The UAE will lead the voluntary carbon market in the region during 2025

The UAE seeks to strengthen its regional and global position in the voluntary carbon market in anticipation of investment opportunities within government initiatives that aim to achieve carbon neutrality by 2050, according to the Abu Dhabi-based Interregional Center for Strategic Analysis. The Voluntary Carbon Market is a platform for companies and individuals to trade carbon credits with the aim of offsetting unavoidable carbon emissions, enabling improved sustainability and reduced environmental impact. Interregional said: According to Boston Consulting Group, the size of the voluntary carbon market in the region is expected to range between $10 and $40 billion by 2030. Global estimates indicate that the value of the carbon credits market will reach more than $50 billion during the same period.

Initiatives
Interregional pointed out that the UAE has launched a number of ambitious projects to enhance its role in carbon trading, most notably: the Dubai Financial Market’s experimental platform for trading carbon credits during the COP28 conference, to facilitate financing of environmental projects. In September 2023, the “UAE Carbon Alliance” was launched: during which companies committed to purchasing African carbon credits worth $450 million to enhance connectivity between the UAE and African carbon markets.
AirCarbon Exchange in Abu Dhabi is the first fully regulated exchange for carbon trading, facilitating buying and selling operations for companies. Abu Dhabi Global Market has become the first regulatory body to treat carbon credits as financial instruments, enhancing transparency in the market. These platforms facilitate the process of trading carbon credits between buyers and sellers, and companies that own a surplus of carbon credits can sell them to companies that need to offset their emissions. All traded credits are verified by internationally accredited classification bodies to ensure their credibility. These platforms contribute to directing funds towards environmental preservation and sustainable development projects, and enhance the reliability of trade in this field.

Government support and legislation
Interregional explained that, within the framework of regulating greenhouse gas emissions, the UAE issued a ministerial decision obligating large companies to monitor their emissions and submit reports about them, and also established a national registry of carbon credits to promote trade in this field.

Carbon capture and sequestration
The UAE is one of the world’s leading countries in carbon capture and sequestration (CCS) technologies, including the Al Reyadah project, which is managed by ADNOC to capture 800,000 tons of carbon dioxide annually from the Emirates Steel factory. As for the Habshan project, it is expected to add a capacity of 1.5 million tons annually, bringing ADNOC’s total capacity to 2.3 million tons, with a plan to reach 10 million tons annually by 2030.

Uses
The UAE uses captured carbon dioxide mainly in enhanced oil recovery processes, which contributes to improving the efficiency of oil extraction and reducing environmental impact.
Carbon capture techniques rely on capturing carbon dioxide from industrial emissions sources, such as factory smokestacks and power plants. After the gas is captured, it is compressed and transported via pipelines to suitable geological storage sites, such as deep shale formations or depleted oil and gas reservoirs. In some cases, the injected carbon dioxide is used to enhance oil recovery, a process known as enhanced oil recovery. The carbon dioxide captured in the UAE is mainly used in enhanced oil recovery operations within the country.

Sustainable projects
The Ministry of Climate Change and Environment has launched the National Carbon Sequestration Roadmap, which includes activities such as planting mangroves and producing their seeds to enhance natural carbon sequestration. With the UAE committed to reducing emissions by 40% by 2030, carbon management is a key focus for achieving sustainability. It also targets the production of 14.2 gigawatts of renewable energy, which reinforces the need for innovative carbon management solutions.
Global carbon markets open the door for the UAE to sell carbon credits or export mitigation technologies, which supports global efforts to reduce climate change and enhances the country’s role as a regional leader in this field.