The EU 'green' market has taken a battering recently after consistently performing well over the previous five years to become a $142bn entity. It has been accessed by Gulf industries seeking funds to invest in projects designed to cut greenhouse gas emissions, writes Farah Halime
EU carbon prices have fallen to their lowest point in more than two years amid speculation the world's largest market for green credits faces an existential threat.
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The EU has developed a US$142 billion (Dh521.58bn) market for carbon credits in the past five years that has also been accessed by Gulf industries seeking funds to invest in projects designed to cut emissions of carbon dioxide, which causes global warming.
But there are growing signs the EU programme is facing a major challenge.
The price of carbon credits has fallen by a third in just three weeks to €11.85 a tonne.
"There is so much post-2012 uncertainty that we've seen institutional investors not prepared to take on the risk of investing," said Matthew Gray, a senior carbon trading analyst at carbon consultancy IDEAcarbon in London.
"Why would [an investor] take that unnecessary risk?"
The EU emission trading scheme was set up to cap the emissions of about 11,000 factories and power plants. It is a major pillar of EU climate policy, which is committed to reduce carbon dioxide emissions by 21 per cent from 2005 levels by 2020. These ambitious targets drive demand for carbon credits, although the target could rise to 30 per cent if the EU approves it. Europe dwarfs the rest of the world in trading activity, accounting for the majority of the global market value.
Industries such as power plants and steel mills buy credits to offset the emissions they generate, but they can just as easily sell them if they generate fewer emissions than the quota set by the European Commission (EC).
However, plans by the EC, which is body behind the trading scheme, to sell an extra 300 million carbon credits on the market to raise funds for green energy projects threatens to further saturate the market and push prices down.
This uncertainty on the future price of carbon credits, coupled with euro-zone debt woes, has led to a sell-off. Having grown tenfold from about $15bn in 2005, the market began to contract last year when trading activity fell by about $2bn.
There have been attempts by Middle East players to break into the European market.
The UAE's Masdar last month became the first country in the GCC to earn financial credits from the UN for a project to reduce carbon emissions.
Masdar worked with Emirates Power Company, a subsidiary of the Abu Dhabi Water and Electricity Authority, to develop a project at its power generation plant at Taweelah, a water and power project.
Teh Dubai Carbon Centre of Excellence recently unveiled plans to offset 5 million tonnes of carbon annually. Major carbon-producing companies, including the Dubai Electricity and Water Authority, the aluminium company Dubal and the energy company Enoc, have also announced they are considering carbon-emission reduction quotas as part of a voluntary joint initiative.
At the moment, the EU accepts credits from anywhere in the world. And although there is no a specific deal between the GCC and the EU, Gulf countries are considered to fall under the right category for generating carbon credits.
"Given the limited number of projects in the region and the expectations of registered projects being grandfathered into future schemes, credits from existing projects in the GCC have a good chance of continued eligibility post-2012," said Philip Moss, the former carbon markets manager at Masdar.
The evolution of bilateral carbon trading agreements is partly the result of the failure of global powers to extend the Kyoto protocol beyond next year, which could have formed the basis for a global market in carbon credits. The agreement is aimed at fighting global warming and binds 37 industrialised nations to targets for cutting environmentally harmful emissions. But countries including Japan and Russia do not want to extend the treaty.
One London carbon trading outfit has even set up a credit trading floor in Dubai.
Advanced Global Trading, a carbon credit-trading company, opened up an informal trading floor in Dubai last month.
Mr Moss said while he did not see the benefit of setting up a carbon trading floor in the Middle East, he recognised the region could become a big player in an increasingly fragmented market.
"I expect to see an increase in the number of bilateral agreements … as the carbon market slows. You will still have trading, but it will take on a different trade and form," he said.
"The EU will continue to buy a lot of carbon credits [for trade] but, in addition, it will likely import credits from overseas emerging markets like the UAE."
He said countries would also be likely to enter into agreements with one another to buy and sell carbon credits. The UAE is one of the largest polluters in the world per capita, according to UK risk analysts Maplecroft, signalling strong potential for the country to raise its carbon-generating projects.
fhalime@thenational.ae
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UPI facts
More than 2.2 million Indian tourists arrived in UAE in 2023
More than 3.5 million Indians reside in UAE
Indian tourists can make purchases in UAE using rupee accounts in India through QR-code-based UPI real-time payment systems
Indian residents in UAE can use their non-resident NRO and NRE accounts held in Indian banks linked to a UAE mobile number for UPI transactions
The specs
Engine: 4.0-litre V8 twin-turbocharged and three electric motors
Power: Combined output 920hp
Torque: 730Nm at 4,000-7,000rpm
Transmission: 8-speed dual-clutch automatic
Fuel consumption: 11.2L/100km
On sale: Now, deliveries expected later in 2025
Price: expected to start at Dh1,432,000
Sole survivors
- Cecelia Crocker was on board Northwest Airlines Flight 255 in 1987 when it crashed in Detroit, killing 154 people, including her parents and brother. The plane had hit a light pole on take off
- George Lamson Jr, from Minnesota, was on a Galaxy Airlines flight that crashed in Reno in 1985, killing 68 people. His entire seat was launched out of the plane
- Bahia Bakari, then 12, survived when a Yemenia Airways flight crashed near the Comoros in 2009, killing 152. She was found clinging to wreckage after floating in the ocean for 13 hours.
