In a significant policy announcement, the UAE Securities and Commodities Authority (“SCA”) has confirmed it is developing a new regulatory framework for carbon credit trading platforms, a strategic project aimed at supporting the UAE’s national climate goals. This initiative moves the trading of carbon credits into a formal, regulated financial market, creating a new asset class for investors and a critical tool for corporate decarbonisation strategies.
The legal foundation for this new market is the recently enacted Cabinet Decision No. 67 of 2024, which established a National Register for Carbon Credits. Article 9 of the Decision explicitly defines carbon credits issued by the National Register as “financial instruments” when traded within the State. This legal characterisation is pivotal, as it brings the entire lifecycle of carbon credit trading firmly within SCA’s jurisdiction over securities and commodities markets.
Under the Cabinet Decision, SCA is granted an extensive and explicit mandate to build and supervise this emerging market. Its competencies include issuing the specific decisions that will govern the licensing and ongoing operation of carbon credit trading platforms. SCA will also regulate all core market functions, including the listing, trading, clearing, settlement and transfer of ownership of carbon credits. Furthermore, its supervisory powers will extend to all financial activities related to these platforms, backed by the authority to investigate violations.
To ensure market integrity, the new framework is supported by a robust enforcement toolkit. Article 12 of the Cabinet Decision empowers SCA to impose significant administrative penalties for breaches of its forthcoming rules. These range from warnings and financial fines of up to AED 1,000,000 to the suspension of trading or even the cancellation of a platform’s operating license. This signals a clear regulatory intent to hold the carbon market to the same high standards as traditional securities and commodities markets.
While the primary legislation is now in force, the detailed secondary regulations from the SCA are still in development. We expect SCA to issue a dedicated carbon market framework in 2026 that will detail the licensing requirements, prudential standards and market conduct rules for platform operators. Prospective market participants should monitor SCA consultations closely as this new regulatory landscape takes shape.