The government of the United Arab Emirates (UAE) – gearing up to host the COP28 climate summit later this year – is to develop a national system for carbon credits based on blockchain.
Minister of climate change and environment HE Mariam bint Mohammed Saeed Hareb Almheiri witnessed the signing of a Memorandum of Understanding (MoU) between the UAE’s Ministry of Climate Change and Environment and two technology partners as they look to establish ‘the world’s first-of-its-kind national system for carbon credits using blockchain technology’, according to a LinkedIn post published by the ministry.
Carbon credits are tradeable permits or certificates to emit a set amount of polluting gas. Blockchain is a list of records, known as blocks, securely linked together using cryptography as an immutable ledger.
The collaboration ultimately aims to cut emissions and boost sustainable agriculture, environmental health and biodiversity in the UAE by providing ‘the highest levels of transparency, reliability, efficiency and security in managing the issuance, transfer, calculation and accurate tracking of carbon credits,’ according to the announcement.
The initiative is revealed as the potential of ‘green fintech’ to help tackle climate change garners growing attention from governments and international institutions. COP28 will be held from 30 November to 12 December in the UAE’s biggest city, Dubai.
RELATED ARTICLE World Bank’s IFC backs blockchain carbon credits platform – our news story (23 August 2022) on the Carbon Opportunities Fund, a global investment platform to sell and track carbon credits using blockchain being launched by a partnership including the International Finance Corporation (IFC), part of the World Bank Group
‘Facilitating the flow of financing’
The MoU was signed the UAE ministry office in Dubai by acting undersecretary HE Mohammed Said Al Nuaimi, and representatives of the two external partners: Taryam Matar Taryam, chief executive of UAE-headquartered Industrial Innovation Group; and Peter Knez, chair of the Foundation Council at Venom Foundation.
Industrial Innovation Group describes itself as a global systems integrator that operates in areas including ID documents and IT systems. Venom is a blockchain infrastructure licensed under the Abu Dhabi Global Market (ADGM) framework.
The former company said in a press release that the national system would ‘facilitate digitisation and streamline the process of issuance, transfer and retirement of carbon credits’.
The initiative will, according to Industrial Innovation Group’s announcement, ‘play a pivotal role in facilitating the flow of financing from emitters to carbon removal projects at both national and international levels […] and incentivise and reward businesses that implement sustainable practices and invest in emission-reducing projects’.
‘By creating a credible framework for carbon credits generation, verification [and] traceability, the register system will empower organisations to offset their emissions while promoting a low-carbon economy,’ the announcement added.
UAE Ministry of Climate Change and Environment: the ministry highlighted the Memorandum of Understanding via LinkedIn and also using ‘X’ (formerly known as Twitter)
UAE’s revised emissions target
The UAE recently set a new target of cutting emissions by 40 per cent by 2030. Its ambition was previously 31 per cent. The revised target, announced by the ministry last month, is part of the third update of the UAE’s second Nationally Determined Contributions (NDCs). NDCs are countries’ self-defined national climate pledges under the 2015 Paris Agreement.
“The UAE believes in its ability to make a difference in this field,” said Almheiri (in a quote contained in Industrial Innovation Group’s announcement). Achieving carbon-reduction goals would, she said, “require working according to a scientific approach based on modern technology and the highest levels of transparency to monitor carbon credits to work according to realistic data, achieve tangible results on the ground and achieve climate neutrality by 2050.”
“The collaboration with the Industrial Innovation Group and Venom Foundation to establish the national system for carbon credits using blockchain is an important step in this field and reflects our determination to enhance the UAE’s climate action for a more sustainable future for us and future generations,” she added.
The UAE government has faced criticism for appointing Sultan Al Jaber as COP28 president. The minister of industry and advanced technology, and UAE special envoy for climate change, is also group chief executive of Abu Dhabi National Oil Company (ADNOC). He is also chairman of Masdar, a UAE-government owned renewable energy company.
The Washington Post reported on 9 August that the UAE had hired a US-based communications agency to ‘counteract all negative press and media reports’ about its role in hosting COP28.
FURTHER READING
‘Fintech and the SDGs: a fireside chat with Aiaze Mitha’ – a write-up of a fireside chat with Aiaze Mitha, the United Nations Development Programme (UNDP)’s global lead for digital finance for the Sustainable Development Goals (SDGs), held during the Global Government Fintech Lab 2023 on 18 May 2023
‘Going green: governments look to fintech to help combat climate crisis’ – write-up of a Global Government Fintech webinar titled ‘How Can “Green Fintech” Help Tackle Climate Change?’ (held on 8 February 2022)
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