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AirCarbon Exchange (ACX) is built on the basis of blockchain technology and is the world’s first fully digital carbon trading platform. In Abu Dhabi, ACX found a vibrant start-up ecosystem that could deliver the innovation, accelerated growth, legal support and regulatory flexibility it needed to realize its global ambitions. ACX President Middle East/Africa Kevin Iwanaga explains why Abu Dhabi is the right place at the right time.
common vision
Initially launching in Singapore in January 2021, ACX was looking for places to expand. “One of the reasons we chose the Middle East is that it is a relatively untapped market from a carbon market perspective,” explains Iwanaga. As one of the fastest growing economies in the world, Abu Dhabi stands out for its efficient and structured fintech start-up ecosystem, incentives and forward-thinking government support, making it a prime location for innovative companies with global ambitions. Ideal location.
“The Government of Abu Dhabi, together with Mubadala, embarked on its vision to develop Abu Dhabi into a leading global commodity trading hub. ACX’s vision to expand into the world’s leading digital carbon and environmental trading hub is an ideal fit ,” Iwanaga said. “Abu Dhabi has also attracted significant international capital into the Abu Dhabi Global Market (ADGM). Combine this with continued investment in the long-term energy transition, the current energy crisis situation, and the upcoming COP28 in the UAE, and you have an expansion-filled many of the drivers needed for a vibrant global carbon market trading hub”
vibrant community
Abu Dhabi has a vibrant entrepreneurial ecosystem, including start-ups and established businesses. “It’s a very mature ecosystem,” Iwanaga said. “They know exactly how to bring startups and entrepreneurs into the ecosystem, how to get them into the right place and nurture them over the years.
“As soon as I arrived in Abu Dhabi, I was immediately introduced to the ecosystem and all the other entrepreneurs and business leaders. It’s very well structured and organized.”
Startup founders can come together at Hub71 in Abu Dhabi to discuss issues, share ideas, and participate in programs designed to help them thrive. New entrepreneurs can receive mentorship, as well as introductions to venture capitalists (VCs) and other investment vehicles.
The Abu Dhabi Investment Office (ADIO) provides innovative businesses with a range of growth-enhancing support. “They can bring the company into the ADIO family and provide incentives to help the company grow through a rebate program where they will subsidize or rebate us or refund a percentage of the cost,” Iwanaga explained. “That money is freed up so we can reinvest it back into the company for growth.” ADIO can also help companies understand the opportunities available in Abu Dhabi, then facilitate connections and develop partnership packages to jump-start in the UAE capital and extensions.
international ambition
Located at the crossroads of Europe, Asia and Africa, Abu Dhabi’s world-class business environment provides ACX with a springboard to the rest of the world.
“ADGM is a world-renowned and well-respected international financial center,” said Iwanaga. “They’ve been very successful in attracting top-tier companies from around the world.” ADGM is one of the world’s premier international financial centres, with its own regulatory framework, English common law legal framework and court system, and business-friendly operations. “This makes it more flexible and easier for multinational companies to do business,” Iwanaga said.
Upon arrival in Abu Dhabi, Hub71 and ADGM connected Iwanaga with Fortune 500 CEOs, business leaders and heads of state. “In big cities like New York, Tokyo or Hong Kong, I would never have had these opportunities,” he explained. “It gives ACX huge global exposure from Abu Dhabi/ADGM.”
visionary regulation
Forward-thinking and progressive regulators are needed when it comes to enabling regulatory innovation in a pioneering field like carbon trading. While other jurisdictions may have reacted more conservatively to platforms such as ACX, ADGM’s Financial Services Regulatory Authority (FSRA) advocates for a more progressive financial services environment.
“The FSRA immediately understood what we were trying to do and started working closely with us, which is not typical for a regulator,” Iwanaga said. FSRA progressively expands and updates its commodity regulatory framework to include carbon credits and allowances for physical commodities in any jurisdiction for the first time. As a result, ADGM became the first jurisdiction in the world to classify carbon credits and allowances as new physical spot commodities and environmental financial instruments.
“It also enables ACX to offer the first-ever licensed and regulated carbon custody service, where carbon credits can be held in a fully licensed custodial account that is fully regulated away from exchanges and clearing houses. Regulation and bankruptcy.
“This is a huge step forward in bringing integrity and confidence to the carbon market,” Iwanaga said. “This will help attract more capital flows and liquidity into the carbon market for the first time. We are therefore receiving inquiries from companies around the world to learn more about this unique advantage. As we Investors and buyers have more confidence to invest large-scale capital into the global carbon market because of the higher integrity brought by the market.”
right place at right time
“We were very lucky to land in Abu Dhabi at the right time,” Iwanaga said. “There has been a lot of activity, energy and focus on the carbon market ahead of COP28, and ACX is an important part of that. The platform will be an important tool for the UAE to achieve its net-zero emissions and decarbonization goals.”
At the same time, ACX is expanding into new countries to develop a global carbon trading network, Iwanaga said: “Settlement, custody and clearing will all be centralized here in Abu Dhabi because we are regulated. We call it ‘our hub and spoke’ model’ and Abu Dhabi is the hub at the center of it”.
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