Abu Dhabi Wealth Fund Mubadala Acquires 20% Stake in ACX

Abu Dhabi wealth fund Mubadala Investment Company has acquired a strategic stake in Singapore-based AirCarbon Exchange (ACX), which is establishing a carbon credits trading exchange and trading house in the emirate.

Mubadala, the $284 billion Abu Dhabi sovereign fund, will acquire at least a 20% stake in AirCarbon Exchange. The acquisition supports the plan of the oil-rich OPEC member to enable companies to trade and finance carbon credits.

Mubadala said that the deal with ACX has been successfully done but they didn’t disclose any financial details.

The executive director of UAE Clusters at Mubadala Badr Al Olama said that the UAE is leading the transformation of the financial ecosystem. This recent investment is a testament to its role in contributing to that change.

He further noted that:

“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 decarbonisation and diversification of the UAE economy…”

ACX uses blockchain technology to securitize carbon credits. It will soon begin its first carbon exchange operations in the United Arab Emirates.

Regulating Carbon Credits Trading in Abu Dhabi

Emissions trading schemes in carbon markets are tools to reduce greenhouse gas emissions. They place a cap or limit on the amount countries or firms can emit. If they exceed those limits, they can buy permits in the form of carbon credits from others.

Carbon credits are known as carbon offsets in the voluntary carbon markets. The market for these instruments can grow to over $50 billion by 2030, according to some estimates.

The UAE has been spending billions of dollars to increase oil and gas production. But the Arab’s 2nd largest economy also plans to invest about $165 billion in clean and renewable energy to reach net zero emissions by 2050. Doing so makes it the first nation in the Middle East to have a net zero pledge.

Abu Dhabi’s stake in ACX is part of UAE’s net zero strategies and efforts to offset its emissions. The move is also a preparation for hosting the next climate change summit COP28.

In February this year, ACX partnered with the Abu Dhabi Global Market (ADGM) to set up the first regulated carbon credits trading exchange in the capital. ACX also plans to set up a regulated recognized clearing house called ACX Clearing Corporation for clearing and settling commodities and their derivatives.

ADGM will regulate carbon credits and offsets as emission instruments in the country. It will also issue licenses for exchanges to operate both spot and derivative markets.

In January, ADGM revealed that it had achieved carbon-neutrality status by offsetting its carbon emissions in 2021. As such, it becomes the “world’s first international financial center to become carbon neutral”.

ADGM’s chairman Ahmed Al Zaabi remarked that:

“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.”

Financing the Green Transition in UAE

Governments around the world are pursuing net zero emissions goals. New initiatives have been announced at this year’s COP27 summit in Egypt that just concluded. And a lot of investments are necessary to achieve those net zero targets – about $50 trillion.

Also, the world needs to cut GHG emissions by about 51 billion tonnes each year to reach net zero by 2050.

The International Monetary Fund urges the investment industry to scale up efforts to finance the green transition and mitigate the climate crisis.

Saudi Arabia and other Gulf Arab states have been boosting their green credentials.

In October, Saudi Arabia’s sovereign wealth fund, the Public Investment Fund, had auctioned off 1.4 million tonnes of carbon credits. It’s the Middle East’s first carbon offset auction and the largest-ever in the world.

Oil giant Saudi Aramco, mining firm Ma’aden, and Olayan Financing Company bought the largest number of carbon credits.

And the investment of Mubadala in ACX is the most recent commitment to finance green transition in UAE. Through the initiative, Abu Dhabi aims to attract inflows from global capital markets through carbon credits as investors seek for more ESG-compliant investments.

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How to Calculate Carbon Credits? (5 Easy Steps to Follow)


Carbon credits are vital components of global emissions trading strategies to lower emissions and global warming. But not everyone knows how to calculate carbon credits and price them.

If you’re one of those wondering how carbon credits are calculated, then this article will guide you through from start to finish.

It will help you know the steps detailing how carbon credits are calculated, the importance of accounting them and how to measure the credits you need to offset your emissions. This is even more important if you are so eager to reduce your own carbon footprint and compensate for it well.

