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DFM to launch pilot for trading carbon credits

By Pramod Kumar
Drake & Scull's trading ceased in November 2018 when the company disclosed losses exceeded 75 percent of its capital Wam
Drake & Scull's trading ceased in November 2018 when the company disclosed losses exceeded 75 percent of its capital

Dubai Financial Market (DFM), the operator of the Dubai stock exchange, will launch a pilot programme for trading carbon credits during Cop28.

The pilot programme for institutional investors starts from December 4 to 8, 2023, with the offsetting period ending on January 10, 2024, the UAE state-run Wam news agency reported. 

The inaugural pilot will see the participation of more than 17 UAE companies, including Dubai Electricity and Water Authority (Dewa), DP World, Dubai Municipality, Dubai International Financial Centre, Emirates NBD, Majid Al Futtaim, Shuua Capital, Al Ansari Financial Services and Emaar among others. 

The transactions will be executed through five DFM brokers – Al Ramz Capital, Arqaam Securities, BHM Capital, EFG Hermes and Emirates NBD Securities. 

Clearing and settlement processes will be handled in US dollars by Dubai Clear and the Dubai Central Securities Depository, with global daily price reference provided by pricing agencies such as Opis, a Dow Jones company.

The carbon credits traded on DFM will be supplied from Dewa and MyCarbon from internationally certified carbon projects worldwide. 

All projects have been verified by standard setters such as Verra or the UN’s Clean Development Mechanism. 

Quality carbon credits from local Dewa projects will be offered at the pilot.

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 decarbonisation, the demand for carbon project financing is poised to surge, and the need for trade credits will grow in tandem, he added.

Dawood Abdulrahman AlHajri, director general of Dubai Municipality, said the carbon credits trading platform will play a vital role in achieving climate neutrality by 2050, unlocking new opportunities for sustainable development and consolidating Dubai’s position as a centre for green economy innovations and opportunities.

UAE will host Cop28 at Expo City Dubai from November 30 to December 12, 2023.

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