Abu Dhabi to launch world’s first carbon credit trading exchange and clearing house

Abu Dhabi Global Market (ADGM) said on Tuesday it was partnering with AirCarbon Exchange (ACX) to create the world’s first fully regulated carbon trading exchange and carbon clearing house in Abu Dhabi.

ADGM will regulate carbon credits and offsets as emission instruments, and issue licences for exchanges to operate both spot and derivative markets, that will allow corporates to trade and finance carbon credits like conventional financial assets, the company said in a statement.

AirCarbon Exchange is the world’s first fully digital carbon exchange, and with the new regulatory framework, companies can invest in global carbon reduction and offset programmes, ADGM said.

Expected to launch in 2022, ACX will be set up as a Recognised Investment Exchange (RIE) and regulated by ADGM, offering its market participants and customers efficient trading and a regulated transparent price discovery mechanism. In addition, ACX also aims to set up a regulated Recognised Clearing House (RCH) – known as ACX Clearing Corporation – for the purposes of custodising, clearing and settling commodities and commodity derivatives, the company said.

“This is a significant global milestone and another world’s first for Abu Dhabi. This initiative reinforces ADGM’s commitment and ongoing efforts to cement its position as a leading international financial centre and world-class global commodities and carbon trading hub,” Ahmed Jasim Al Zaabi, Chairman of ADGM, said in a statement. “

We are excited to be partnering with ACX to enable and facilitate trading of high-quality carbon credits, and in that aspect, encourage more companies to reach their decarbonisation goals. As the first country in the Gulf 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 underlines ADGM’s focus on carbon neutrality as an international financial centre,” he added.

ACX will initially use its distributed ledger technology within a traditional commodity trading construct to create tokenised carbon credits for spot trading. At a later stage, it plans to offer carbon credit futures as commodity derivatives for trading.