Saudi Arabia, the world’s largest oil exporter, has launched its first carbon credit trading exchange at the UN Climate Change Conference (COP29) in Baku, Report informs.
This comes as developing countries work to strengthen carbon pricing and trading mechanisms to achieve carbon neutrality goals.
The exchange platform, managed by Saudi Arabia’s Regional Voluntary Carbon Market Company (RVCMC), is part of the national strategy to expand the voluntary carbon market.
“Our message at COP is clear: accelerating global decarbonization requires unlocking financial flows for climate projects at scale,” said RVCMC CEO Riham ElGizy. “High-integrity voluntary carbon markets can play an important role in reducing the climate finance gap this decade. However, realizing the market’s potential requires institutional infrastructure that will enable greater private sector participation.”
The platform’s opening featured an auction with 22 companies from Saudi Arabia and other countries participating. The auction offered 2.5 million high-quality carbon credits from 17 projects certified by Verra, Gold Standard, and Puro.earth since 2020. Most credits came from projects in Global South countries, including Bangladesh, Brazil, Ethiopia, Malaysia, Pakistan, and Vietnam. This is RVCMC’s third carbon credit auction following events in Nairobi and Riyadh.
Last year, RVCMC sold 2.2 million metric tons of carbon credits at its second auction in Kenya, demonstrating the kingdom’s commitment to strengthen its position in the carbon sector.
Middle Eastern countries, such as Saudi Arabia and the UAE, are actively expanding their participation in the voluntary carbon market. RVCMC is backed by Saudi Arabia’s sovereign Public Investment Fund (PIF) (80%) and Saudi Tadawul Group (20%). PIF manages a significant portion of Saudi Arabia’s renewable energy investments, including solar projects, as part of the Vision 2030 plan to diversify the economy.
Despite this, Saudi Arabia remains dependent on oil revenues and has committed to achieving carbon neutrality by 2060. The Intercontinental Exchange (ICE) also announced plans to collaborate with Middle Eastern companies to create a carbon market hub in the region. This comes amid criticism of the voluntary carbon market due to the low quality of some carbon projects and credits, which has reduced liquidity and led to falling offset prices. However, many hope that quality improvement initiatives will restore market confidence.