Mubadala acquires stake in world’s fully regulated carbon exchange

Gulf Today, Staff Reporter

Mubadala Investment Company (Mubadala), an Abu Dhabi sovereign investor, and AirCarbon Exchange (ACX), the global exchange revolutionising the voluntary carbon market based in Hub71, Abu Dhabi’s global tech ecosystem, have successfully completed a transaction under which Mubadala has acquired a strategic stake in ACX, supporting ACX’s establishment of the first fully regulated carbon trading exchange and carbon clearing house in Abu Dhabi.

ACX is a global environmental commodities exchange that uses distributed ledger technology leveraging blockchain architecture to create securitized carbon credits. This framework allows corporates to trade and finance carbon credits like conventional financial assets, increasing participation and investment in global programs for carbon emission reduction and offset.

As part of its responsible investing and economic diversification mandate, Mubadala is investing in commercially attractive solutions to the world’s most significant challenges and is purposefully deploying capital in high growth sectors that drive substantial change.

The announcement was made during the first edition of Abu Dhabi Finance Week (ADFW) hosted by ADGM between 14 and 18th November 2022, in partnership with key economic drivers of the Abu Dhabi economy and a group of global and regional financial institutions. The week-long event serves as a platform for in-depth conversations around the MENA region’s thriving financial sector, industry trends, developments and innovation involving financial markets and global banking.

The signing was witnessed by  Ahmed Jasim Al Zaabi, Chairman of Abu Dhabi Global Market and Musabbeh Al Kaabi Chief Executive Officer of UAE Investments at Mubadala and signed by Badr Al Olama Executive Director, UAE Clusters at Mubadala, Dhaher Bin Dhaher Chief Executive Officer of Registration Authority at Abu Dhabi Global Market, and William Pazos Managing Director and CO - Founder of AirCarbon Exchange.

Commenting on this,  Ahmed Jasim Al Zaabi, Chairman of Abu Dhabi Global Market (ADGM), said: “The UAE continues to be a leader in leveraging the path to a lower carbon economy to safeguard the environment, drive down emissions and create lasting economic opportunities. The investment by Mubadala in ACX is a great testament to the commitment towards climate action, which will enable investors and businesses to voluntarily purchase verified emissions reductions in the form of carbon credits within the progressive ecosystem of ADGM. As one of the first-fully regulated jurisdictions in the world to regulate carbon credits and offsets as environmental instruments in a voluntary market, ADGM is committed to playing a leading role in facilitating the transition to a lower carbon economy by stimulating sustainable finance flows of investments.” Commenting on this transaction, Badr Al Olama, Executive Director of UAE Clusters at Mubadala Investment Company, said: “The UAE is spearheading the transformation of the financial ecosystem, and this investment is a testament to our role in contributing to it. By investing in Air Carbon Exchange and pioneering the future of environmental commodities, we demonstrate our ability to combine impact with investments that support both the decarbonization and diversification of the UAE economy.”

Thomas McMahon, CEO & Co-Founder of ACX also added, “We are honored today to announce Mubadala’s investment in ACX. It represents Mubadala’s confidence in the growth potential of ACX and validates the hard work the team has committed into developing ACX and our joint commitment going forward to scaling the voluntary carbon market both in region and globally.”

ADGM is the first jurisdiction to regulate carbon credits and offsets as environmental instruments, a class of financial instruments, and to license exchanges and clearing houses that operate both spot and derivatives markets. In addition, ADGM itself has achieved ‘carbon neutrality’ by offsetting its 2021 carbon emissions as an organization to become the world’s first carbon-neutral international financial center, underpinning its commitment to building a progressive and more sustainable economy in line with the UAE Net Zero by 2050 Strategic Initiative.

Mubadala’s commitment to the energy transition and climate impact began in 2001 with some of the foundational investments were made. This partnership is a step forward and a continuation of Mubadala’s strategic and long-standing support for the acceleration of the UAE’s energy transition and its achievement of net zero emissions by 2050.

ACX has recently been granted Recognition Orders by the Financial Services Regulatory Authority (FSRA) to operate as a Recognised Investment Exchange (RIE) and as a Recognized Clearing House (RCH) in ADGM. This ground-breaking new regulatory framework brings strengthened market structure, trust and integrity to the voluntary carbon markets, and within the framework includes rules supervised by the FSRA across fair and orderly trading, real-time trade surveillance, regulated spot carbon contracts, full market transparency and price discovery, and real-time settlement.

Last year, ACX was recognized as the Best Carbon Exchange in Environmental Finance’s prestigious Voluntary Carbon Market Rankings. In January 2022, ACX partnered with the UN Framework Convention on Climate Change (UNFCCC) to promote carbon offsetting via UNFCCC Certified Emission Reductions (CERs) to allow clients representing 30 different countries to purchase and retire CERs for their carbon offsetting purposes.