Bid to trade gas emissions permits comes despite the emirate being among the world's worst polluters.
Dubai has launched a bid to become a centre for trading greenhouse gas emissions permits, diving into a fast growing market and the potential to turn the region's sizeable carbon footprint into cash.
Famed for its man-made islands, non-stop construction and cavernous air-conditioned shopping malls, Dubai is part of the United Arab Emirates, one of the highest per capita producers of greenhouse gas in the world.
State-run Dubai Multi Commodities Centre (DMCC) and London-listed carbon-credit company EcoSecurities have signed a deal to try and make Dubai the regional centre for trading carbon offsets.
The two are eyeing several projects in the United Arab Emirates that could cut greenhouse gas emissions and generate carbon emissions reduction certificates (CER) under a United Nations scheme.
Later, they will look at similar projects across the rapidly growing economies of the Middle East.
Under the Kyoto Protocol developing countries can sell emissions reductions from their energy-intensive industry to help rich countries offset their own contribution to climate change.
"For sure, it is on our agenda to launch a futures contract on carbon emissions," Tilak Doshi, DMCC's executive director of energy told Reuters.
"It is very hard to say when. There must be trade [first]."
The market in the Middle East is still nascent.
EcoSecurities acts as a go-between in the growing trade in carbon offsets between rich and developing countries, worth $5 billion last year. The DMCC is a controlling shareholder in Dubai's Gold and Commodities Exchange, which hosts commodities and currency futures trade.
The region is a major contributor to greenhouse gas emissions, through its oil and gas industry which produces over 30% of global oil supply and over 10% of its gas.
"The immediate emphasis will be on projects in infrastructure and major industries such as oil and gas, cement and aluminium," Souheil Abboud, EcoSecurities' regional manager for the Middle East told Reuters on Monday.
For example, EcoSecurities recently registered a project in Qatar to cut gas flaring at the Al-Shaheen oilfield. The project aims to cut emissions by some 2 million tonnes of carbon dioxide per year, implying carbon offsets revenues of around 30 million euros ($40.37 million) annually.
The global carbon market traded volumes of over $30 billion last year, up from less than $1 billion in 2004. The rapid expansion has caught the attention of a growing number of international investment banks.
UAE greenhouse gas emissions per capita were among the highest in the world in 2003, according to a U.N. Development Programme report issued last year. The UAE emitted 33.6 tonnes per capita, second only to Qatar and over nine times the world average of 3.7 tonnes.
Mindful of its reputation as a belcher of greenhouse gases, the Gulf Arab state has launched a series of initiatives aimed at reducing emissions by around 40%.For all the latest energy and oil news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.