The UAE’s Carbon Market: Pioneering Climate Action and Sustainable Commerce

As the global economy pivots toward decarbonization, the United Arab Emirates is establishing itself as a regional and global leader in carbon market development. The UAE is building a regulated, transparent, and growth-driven ecosystem—from policy frameworks to trading platforms—that reflects its ambition to achieve Net Zero by 2050.

1. Foundational Framework: Building a Regulated Carbon Market

The UAE has laid the legal foundation with Cabinet Resolution No. 67 of 2024, which took effect on December 28, 2024. This resolution mandates that public and private entities emitting 0.5 million metric tonnes CO₂e or more annually must register with the newly formed National Register for Carbon Credits (NRCC). The Ministry of Climate Change and Environment oversees this, while the Securities and Commodities Authority (SCA) regulates licensed carbon trading platforms. Entities under the threshold may participate voluntarily.

This system went live for registered entities by June 28, 2025, ushering in a formal structure for monitoring, reporting, verification (MRV), and transparent carbon credit trading. Experts highlight that this regulatory clarity is positioning the UAE as a model for regional carbon market development, with significant penalties (up to AED 1 million) for non-compliance underscoring its seriousness.

2. Market Infrastructure: Exchanges, Pilots, and Platforms

AirCarbon Exchange (ACX)

Launched in late 2022 under the Abu Dhabi Global Market, AirCarbon Exchange (ACX) stands as the world’s first fully regulated voluntary carbon trading exchange and clearinghouse.

Dubai Financial Market (DFM) Pilot

At COP28 in late 2023, DFM hosted a pilot program where institutional investors traded carbon credits sourced from both local projects and international initiatives, verified by global standards. The pilot demonstrated the appetite for carbon trading in the UAE’s financial markets.

Emirates NBD’s Carbon Future Contracts

Responding to growing corporate demand, Emirates NBD rolled out compliant carbon futures trading aligned with international emissions trading schemes, positioning itself as a bridge to global compliance markets.

3. Demand Mobilization: UAE Carbon Alliance & International Outreach

Formed in June 2023 by the UAE Independent Climate Change Accelerators (UICCA), the UAE Carbon Alliancebrings together institutions such as ACX, First Abu Dhabi Bank, Mubadala, TAQA, Masdar, ADCB, Standard Chartered, and Emirates NBD. Its mandate includes raising awareness, aggregating demand, and advocating for high-integrity carbon markets both locally and globally.

A striking example is the Alliance’s pledge to purchase US$450 million worth of African carbon credits by 2030, through a partnership with the Africa Carbon Markets Initiative. This demonstrates the UAE’s intention to influence both domestic and international climate markets.

4. Market Outlook: Growth Projections and Trend Trajectories

The UAE’s overall carbon credit market generated US$3.29 billion in revenue in 2023, with projections reaching US$25.85 billion by 2030, driven primarily by compliance demand—though voluntary credits are the fastest-growing segment.

Specifically, the voluntary carbon credit market accounted for about US$27.9 million in 2023, expected to grow to US$146.4 million by 2030, led by afforestation and reforestation projects, followed by energy-efficiency and soil carbon solutions.

At a regional scale, the UAE and the broader Middle East voluntary carbon market could expand to US$10–40 billion by 2030, reflecting growing investor interest in climate technology and sustainability finance.

5. Integration and Validation: Standards, Technology, and Oversight

The NRCC emphasizes MRV protocols aligned with international standards and independent audits. Trading platforms must be licensed by the SCA. Governance measures are reinforced by blockchain technologies that enhance traceability and prevent double-counting, ensuring transparency and credibility across the market.

6. Strategic Implications for Businesses and Policymakers

For Large Emitters (0.5 MMT+ CO₂e annually):

Register with NRCC and ensure MRV systems are compliant.
Prepare for trading carbon credits through licensed platforms.
Leverage these mechanisms to align with the UAE’s Net Zero by 2050 strategy.

For Voluntary Participants and SMEs:

Consider joining the NRCC voluntarily to demonstrate climate leadership.
Benefit from growing demand and credible carbon-offset supply.

For Financial Institutions and Market Participants:

Opportunities abound in exchanges, clearing services, and risk management products.
Institutions such as Emirates NBD, ACX, and DFM are already leading the way.

For International Investors & Carbon Credit Suppliers:

The UAE’s demand signal, including its pledge for African credits, presents a prime opportunity.
High standards and regulatory clarity make the UAE a promising market for binding and voluntary credits.

A Carbon-Smart UAE—Leading with Structure and Momentum

The UAE’s carbon market has matured from initial frameworks to an operational and expanding ecosystem in under two years. Anchored by a clear legal mandate, advanced trading platforms, and a coalition of trusted market actors, the country is building both capacity and credibility.

For businesses, this means compliance obligations that align with broader net-zero strategies—and growing access to an emergent asset class. For investors and global partners, it signals a market-friendly, high-integrity gateway into regional and international carbon solutions.

As the world increasingly embraces carbon pricing mechanisms, the UAE’s approach could become a regional benchmark—and perhaps a global exemplar—for carbon market infrastructure and climate action.