion and is expected to reach USD 15 billion by early 2030.
To continue the project and to be fully operational by this year, ACX will become an investment exchange recognised and regulated by ADGM. ACX Clearing Corporation will also be created, which will have the objective of custodian, clearing and settlement of carbon commodities and derivatives. When implemented, ACX will use registry technology resources to create carbon credits for spot trading.
By creating this innovative marketplace, Emirates is meeting its stated goals of reducing its carbon footprint and helping to change the environment. The exchange is expected to help other markets and institutions enter the digital trading ecosystem. It is also intended to include clean energy products within the same system.
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"We are excited to partner with ACX to enable and facilitate the trading of high quality carbon credits and, in that respect, encourage more companies to achieve their decarbonisation goals. As the first Gulf country to commit to net zero by 2050, this new trading platform is a further extension of Abu Dhabi's drive to support sustainability ambitions and ADGM's focus on carbon neutrality as an international financial centre," commented Al-Zaabi. internacional”, comentó Al-Zaabi.
The two companies have achieved extraordinary accomplishments on behalf of the Emirates in the environmental fight. ACX was ranked last year as the firm with the "Best Carbon Exchange" according to Enviromental Finance's carbon market ranking. It also partnered with the United Nations Framework Convention on Climate Change (UNFCCC) to promote greenhouse reduction. ADGM, for its part, has become the first centre to become carbon neutral and to be able to offset its carbon emissions by 2021.