Offset8 Capital, an asset management company based in Abu Dhabi, is planning to raise $250 million for a carbon investment fund. The demand for better-regulated carbon credits is increasing, and the company aims to close the initial capital for the fund in the third quarter of this year. The fund will be established in the Abu Dhabi Global Market (ADGM) to take advantage of its framework that regulates carbon credits. This will be the first carbon investment fund of its kind in the Middle East.
Offset8 Capital’s Carbon Investment Fund aims to provide funding to projects and companies that actively engage in reducing global carbon emissions. The primary goal is to finance carbon removal projects that not only cut emissions but also benefit local communities. The company believes that the voluntary carbon market needs to become easier to understand in order to attract more stakeholders and accelerate the fight against global warming. To achieve this, Offset8 Capital plans to close a $250 million carbon fund. The proposed investments will target carbon reduction projects in the Middle East, Africa, and Southeast Asia. The company has already identified over 50 projects in 29 countries that it expects will form the fund’s investment pipeline. These projects include reforestation, mangrove restoration, water purification, biodiversity conservation, and biochar initiatives.
In evaluating these projects, Offset8 Capital will rely on the Integrity Council on the Voluntary Carbon Markets’ Core Carbon Principles for high-quality carbon credits. The company’s plans for raising the carbon fund align with Abu Dhabi’s launch of its own carbon credit exchange last year. The Abu Dhabi sovereign fund Mubadala acquired a strategic stake in AirCarbon Exchange (ACX), which established the carbon credits trading exchange and trading house in the UAE capital. This move supports the UAE’s net zero strategies and efforts to offset its emissions. Abu Dhabi’s regulatory framework considers carbon credits as both a financial instrument and a spot commodity, improving compliance and capital requirements. These actions are in line with the UAE’s preparations for hosting this year’s premier climate change summit COP28, with the CEO of the Abu Dhabi National Oil Company (ADNOC) serving as the conference’s president. However, the country’s significant oil and gas production has drawn criticism from environmentalists.
The voluntary carbon markets (VCMs) have also faced scrutiny due to their rapid growth and increasing demand from corporate offsetting goals. This has led to the creation of new guidelines and calls for stricter regulations. Criticisms have been raised regarding the presence of worthless credits in the market. Jules Maitrepierre, another co-founder of Offset8 Capital, acknowledges these concerns and emphasizes the need for high-quality credits and strict guidelines to attract capital. International carbon standards have published better principles and rulebooks governing carbon markets to address these issues. Despite challenges in the limited supply of high-quality credits, corporate demand for carbon offset credits remains strong. More buyers are joining the “flight to quality,” becoming more involved in projects and focusing on contribution rather than mere offsetting.
Currently, Offset8 Capital is a team of 12 individuals with diverse expertise in carbon markets, commodity trading, investment, and asset management in emerging markets. This expertise is crucial in sourcing high-quality carbon projects and generating the corresponding carbon credits.