- Jim Polehinke was the co-pilot and sole survivor of a 2006 Comair flight that crashed in Lexington, Kentucky, killing 49.
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MATCH INFO
Group B
Bayern Munich v Tottenham, midnight (Thursday)
What are the GCSE grade equivalents?
- Grade 9 = above an A*
- Grade 8 = between grades A* and A
- Grade 7 = grade A
- Grade 6 = just above a grade B
- Grade 5 = between grades B and C
- Grade 4 = grade C
- Grade 3 = between grades D and E
- Grade 2 = between grades E and F
- Grade 1 = between grades F and G
Conflict, drought, famine
Estimates of the number of deaths caused by the famine range from 400,000 to 1 million, according to a document prepared for the UK House of Lords in 2024.
It has been claimed that the policies of the Ethiopian government, which took control after deposing Emperor Haile Selassie in a military-led revolution in 1974, contributed to the scale of the famine.
Dr Miriam Bradley, senior lecturer in humanitarian studies at the University of Manchester, has argued that, by the early 1980s, “several government policies combined to cause, rather than prevent, a famine which lasted from 1983 to 1985. Mengistu’s government imposed Stalinist-model agricultural policies involving forced collectivisation and villagisation [relocation of communities into planned villages].
The West became aware of the catastrophe through a series of BBC News reports by journalist Michael Buerk in October 1984 describing a “biblical famine” and containing graphic images of thousands of people, including children, facing starvation.
Band Aid
Bob Geldof, singer with the Irish rock group The Boomtown Rats, formed Band Aid in response to the horrific images shown in the news broadcasts.
With Midge Ure of the band Ultravox, he wrote the hit charity single Do They Know it’s Christmas in December 1984, featuring a string of high-profile musicians.
Following the single’s success, the idea to stage a rock concert evolved.
Live Aid was a series of simultaneous concerts that took place at Wembley Stadium in London, John F Kennedy Stadium in Philadelphia, the US, and at various other venues across the world.
The combined event was broadcast to an estimated worldwide audience of 1.5 billion.
THREE
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Sholto Byrnes on Myanmar politics
Yahya Al Ghassani's bio
Date of birth: April 18, 1998
Playing position: Winger
Clubs: 2015-2017 – Al Ahli Dubai; March-June 2018 – Paris FC; August – Al Wahda
The five pillars of Islam
NO OTHER LAND
Director: Basel Adra, Yuval Abraham, Rachel Szor, Hamdan Ballal
Stars: Basel Adra, Yuval Abraham
Rating: 3.5/5
Specs
Engine: Duel electric motors
Power: 659hp
Torque: 1075Nm
On sale: Available for pre-order now
Price: On request
What the law says
Micro-retirement is not a recognised concept or employment status under Federal Decree Law No. 33 of 2021 on the Regulation of Labour Relations (as amended) (UAE Labour Law). As such, it reflects a voluntary work-life balance practice, rather than a recognised legal employment category, according to Dilini Loku, senior associate for law firm Gateley Middle East.
“Some companies may offer formal sabbatical policies or career break programmes; however, beyond such arrangements, there is no automatic right or statutory entitlement to extended breaks,” she explains.
“Any leave taken beyond statutory entitlements, such as annual leave, is typically regarded as unpaid leave in accordance with Article 33 of the UAE Labour Law. While employees may legally take unpaid leave, such requests are subject to the employer’s discretion and require approval.”
If an employee resigns to pursue micro-retirement, the employment contract is terminated, and the employer is under no legal obligation to rehire the employee in the future unless specific contractual agreements are in place (such as return-to-work arrangements), which are generally uncommon, Ms Loku adds.
UAE currency: the story behind the money in your pockets
Company%20profile
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THE CLOWN OF GAZA
Director: Abdulrahman Sabbah
Starring: Alaa Meqdad
Rating: 4/5
The specs
Engine: 2.0-litre 4-cylinder turbo hybrid
Transmission: eight-speed automatic
Power: 390bhp
Torque: 400Nm
Price: Dh340,000 ($92,579
Killing of Qassem Suleimani
Benefits of first-time home buyers' scheme
- Priority access to new homes from participating developers
- Discounts on sales price of off-plan units
- Flexible payment plans from developers
- Mortgages with better interest rates, faster approval times and reduced fees
- DLD registration fee can be paid through banks or credit cards at zero interest rates
Key facilities
- Olympic-size swimming pool with a split bulkhead for multi-use configurations, including water polo and 50m/25m training lanes
- Premier League-standard football pitch
- 400m Olympic running track
- NBA-spec basketball court with auditorium
- 600-seat auditorium
- Spaces for historical and cultural exploration
- An elevated football field that doubles as a helipad
- Specialist robotics and science laboratories
- AR and VR-enabled learning centres
- Disruption Lab and Research Centre for developing entrepreneurial skills
