Abu Dhabi Global Market (ADGM) has announced the launch of the world’s first regulated carbon credit exchange and carbon clearing house, to regulate carbon credits and offsets as emissions instruments.

The international financial centre said corporates will be able to trade and finance carbon credits like conventional financial assets when AirCarbon Exchange (ACX) launches in the emirate this year.

The exchange is the world’s first fully regulated voluntary carbon exchange and carbon clearing house and the first regulated voluntary carbon market (VCM) in the MENA region.

ADGM is partnering with ACX, which was first launched in Singapore in 2021, on the initiative which will regulate carbon credits and offsets as emission instruments, and issue licences for exchanges to operate both spot and derivative markets.

The regulatory framework will allow corporates to trade and finance carbon credits like conventional financial assets, thus increasing participation and investment in global carbon reduction and offset programmes, ADGM said in a press release. 

The exchange will be established as a recognised investment exchange (RIE) regulated by ADGM. There will also be a recognised clearing house (RCH) known as ACX Clearing Corporation to custodise, clear and settle commodities in commodity derivatives, according to ADGM.

Once it is operating, ACX will extend its trading platform to include clean energy products in addition to carbon credits.

Ahmed Jasim Al Zaabi, chairman of ADGM, said: “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.”

 The UAE is aiming to attract inflows from global capital markets as investors increasingly seek ESG-compliant investments through the Net Zero by 2050 Strategic Initiative, ADGM added. 

Earlier this year, it became the first world’s first international financial centre to become carbon neutral.

(Writing by Imogen Lillywhite; editing by Seban Scaria)