The Securities and Commodities Authority (SCA) has announced an initiative for launching the region’s first-of-its-kind form of trading in emissions that specifically targets carbon dioxide.
The initiative reflects the significant growth in passenger and cargo air traffic in the country, with the UAE ports now considered a main destination for a large number of international air carriers, and the tangible increase in the industrial sector’s share of the country’s GDP as a result of the rising number of plants operating nation-wide, which consequently results in growing industrial emissions.
Under the carbon trading, a country having more emissions of carbon is able to purchase the right to emit more and the country having less emission sells the right to emit carbon to other countries. The countries emitting more carbon thereby satisfy their carbon emission requirements, and the trading market results in the most cost-effective carbon reduction methods being exploited first.
The initiative is part of a roadmap being deliberated by the SCA, the results of which will be announced shortly, to ensure sustainable financial markets complying with world standards.
This form of permit trading is a common method countries utilise in order to meet their obligations specified by the Kyoto Protocol; namely the reduction of carbon emissions in an attempt to mitigate future climate change.