Abu Dhabi Global Market announced on Tuesday the partnership with AirCarbon Exchange (ACX), a Singapore-based commodities exchange, which will allow ADGM to establish in Abu Dhabi the world’s first fully regulated carbon trading exchange and carbon clearing house.
ADGM will be the first jurisdiction to regulate carbon credits and offsets as emission instruments, as well as grant licenses to exchanges that will operate both spot and derivative markets.
New exchange is expected to be launched later this year, and will be established as a Recognized Investment Exchange, allowing companies to trade carbon credits similarly to conventional financial products, and thus boosting participation and investment in global carbon reduction and offset program.
ACX intends to initially deploy distributed ledger technology often used in a traditional commodity trading market to create tokenized carbon credits for spot trading. At a later stage, the exchange plans to provide carbon credit futures as commodity derivatives for trading.
All digital tokens will be custodied by a regulated Recognized Clearing House (RCH), and all spot transactions will be settled and cleared using RCH's blockchain smart contracts.
Once the RCH begins working within ADGM, it will play a pivotal role in other markets and financial instruments, including virtual asset markets, adding vital market infrastructure to the digital trading ecosystem, said Ahmed Jasim Al Zaabi, chairman of ADGM.
In addition to carbon credits, ACX plans to expand its trading platform to include clean energy goods.
Last year, the United Arab Emirates pledged to achieve net-zero emissions by 2050, becoming the first country in the Middle East and North Africa to make such commitment.
ADGM announced in January that it had offset its 2021 carbon emissions through purchasing carbon credits from Indonesia, becoming the world’s first carbon-neutral international financial center.