The Regional Voluntary Carbon Market Company (RVCMC) and the Clean Development Mechanism Designated National Authority (CDMDNA) in Saudi Arabia have finalized a significant memorandum of understanding (MoU) aimed at propelling the Kingdom’s climate objectives forward.
This agreement was formalized during a signing event at the 8th Edition of the Future Investment Initiative (FII8) in Riyadh, with notable figures in attendance, including Prince Abdulaziz Bin Salman, Energy minister of Saudi Arabia, and Yasir Al Rumayyan, governor of the Public Investment Fund. RVCMC and CDMDNA have committed to collaborate on initiatives that promote climate action within the Kingdom.
Importance of transparency in carbon markets
On the main plenary stage of FII, RVCMC Chair Rania Nashar and CDMDNA’s Director of Technical Affairs Maria AlJishi signed the MoU, acknowledging its pivotal role in establishing a transparent, robust, and credible carbon market framework in the Kingdom.
High-integrity carbon credits are essential for financing climate initiatives, as they fund projects designed to reduce and eliminate carbon emissions, thus accelerating the transition toward low-carbon and sustainable economies globally.
Addressing climate change challenges
Addressing climate change is one of the foremost challenges confronting Saudi Arabia, the Middle East, and the entire planet. For the Kingdom, reducing emissions is a key priority, and voluntary carbon markets are poised to play a crucial role in meeting climate targets.
Launch of innovative carbon challenge
In July 2024, Saudi Arabia launched the Carbon Capture and Utilization Challenge, aimed at identifying innovative solutions to foster the circular carbon economy. This announcement occurred during the United Nations High-Level Political Forum on Sustainable Development (HLPF), in collaboration with Saudi Arabia’s Ministry of Economy and Planning (MEP) and Ministry of Energy, along with UpLink.
The challenge was introduced as part of the HLPF session titled “SDG 13 and Interlinkages with Other SDGs – Climate Action.” It invites startups to propose distinct solutions that promote carbon reductions through transformative sustainable systems, including carbon capture technologies, innovative carbon utilization applications, and enhanced industrial integration.
Role of innovation in sustainability
Moreover, this initiative underscores the significance of carbon capture and utilization (CCU) and the essential role innovation plays in paving the way for a sustainable and economically viable future. It also highlights the importance of carbon removal in achieving net-zero emissions targets by mid-century.
Saudi Arabia’s commitment to climate goals
Furthermore, Saudi Arabia has made a long-term commitment to combat climate change and to cooperate with other nations in this endeavor. Also, the launch of the Carbon Capture and Utilization Challenge is a key component of these efforts, which align with the Paris Agreement and the United Nations Framework Convention on Climate Change.
Establishment of carbon market company
In October 2022, the Saudi Sovereign Wealth Fund (PIF), in partnership with the Saudi Tadawul Group, established a regional voluntary carbon market company and announced an auction for one million tons of carbon credits. This initiative is further aligned with the Kingdom’s ambition to achieve net-zero carbon emissions.
The newly formed company was established with a capital of 500 million riyals, with the Fund retaining an 80 percent stake and the Tadawul Group holding the remaining 20 percent.
Additionally, the company aims to assist regional companies and sectors in attaining zero-carbon status and to facilitate the acquisition of carbon credits to mitigate carbon emissions throughout their value chains.
Record-breaking carbon credit auction
During this timeframe, the PIF successfully conducted an auction for 1.4 million tons of carbon credits, marking the largest carbon credit sale globally at the 6th edition of the Future Investment Initiative (FII) in Riyadh.
Fifteen Saudi and regional entities participated in the auction, and certificates were awarded to the participants by Yazeed Al-Humied, Deputy Governor and Head of MENA Investments, during the closing ceremony.
Major participants in the auction
The largest purchasers of carbon credits included Saudi Aramco, Olayan Financing Company, and the Saudi Arabian Mining Company (MAADEN). Other successful bidders comprised Abdul Latif Jameel Co., ACWA Power Company, ENOWA (a subsidiary of NEOM), Golf Saudi, Gulf International Bank, International Islamic Trade Finance Corporation, Saudi Basic Industries Corporation (SABIC), Saudi Motorsport Company (SMC), Saudi National Bank, Saudi Airlines, Yanbu Cement Company, and Zamil Group Holding Company.
Previous initiatives and future plans
The PIF and the Saudi Tadawul Group previously announced a voluntary market initiative for trading carbon credits in September 2021. The Kingdom has committed to achieving net-zero greenhouse gas emissions by 2060 and has allocated substantial funding for carbon capture technology in pursuit of this goal.
Additionally, Saudi Arabia aims to increase the share of solar and wind energy in its local power grid to 50 percent by 2030, with natural gas accounting for the remainder. The nation is also investing significantly in hydrogen, which is viewed as vital for its eventual transition away from oil and gas.
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