How To Calculate Carbon Credits

A carbon credit is a unit of exchange that individuals and firms alike use to offset their greenhouse gas (GHG) emissions.

One carbon credit, or offset in the voluntary carbon market (VCM), is equal to one metric tonne of GHG reduced or avoided from entering the atmosphere.

Carbon credits don’t have the same value. This is mainly because the carbon credit market, like any other voluntary markets, are not regulated. Different factors affect the final value or price of the credit.

Market dynamics or the supply and demand, project costs and location, and the project developer all impact how much is the worth of each credit. So the results of measuring and accounting for carbon credits can vary a lot, depending on those factors.

Accounting for carbon credits also varies for personal and business purposes.

On the individual level, home energy use, travels, meals, and hotel stays are the key items to factor in when calculating emissions. For businesses, the entire value chain of the products or services offered must be taken into account. Plus, employees’ travel and commute.

The total tonnes of emissions calculated determine the amount of carbon credits you need to offset your footprint.

How Are Carbon Credits Calculated?

There are five easy steps to follow on how to calculate carbon credits you have to buy for offsetting emissions according to DEFRA.

It refers to the Department for Environment, Food and Rural Affairs in the UK. But in general, the steps for calculating carbon footprint to know the corresponding offsets are the same from country to country and here’s how to do that.

Step #1: Determine activities that emit GHGs

The first thing you should do is to identify activities you or your firm do that release GHGs.

The more complex the structure of your organization, the more difficult it is to identify who or what are the sources of emissions. But most often, doing it involves three different ways based on the following emissions scopes.

The following diagram shows the common types of emissions sources under each scope.

Identifying those activities under each of the 3 scopes will be helpful when targeting the emissions source for later reductions.

Step #2: Quantify polluting activities

The most common approach used to calculate GHG emissions is to apply emission factors to known activity data from your home or organization.

This means getting the quantity of resource use through receipts, invoices, or bills associated with the activities. For instance, calculate the amount of electricity, fuels, goods, and services you paid for.

Activity data can be collected in different units of measurement. For example, weights in the case of food or volume for fuel used and kilowatt hours for electricity consumed.

For water, you quantify emissions in cubic meters while it’s mileage for travel. The costs for each of these polluting activities should be monitored and summed up for each year.

It is best to collect activity data by volume or mass (e.g. liters of petrol) as emissions can be measured more accurately.

The table below sets out common polluting activities and sources of information to turn the data into GHG emissions.

And if it’s impossible for you to calculate emissions from known activity data, you can estimate. But be transparent of the estimation method used to ensure that results are reasonable.

Step #3: Get the emission factor of major GHGs

This is when things can be quite tricky as to how carbon credits are calculated. That’s because there’s a formula to get the emissions from all six major GHGs. But keep in mind that your reporting period should be for 12 months.

Your emissions year should also ideally correspond with your financial year. In case they’re different, most of your reporting year must fall within your financial year.

Going back to the DEFRA guide, it notes that different activities or fuels also have different emission factors (EF). That’s to reflect how polluting each of the following GHGs is:

Carbon dioxide (CO2),
Methane (CH4),
Nitrous oxide (N2O),
Hydrofluorocarbons (HFCs),
Perfluorocarbons (PFCs), and
Sulfur hexafluoride (SF6).

Different activities and fuel can release one or more of them. So, it’s important that you know their corresponding EF. To calculate emissions of each GHG, here’s the formula to follow:

“Activity data x Emission factor = GHG emission”

Activity data refers to total use of a resource in a year. Multiplied that by the EF of all the GHGs generated by that certain activity and you get the emissions.

The Environment Protection Agency (EPA) Greenhouse Emission Inventories provide the EFs for various fuels/resources. These include coal and coke, biomass, electricity, fossil fuels, natural gas, and petroleum.

You can also find the EF of GHGs per type of vehicle that you or your company use and corresponding year.

The EPA also keeps a record of EFs for various industries called AP-42. It contains EFs of over 200 air pollution source categories, industry sectors or groups of similar emitting sources.

For the EFs of the foods and drinks you consume, you can find them in this Intergovernmental Panel on Climate Change (IPCC) Guidelines for National Greenhouse Gas Inventories.

