FAB signs carbon credit pacts with Masdar and Blue Carbon

Move aimed at boosting the trade of emissions permits in the UAE

Solar panels above the car park at Masdar City's net-zero building in Abu Dhabi. Khushnum Bhandari / The National

First Abu Dhabi Bank has signed preliminary agreements with Masdar and Blue Carbon to supply carbon credits, a move that will boost the trading of emissions permits in the UAE.

Pacts with Masdar, Abu Dhabi’s clean energy company, and Dubai-based Blue Carbon, which focuses on creating environmental assets and nature-based solutions are “important milestones”, connecting UAE sustainability leaders directly into the emerging Mena carbon trading market, FAB, the UAE's largest bank by assets, said on Monday.

Carbon credits, also known as carbon offsets, are permits that allow companies to emit a certain amount of carbon dioxide or other greenhouse gases.

The funds from the sale of the credits are then used to finance climate-action projects that would not otherwise get funding.

The market for the financial instrument could be worth more than $50 billion by 2030, according to consultancy McKinsey.

“Masdar has been active in carbon markets through our own investments and projects for the past 15 years, and we are fully supportive of tools that increase capital allocation to decarbonisation initiatives,” said Mohamed Al Ramahi, Masdar chief executive.

“Carbon credits provide industries with practical tools for reaching their ambitious decarbonisation targets. Ahead of the UAE hosting Cop28, we will continue to work across all sectors to build a more sustainable future for all.”

FAB is engaged in advanced discussions with several UAE entities to build a voluntary carbon ecosystem in the Arab world’s second largest economy.

In August, the Ministry of Climate Change and Environment signed a preliminary agreement with UAE-based Industrial Innovation Group and Venom Foundation to establish a national system for carbon credits using blockchain technology.

The pact in the run-up to the UN climate summit in Dubai in November and December is in line with the UAE’s stricter carbon emissions reduction targets this decade and achieving its goal of climate neutrality by 2050, the ministry said on Monday.

FAB said the move was in line with its ambitions to become a carbon trading hub in the UAE. It has already established a dedicated carbon trading desk as part of its global markets offering to clients.

The desk provides carbon trading and financing options, facilitates strategic carbon-related transactions, and promotes the development of high-quality carbon credits for corporate and investment banking clients.

FAB has trading capabilities in both compliance markets, including the EU Allowances and UK Allowances, and voluntary carbon markets, offering forward carbon credit purchase-structured solutions to local and international customers.