First Regulated Carbon Market in Abu Dhabi - Mubadala Acquires Stake
Mubadala secures strategic stake in ACX which is establishing the first regulated carbon trading exchange and carbon clearing house based in Abu Dhabi
Emissions trading schemes in carbon markets are tools to reduce greenhouse gas emissions. They place a cap on the amount countries or firms can emit, and if they exceed those limits, they can buy permits in the form of carbon credits from others.
Carbon credits are known as carbon offsets in the voluntary carbon markets. The market for these instruments can grow to over $50 billion by 2030, according to some estimates.
In February 2022 AirCarbon Exchange (ACX) partnered with the Abu Dhabi Global Market (ADGM) to set up the first regulated carbon credits trading exchange in the capital. ACX also plans to set up a regulated recognized clearing house called ACX Clearing Corporation for clearing and settling commodities and their derivatives.
ADGM will regulate carbon credits and offsets as emission instruments in the country. It will also issue licenses for exchanges to operate both spot and derivative markets.
Mubadala, the $284 billion Abu Dhabi sovereign fund, will acquire at least a 20% stake in ACX.
Commenting on this, H.E. Ahmed Jasim Al Zaabi, Chairman of ADGM, said: “The UAE continues to be a leader in leveraging the path to a lower carbon economy to safeguard the environment, drive down emissions and create lasting economic opportunities. The investment by Mubadala in ACX is a great testament to the commitment towards climate action, which will enable investors and businesses to voluntarily purchase verified emissions reductions in the form of carbon credits within the progressive ecosystem of ADGM. As one of the first-fully regulated jurisdictions in the world to regulate carbon credits and offsets as environmental instruments in a voluntary market, ADGM is committed to playing a leading role in facilitating the transition to a lower carbon economy by stimulating sustainable finance flows of investments.”