Step #4: Change the EF to carbon dioxide equivalent

One crucial thing to take note is that the 6 major GHGs don’t have equal damage to the planet, also called their Global Warming Potential (GWP).

In other words, one unit of CO2, for instance, has a different warming effect than methane. It’s the same for the other GHGs.

Likewise, one unit of nitrous oxide has a GWP of 298 or equal to 298 units of CO2. It means N2O has the potential to warm the earth 298x more than the same amount of CO2.

That’s why it’s important to convert emissions into CO2 equivalent (CO2e). To do this, multiply the EF of each GHG with its corresponding GWP.

Step #5: Compute total emissions

The last step left to do is to calculate the total emissions of your activities/resource use. Get it by summing up all emissions in CO2e for a year.

For personal emissions, there’s another way to get your carbon footprint. For instance, you can use an online calculator that can generate your total emissions after you provide all the information.

But if you prefer a manual calculation for your organization’s emissions, you can always follow the five easy steps mentioned.

Sample computation to calculate carbon credits

The steps serve as a guide on how carbon credits are calculated. To give you a clearer picture, here’s a sample calculation you can try.

It’s based on electricity use of a household with four persons living in the U.S. The basis is the known 2015 activity data.

Step 1: Electricity use is under Scope 1 emissions

Step 2: Average use of electricity by 1 person in the US is 4,517 kWh/year.

So, it means the household of 4 people uses about 18,068 kWh (kilowatt per hour). That is equal to around 18 MWh of electricity use. 1,000 kWh = 1 megawatt (MWh).

The next step is to calculate the emissions for the activity by getting its EF.

Step 3: Electricity use EF from the EPA Greenhouse Emission Inventories

Get the EFs for electricity from the EPA Greenhouse Emission Inventories. You’ll find three GHGs for this – CO2, CH4, and N2O. Here’s the corresponding EFs for each one of them:

CO2/MWh = 650.31 lbs
CH4/MWh = 0.03112 lbs
N2O/MWh = 0.00567 lbs

Following the formula provided earlier, multiply the 3 EFs above by 18 MWh of electricity used by the household of 4. The computation to calculate total emissions for a year goes as follows:

650.31 lbs (CO2) x 18 = 11,705.58 lbs of CO2
0.03112 lbs (CH4) x 18 = 0.56016 lbs of CH4
0.00567 lbs (N2O) x 18 = 0.10206 lbs of N2O

Step 4: Converted CO2e for CH4 and N2O

To express all the emissions in CO2e, multiply their GWP specified in the EPA Greenhouse Emission Inventories.

In this case, the methane (25) and nitrous oxide (298) GWPs as explained earlier. The calculation goes like this:

11,705.58 lbs of CO2 x 1 = 11,705.58 lbs of CO2e
0.56016 lbs of CH4 x 25 = 14.00 lbs of CO2e
0.10206 lbs of N2O x 298 = 30.41 lbs of CO2e

Step 5: Total emissions is 11,750 lbs of CO2e

Lastly, sum up all the 3 converted emissions from step 4 above. Then you’ll arrive at around 11,750 lbs of total CO2e emitted in a year for electricity consumption of 4 people.

Carbon emissions often come in tonnes. So 11,750 pounds is equal to about 5.33 tonnes of CO2e.

So, what does that figure mean to calculate the carbon credits you have to buy? It’s pretty simple. Just multiply the total emissions (5.33) with the price of carbon per tonne as per the market’s rate.

For example, if the carbon price in the market that you buy from is at US$15.0/tCO2e, that would be: 5.33 tCO2e x $15.0 = $79.95.

So, the family of four wanting to offset their emission due to electricity use can buy carbon credits worth $79.95. Or it can be lower depending on the certain market they’ll be buying from.

That money is then spent on projects that reduce or avoid carbon from entering the atmosphere.

Accounting For Carbon Credits

High CO2 emitting sectors like the energy, aviation, and automobile are under regulatory or compliance carbon credit schemes. It means they have to meet a certain limit on emissions set by a government regulatory framework.

