Regional Voluntary Carbon Market Company held an auction in mid-June for 2.2m carbon offsets with credits bought by Saudi Aramco, Saudi Electricity Company and ENOWA among other firms. The voluntary credits were backed by avoidance and removal projects across the Middle East and North Africa and Sub-Saharan Africa and were sold at SAR 23.50/credit, with each credit equivalent to one tonne of CO2.
RVCMC was established in Q4 2022 and 80% of the company is owned by PIF with the remainder owned by Saudi Tadawul Group. An initial auction in October last year sold 1.4m carbon credits to corporates in Saudi Arabia. In both auctions the credits were compliant with CORSIA, an international voluntary standard for offsetting emissions from aviation.
Saudi Arabia has set a net zero emissions target of 2060 and in its updated Nationally Determined Contribution (NDC) aims to cut emissions by 278m tonnes of CO2eq by 2030 from a 2019 baseline. That is an increase from Saudi Arabia’s initial target of a reduction of 130m tonnes CO2eq. In its NDC, Saudi Arabia listed Article 6 voluntary cooperation mechanisms as playing a “role in achieving the Kingdom’s climate change ambitions,” referring to an article of the Paris Agreement that allows for cross-border transfer of voluntary “mitigation outcomes,” essentially providing a means to engage in international carbon trading.
Saudi Arabia’s total emissions were estimated at around 670m tonnes of CO2eq in 2021, representing around 1.8% of total global emissions compared with Saudi Arabia’s economy accounting for about 0.9% of total global nominal GDP. Most emissions are generated from utilities while transport, industry and manufacturing also represent sizeable sources of emissions. On a per capita basis, Saudi Arabia’s emissions are high at about 23 tonnes/person compared with closer to 13 tonnes/person for high-income country peers.
Source: Our World In Data.
The UAE is also taking steps to establish voluntary carbon trading as a mechanism to offset the country’s emissions. Abu Dhabi Global Market has partnered with ACX, a Singapore based exchange and clearing house that hosts VCM credits while ADNOC is reportedly establishing a carbon credit trading desk based on credits it generates from emissions reductions.