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Saudi Arabia to Initiate Market to Offset Greenhouse Gas Emissions

Saudi Arabia has announced its intentions to launch a market mechanism to counterbalance greenhouse gas emissions early next year. This initiative will provide companies a framework to offset their emissions by purchasing credits from projects that voluntarily reduce or remove greenhouse gas emissions.

The Kingdom launched the mechanism during the United Nations Climate Week for the Middle East and North Africa in Riyadh. It aims to “stimulate the widespread deployment of emission reduction and removal activities.” It also aims to support and empower “national climate strategies, policies, and programs.” This was disclosed by the National Committee for the Clean Development Mechanism in Saudi Arabia. Participation in this mechanism is voluntary, project-based, and spans “across all sectors,.” It will allow both public and private sectors, as well as branches of foreign companies, to engage.

Aligning with Global Climate Commitments

Notably, the approach aligns with Article 6 of the Paris Climate Agreement. It offers a substantial step toward enabling the Kingdom to manage and offset its carbon footprint actively, involving different economic sectors in the fight against climate change.

The Saudi Public Investment Fund (PIF), declared last year its plans to establish the Regional Voluntary Carbon Market company. Such plans were prepared in collaboration with Saudi Tadawul Group, which operates the Kingdom’s stock exchange.

Corporate Participation in Carbon Credit Purchase

In June, approximately 16 Saudi companies, including Aramco and the Saudi Electricity Company purchased over 2.2-million-ton carbon credits. The purchased carbon quantities are certified and stem from projects that avoid emissions utilizing sustainable technologies or remove carbon from the atmosphere, stated the Regional Voluntary Carbon Market company that organized the auction.

This innovative move exemplifies a commitment to adopting cleaner practices and integrating sustainability into the nation’s broader economic framework. Through the new market, companies can actively participate in reducing their carbon emissions, contributing to a greener and more sustainable future for the nation and the global community. It also represents a practical approach for companies in Saudi Arabia to partake directly in curbing their carbon emissions, exemplifying a strategic blend of environmental responsibility and economic prudence.

 

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