This is also called the cap-and-trade scheme or Emissions Trading System (ETS). These systems create the Certified Emissions Reduction (CER) credits. Firms with excess CER credits can trade with others who are over their limits.

There are some key international accounting bodies for regulatory carbon credits after the Kyoto Protocol. But since there’s no regulatory guidance yet, some firms made their own emissions accounting policies. But most companies are accounting for their carbon credit transactions using the IASB’s IFRS.

You can also buy carbon credits from a voluntary carbon project, also known as carbon offsets. The steps involved when accounting for carbon credits under VCM are identical, but only without the regulatory approving bodies.

Still, a third-party entity must verify the carbon credits created by the project. This is to ensure that the amount of reductions they claim are verifiable and real or measurable.

How To Assess or Measure Carbon Credits?

A project’s emission reductions represented by carbon credits are measured in tonnes of CO2e reduced or removed from the atmosphere. How to measure these carbon credits involves considering a set of key criteria.

A project’s emission reductions represented by carbon credits are measured in tonnes of CO2e reduced or removed from the atmosphere. How to measure these carbon credits involves considering a set of key criteria.

Though each credit represents one tonne of emission reduction, not all carbon credits are created equal and so their prices also vary. In general, there are three criteria that you can use to guide your buying decision – additionality, permanence, and measurability.

Additionality: a carbon reduction or removal is “additional” if it would not have happened without the carbon credit.

Additionality is crucial when evaluating or measuring carbon credits to buy. It affects the quality of a particular carbon credit. This is because buying credits to offset your emissions may only worsen the climate if the reductions are not additional. By definition, most carbon removal credits have high additionality as they rely on carbon credits to work.

Permanence: this refers to the duration and risk of leakage of carbon reduction or removal project.

This criterion considers the fact that most CO2 emitted today will not be 100% removed later. Only 25% of it stays in the air for over a hundred years.

And so, high-quality credits are the ones that go with reductions/removals that are permanent. >100 years is permanent and below that is temporary.

Measurability: this deals with data availability and verification.

The reported emission reductions must be accurate and verifiable. In particular, overestimation of GHG reductions should not occur. Otherwise, the measurability of the data won’t be reliable.

Projects that have no data to verify have poor measurability while those with verified data have good measurability.

Pricing Carbon Credits

In regulated carbon markets like the case of the EU ETS, the regulation influences the price setting. But in the VCM, prices vary based on project location, carbon program, and market conditions.

Carbon credits prices also differ depending on the specific type of projects that generate them.

For instance, carbon credits from wind projects in India (which are abundant) have an average price of $1.2/tonne. In comparison, carbon credits from the same project type in the US (which is not common) cost about $3.7/tonne.

Also, the carbon program Gold Standard often prices carbon credits higher than others. That’s because it includes in the price the social costs of the credits used for offsetting emissions.

You can learn more about carbon pricing in this comprehensive guide.

How Do You Calculate Carbon Credits? – Key Takeaways

Carbon credits put a price on air pollution. They serve as a currency used by entities to pay for their emissions.

Carbon credits are available either in compliance or voluntary carbon markets. Though prices and standards vary between these markets, carbon credits still play the same vital role in preventing or reducing emissions.

Most importantly, measuring your own emissions to calculate the carbon credits needed to offset them is one way you can help to save the planet from damaging effects of the climate.

So, if you’re ready to do it, you can start by following the 5 easy steps discussed on how to calculate carbon credits. Then you can begin searching for the best carbon offset programs to consider.

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Cambodia to Sell 15 Million Tonnes of REDD+ Carbon Credits

At COP27’s talk to end deforestation, Cambodia agreed to sign contracts with international corporate buyers for about 15 million tonnes of Verified Emission Reductions (VERs) or carbon credits from the country’s landmark REDD+ projects.

The announcement from Cambodia shows a groundbreaking collaboration among the government, NGOs, local communities, and large companies, to end deforestation. It represents an effective way to address deforestation while driving investments for sustainable development.

The Royal Government’s Ministry of Environment will be signing agreements with a group of leading corporations that will buy the carbon credits from three of Cambodia’s REDD+ projects developed by the Wildlife Conservation Society and Wildlife Alliance.

