The Finance World Magazine| Edition: October 2023

In the UAE, the primary source of
greenhouse gas emissions is the
energy sector, particularly energy-related
CO2 emissions from fossil fuel
production and combustion, representing
approximately 95% of total emissions.
The UAE is actively pursuing various
strategies to address this challenge, and
successful carbon funding initiatives
are playing a crucial role in advancing
its UAE Net Zero 2050 vision. Some of
these notable successful events are
mentioned as follows:
Carbon Credit Exchange:
In March 2022, one of the most notable
achievements in carbon funding within
the UAE unfolded as Abu Dhabi Global
Market (ADGM) collaborated with Air-
Carbon Exchange (ACX) to establish
the world’s inaugural fully regulated
voluntary carbon trading exchange
and carbon cleaning house. ADGM
became the first regulator to create a
mechanism that promotes carbon as
a tradable product and commodity,
enabling entities to manage carbon
and other greenhouse gases (GHGs)
similarly to financial assets.
In a significant development in the
UAE Carbon Credit Exchange market,
Mubadala Investment Company PJSC
(Mubadala), an Abu Dhabi sovereign
investor, acquired a strategic stake.
This achievement substantiates the
AirCarbon Exchange (ACX), a global
exchange revolutionizing the voluntary
carbon market based on Hub71, Abu
Dhabi’s global tech ecosystem. Together,
Mubadala and ACX have achieved
a successful transaction, reinforcing
ACX’s efforts to establish the first fully
regulated carbon trading exchange and
carbon clearinghouse in Abu Dhabi.
Investment Boost:
Another significant success in the
domain of carbon funding initiatives
is the growing interest of investors in
climate finance. In the UAE, as well
as in other Gulf Cooperation Council
(GCC) countries, there has been a remarkable
surge, with green investments
experiencing an astounding 532 percent
increase, reaching $24.6 billion in 2021,
compared to $3.8 billion the previous
year. This includes investments in
carbon offsetting, renewable energy,
and technology advancement projects.
Carbon Offset Investments:
As part of a range of carbon offset
initiatives, one standout effort is Olivia
UAE’s carbon
funding
initiatives aid in
reducing carbon
emissions,
diversifying its
economy, and
navigating the
complex state
of international
climate finance.
Glea, the MENA region’s pioneering
carbon offset startup. Launched in
Dubai, its primary mission is to provide
businesses with the opportunity
to achieve carbon positivity. Another
significant step towards sustainability
is the establishment of the UAE
Carbon Alliance, initiated by the UAE
Independent Climate Change Accelerators
(UICCA). This alliance aims to
facilitate the transition of companies
towards more sustainable practices,
aligning with the country’s ambitious
goal to reach net-zero emissions by
mid-century.
Renewable Energy Investments:
The most visible success story of the
UAE’s carbon funding endeavours is its
investments in renewable energy. The
world’s largest solar power plant, the
Noor Abu Dhabi, is a testament to the
nation’s commitment to clean energy.
Partnerships with international investors
and organizations have facilitated
these projects, demonstrating the UAE’s
ability to attract foreign capital for
sustainable ventures. Additionally, the
upcoming renewable energy projects
including the Barakah nuclear energy
plant and the (2-GW) Al Dhafra Solar
PV project are anticipated to contribute
significantly, raising the nation’s
clean power generation capacity to
a remarkable 8.8 gigawatts by 2025.
Investments in Technology
Advancement:
Carbon funding has played a pivotal
role in driving technological
advancements within the UAE. This
includes a significant $100 billion
investment in renewable energies and
clean technologies, achieved through a
collaborative effort between the UAE
and the United States. Another noteworthy
development in this sector is
the establishment of the “UAE Climate
Tech” forum, a first-of-its-kind initiative
aimed at addressing the pressing need
for large-scale decarbonization while
simultaneously promoting climate action
and supporting socio-economic growth.
Limitations:
Despite taking substantial steps in
promoting carbon funding in the UAE,
it still continues to face certain challenges
and hurdles including credibility.
A major limitation in carbon funding
is the global credibility crisis surrounding
carbon credits due to doubts about
their effectiveness, transparency,
double counting, and environmental
and social impacts. To address this,
the UAE’s Ministry of Climate Change
and Environment (MoCCAE), Industrial
Innovation Group LLC, and Venom
Foundation have joined forces to
pioneer a transparent and efficient
national carbon credits system using
blockchain technology, ensuring accurate
tracking and digitization.
The UAE’s commitment to carbon
funding is clear through significant
investments and innovative initiatives.
The nation is forging towards a
greener, more diversified and secure
future. Despite challenges, the UAE’s
leadership in addressing climate change
and pursuing sustainability is evident,
laying the foundation for a prosperous,
sustainable tomorrow.
October 2023 www.thefinanceworld.com 61