The UAE Independent Climate Change Accelerators (UICCA), a non-partisan entity focusing on addressing climate change challenges, has established the UAE Carbon Alliance to develop a carbon market framework and ecosystem in the region. The establishment of the alliance follows several regional developments in the carbon exchange space.
The alliance will represent buyers and sellers of carbon credits as well as traders, climate project developers, financial institutions, corporations, exchanges and brokers from across the UAE and beyond.
“Productive partnerships like the UAE Carbon Alliance will help the world find practical solutions on the path to decarbonization by funding the actual physical carbon abatement efforts and making them financially, environmentally and socially viable,” Sheikha Shamma Sultan Khalifa Al Nahyan, the president and CEO of the UICCA who also chairs the new alliance, commented.
According to Sheikha Shamma, the UAE Carbon Alliance will establish the UAE as a hub for high-quality carbon markets to help fund the action to limit global warming to 1.5 degrees.
While established as an independent entity, the UICCA confirmed that the outcomes from the alliance will inform and drive government strategies while enhancing the public and private sectors.
In addition to the UICCA, the founding members of the alliance include AirCarbon Exchange (ACX), First Abu Dhabi Bank, the sovereign wealth fund Mubadala Investment Company (Mubadala), Abu Dhabi National Energy Company (TAQA) and Abu Dhabi Future Energy Company (Masdar).
In an earlier development in March 2022, the Singapore-headquartered ACX, in which Mubadala acquired a stake in November 2022, partnered with the Abu Dhabi Global Market (ADGM) to establish the world’s first regulated carbon credit trading exchange and clearing house. While originally targeted to be launched in 2022, the carbon exchange has yet to go live.
The collaboration follows the earlier partnership between the ACX and the ADGM in February 2022 to offset the ADGM’s 2021 carbon emissions to become the world’s first carbon-neutral international financial center.
Also notable in the carbon exchange space is the MoU signed between Mubadala and South Korea-based SK Group on the 16th January this year to develop a voluntary market tailored to the characteristics of Asian companies.
Several of the founding members of the UAE Carbon Alliance have been active in the Islamic sustainable finance space.
Following the launch of TAQA’s green financing framework in April this year, the company reached a financial close for a AED2.3 billion (US$626.07 million) low-carbon desalination project, which includes an Islamic financing tranche, on the 31st May.
On the 3rd March 2023, the Mubadala-subsidiary Masdar established a green finance framework, allowing it to issue green Sukuk.
Also this year, the company signed an MoU with the IsDB’s insurance arm, the Islamic Corporation for the Insurance of Investment and Export Credit (ICIEC), to promote renewable energy projects in the ICIEC member states.