Cambodia, REDD+ and Carbon Credits

Deforestation and forest degradation are some of the biggest contributors to the climate crisis, representing around 10% to 12% of all emissions. And it will be impossible to achieve the 1.5°C warming goal without ending emissions from forest loss by 2030.

The UN Conference of the Parties (COP) created the REDD+ framework. It refers to Reducing Emissions from Deforestation and Forest Degradation, with the role of conservation, sustainable management of forests, and enhancement of forest carbon stocks in developing countries.

REDD+ is a climate change mitigation strategy that allows communities and governments to gain payments from the voluntary carbon markets for emissions reductions achieved through forest protection projects. These projects tackle the main culprits of deforestation.

REDD+ projects allow stakeholders to get value from protecting and conserving their forestlands. And the government of Cambodia finds REDD+ and the carbon credits the projects generate relevant to their cause.

According to the country’s Minister of Environment, Dr. Say Samal, project-based REDD+ is an essential part of Cambodia’s strategy to achieve its nationally determined contributions (NDCs). The mechanism also ensures that the communities have enough resources to deliver the projects.

He also said that:

“Funds generated from VER sales help Cambodia’s Ministry of Environment enact effective policies that support our country’s efforts to reduce deforestation, including our transition to a nested jurisdictional REDD+ program. At a time when the world is struggling to meet the commitments enshrined in the Glasgow Leaders’ Declaration on Forests and Land Use, Cambodia’s experience demonstrates how project-based REDD+ can help countries like ours, which are ready to preserve its forests, to secure immediate, sustainable, and large-scale financing…”

Protecting Forests With Carbon Credits (VERs)

By closing the deals, the Cambodian government managed to have critical financing to protect its vulnerable forests. It will help support local communities working on the frontline to end deforestation.

The sales from REDD+ carbon credits were part of Everland’s offering. Last June, the forest conservation company revealed its “Forest Plan”. It’s an action plan by Everland to end deforestation by developing up to 75 REDD+ projects worldwide.

Here’s how the plan will look like for REDD+ projects until 2030.

Those community-based forest projects will protect a total of about 50.5 million hectares. They represent 17% of deforestation in 15 critical forest nations, which include Cambodia. Other countries are Brazil, Indonesia, Papua New Guinea, and the Democratic Republic of the Congo.

The government of Cambodia selected Everland to market the carbon credits from its REDD+ projects with large global corporations as buyers. The offering yielded a total bid of 15 million tonnes of emission reductions.

The corporate buyers will use the VERs as part of their strategy to offset unavoidable emissions. All the while contributing to wildlife protection and community development.

Proceeds from the carbon credit sales will be used to:

scale up site-based activities within the REDD+ project landscapes,
strengthen local and community-based institutions to govern community-level revenue sharing,
increase access to jobs, education, and healthcare for the local communities, and
secure the long-term financial stability of the projects in Cambodia.

Scaling up REDD+ Programs in Cambodia

Cambodia has been scaling up its REDD+ program by expanding its portfolio of projects. This is done through the help of its major project developer partners, including the Wildlife Conservation Society (WCS) and Wildlife Alliance.

The Ministry of Environment has implemented three REDD+ projects since 2016. These projects are in Keo Seima, the South Cardamoms and Prey Lang, covering an area of 1.27 million hectares.

So far, the projects have received around $11.6 million from the sale of carbon credits. The revenues are all reinvested in further environmental conservation.

The ministry is also preparing for an additional REDD+ project on 1.19 million ha. This will bring the total REDD+ project area to over of Cambodia’s protected areas.

With these programs, the CEO of Wildlife Alliance Suwanna Gauntlett commented at the COP27 discussion:

“Cambodia’s REDD+ projects adhere to the most rigorous monitoring, evaluation, and independent verification processes. They produce high-quality verified emissions reductions that protect forests, reduce emissions, and safeguard the populations of endangered species in addition to ensuring services and livelihoods for forest communities…”

She also said that those benefits only show the forest nations that they can seek economic growth while preserving the natural beauty of their countries at the same time.

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The Fault in Our Air

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