(Bloomberg) -- The United Arab Emirates is weighing the introduction of a pollution-charging mechanism, which would cement its position as a regional leader in the fight against climate change.
The UAE’s Ministry of Climate Change and Environment is considering options proposed by Abu Dhabi’s Environment Agency for a system that would incentivize companies to reduce their greenhouse gas emissions, according to Eva Torreblanca, a director in the agency’s policy and planning division.
The options include a cap-and-trade design similar to the European Union’s Emissions Trading System, Torreblanca said at an event in the emirate on Tuesday. The agency also proposed taxing some companies that produce more than 25,000 tons of carbon dioxide a year and an auction system similar to Germany’s mechanism for heating and transporting fuels, she said.
UAE wants to be seen at the forefront of the fight against global warming, after Dubai hosted the United Nations’ COP climate summit last year. However, officials outside the Environment Agency worry that imposing obligations on polluters could make the UAE less appealing as a base for companies, according to two people with knowledge of the matter.
The ministry didn’t immediately respond to a request for comment.
While the ministry deliberates, the environment agency is developing a system for measuring and certifying greenhouse gas emissions, Torreblanca said. That should be ready by January and will help the UAE avoid some of the potential pitfalls of cap-and-trade mechanisms, she said, adding that the country will also need to address limited liquidity in its carbon market.
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