Saudi Arabia has launched its first carbon credit trading exchange at the UN Climate Change Conference (COP29) in Baku. The initiative is part of a broader strategy to strengthen global carbon pricing and trading mechanisms to reach carbon neutrality targets.
The platform, managed by the Regional Voluntary Carbon Market Company (RVCMC), is a key element of Saudi Arabia’s national strategy to expand the voluntary carbon market. RVCMC CEO Riham ElGizy emphasized the importance of unlocking financial flows for climate projects at scale. “High-integrity voluntary carbon markets play a vital role in closing the climate finance gap,” she stated.
Auction Features Carbon Credits from Global Projects
The platform’s launch featured an auction with 22 companies from Saudi Arabia and abroad. The auction offered 2.5 million high-quality carbon credits from 17 certified projects, including those in Bangladesh, Brazil, Ethiopia, Malaysia, Pakistan, and Vietnam. Most credits came from Global South countries. This was RVCMC’s third carbon credit auction, following similar events in Nairobi and Riyadh.
Saudi Arabia’s Commitment to Carbon Market Leadership
In 2023, RVCMC sold 2.2 million metric tons of carbon credits at its second auction in Kenya. This highlights Saudi Arabia’s commitment to expanding its role in the global carbon market.
Saudi Arabia and the UAE are ramping up their involvement in the voluntary carbon market. RVCMC is supported by Saudi Arabia’s sovereign Public Investment Fund (PIF), which holds 80% of the company. PIF is also a key player in the nation’s renewable energy investments, including solar projects under Vision 2030.
Although Saudi Arabia remains heavily reliant on oil revenues, it has committed to achieving carbon neutrality by 2060. Additionally, the Intercontinental Exchange (ICE) plans to collaborate with Middle Eastern companies to create a regional carbon market hub.
Challenges and Future Outlook
The voluntary carbon market faces criticism over the quality of some projects and credits, which has led to lower liquidity and falling offset prices. However, efforts to improve quality may restore confidence in the market.
As of November 11, carbon credit prices ranged from $3.85 per metric ton for household device offsets to $125 per metric ton for technological carbon capture offsets, according to Platts, part of S&P Global Commodity Insights.
