Saudi Arabia has introduced its new carbon-trading marketplace shortly after international climate diplomats achieved a landmark agreement on the United Nations-regulated global emissions market framework.
The Saudi initiative aims to auction over 2.5 million tons of carbon credits on the Voluntary Carbon Market Co. exchange, starting Tuesday. These credits, sourced from 17 nations, will finance climate initiatives primarily in the Global South while advancing Saudi Arabia’s commitment to net-zero emissions.
Advocates argue that carbon markets play a crucial role in channeling substantial funding into environmental efforts, enabling companies to purchase credits from emission-reduction projects to fulfill their climate objectives. However, the demand for credits has been sluggish recently, weighed down by accusations of greenwashing within the sector.
Regionally, Saudi Arabia’s endeavor is noteworthy as similar projects have faced challenges; notably, Abu Dhabi’s carbon exchange ceased operations last month after a brief run. Currently, governments in the Middle East do not impose mandatory emission offsets for companies.
Positioning itself as a potential global leader, the Saudi platform aims to rank among the largest voluntary carbon markets by 2030. The upcoming auction will feature credits from projects across several countries, including Bangladesh, Brazil, Ethiopia, Malaysia, Pakistan, and Vietnam.
This initiative follows two previous voluntary carbon credit auctions held in Riyadh and Nairobi. The platform is majorly backed by Saudi Arabia’s Public Investment Fund (PIF), which holds an 80% share, while Tadawul Group, the stock exchange operator, owns the remaining 20%.
