Sustainability

Saudi Arabia’s carbon market to finance climate projects

November 12, 2024, 8:08 PM

Riham ElGizy, CEO of Saudi Arabia carbon trading market RVCMC — Riham ElGizy, CEO of RVCMC, at the launch of the carbon credit auction held in Nairobi. The new trading platform will support 17 projects around the world

Carbon trading platform launch
22 registered companies
Credits will fund eco-projects

Saudi Arabia has launched a carbon trading market that will help provide financing for climate projects.

The Regional Voluntary Carbon Market Company’s (RVCMC) voluntary carbon market exchange platform has more than 2.5 million tonnes of carbon credits for auction, it said in a statement.

Buyers can obtain carbon credits from 17 climate projects from around the world. More than three-quarters of the projects are based in countries across the Global South, including Bangladesh, Brazil, Ethiopia, Malaysia, Pakistan and Vietnam.

RVCMC said it has 22 Saudi and two international companies registered to buy carbon credits. They include Aramco Trading Company, Flynas, Maaden and Saudi National Bank.

The new platform has ambitions to scale up the supply and demand of high-quality carbon credits, which RVCMC said would direct funding to climate projects that require finance.

In addition to the auctions, the platform has request for quote (RFQ) and block trade functionality, with spot market and other functions set to launch in 2025.

It also has plans to develop specialised infrastructure for trade in carbon credits to enable Islamic finance.

Carbon credits allow companies and countries to pay for projects that reduce or remove CO2 emissions and use the credits to offset their emissions.

The credits are issued based on the quantity of carbon produced during the year.

The launch of the RVCMC market comes one day after countries at the two-week Cop29 summit in Baku agreed to carbon credit quality standards for a UN-backed global carbon market that would fund projects that reduce greenhouse gas emissions.

Establishing the gold standard for emissions trading could unlock billions in finance for emissions mitigation projects in the developing world.

To deliver the goals of the Paris Agreement and achieve the global net zero greenhouse gas emissions target, emerging markets and developing countries require $2.4 trillion of investment in climate action per year by 2030, according to RVCMC.

It is hoped that the global voluntary carbon market, which is expected to grow to $100 billion by 2030, can help bridge the climate finance gap.

RVCMC said the credits being sold in Saudi Arabia originate from diverse climate projects, including landfill gas projects that capture methane from waste that otherwise would be released into the atmosphere.

It will also support an indigenous forest reforestation project in Ethiopia that aims to mitigate soil erosion and conserve water resources, and a construction technology project in the US to capture, inject and embed carbon dioxide into fresh concrete.

RVCMC, which is 80 percent owned by Saudi Arabia’s Public Investment Fund and 20 percent owned by the stock exchange owner Tadawul Group, was launched in 2022.

It previously held two rounds of voluntary carbon credit auctions, first in Riyadh and then in Nairobi, Kenya – launched by Riham ElGizy, CEO of RVCMC – which sold more than 3.6 million tonnes.