<a href="https://www.thenationalnews.com/business/energy/2023/10/09/saudi-arabia-launches-greenhouse-gas-crediting-and-offsetting-project/" target="_blank">Saudi Arabia</a>, the Arab world’s largest economy, is following a phased approach in setting up a <a href="https://www.thenationalnews.com/business/energy/2023/10/09/saudi-arabia-launches-greenhouse-gas-crediting-and-offsetting-project/" target="_blank">carbon market</a>, to “ensure readiness” and avoid the pitfalls experienced by the EU and other regions, its energy minister said on Tuesday. <a href="https://www.thenationalnews.com/business/energy/2022/10/26/saudi-arabias-pif-sells-14m-tonnes-of-carbon-credits/" target="_blank">The roadmap</a> for an emissions compliance system will include a pilot phase for the next “two to three years” to make sure that the regulations suit the kingdom’s economy, Prince Abdulaziz Bin Salman said at the Future Investment Initiative conference in Riyadh. “We learnt from everybody's problems and mistakes. I will give it to the EU that they had the start, but they had a very tough start,” Prince Abdulaziz said. “So, learning from what everyone else went through, we wanted to take our time to ensure that regulations and structures should first be commensurate with our own needs and pertinent to our own economy.” Saudi Arabia, the world’s largest oil exporter, is investing in voluntary carbon markets as part of its strategy to achieve net-zero emissions by 2060 and diversify its economy. Last year, the kingdom announced the launch of a greenhouse gas-crediting and offsetting scheme. In 2022, Saudi Arabia's Public Investment Fund and Saudi Tadawul Group established the Regional Voluntary Carbon Market Company, which conducts carbon credit auctions and advises companies on their decarbonisation strategy. The RVCMC will launch a voluntary exchange platform during the Cop29 climate conference in Azerbaijan’s capital Baku, the energy minister said. Saudi Arabia is investing heavily in solar and wind power projects, aiming to diversify its energy mix and reduce its reliance on fossil fuels. “We're transitioning with a purpose … and we're trying to export all forms of energy. We're trying to use our carbon economy as an approach to give us guidance on where we are going to go,” Prince Abdulaziz said. The minister said that Saudi Aramco and Sabic, the kingdom’s petrochemicals company, are actively marketing their upcoming green hydrogen production, and they still have some output available for potential buyers. “They're touring everywhere on planet Earth marketing [green] hydrogen [and there is] still some capacity to sell,” Prince Abdulaziz said. “We also want to make sure that hydrogen can be used and [made] available in Saudi Arabia for those who want to come and invest here in hard-to-abate sectors.” Saudi Arabia aims to produce 2.9 million tonnes of green hydrogen annually by 2030 and increase that amount to 4 million tonnes per year by 2035. An $8.4 billion green hydrogen plant in Neom is at the heart of the kingdom’s production and export plans for the low-carbon fuel. The plant, set to begin operations in 2026, will initially produce 600 tonnes of green hydrogen daily, reducing annual carbon dioxide emissions by 5 million tonnes. This green hydrogen will be available for export to global markets. The Saudi minister defended the kingdom’s continued investments in the oil and gas sector, saying that it is necessary to offset natural production declines from existing fields. “There is something called natural declines, and if you don't attend to that, you lose over time,” Prince Abdulaziz said. He said that Saudi Arabia is still committed to maintaining its crude capacity of 12.3 million barrels per day. Earlier this year, Aramco scrapped its goal of achieving a production rate of 13 million bpd by 2027, which analysts attributed to rising costs and the impact of the ongoing energy transition on crude demand. However, Aramco will continue investing in oil-to-chemicals projects domestically and abroad, Prince Abdulaziz said. “That’s why you see Aramco investing a lot in China, and will be investing a lot everywhere else … because we would like to continue monetising our hydrocarbons,” he added. In a separate session on Tuesday, Aramco chief Amin Nasser said that the oil market is currently “balanced” despite high interest rates and an economic slowdown in China. Mr Nasser expects a recent stimulus package from China's central bank to boost economic activity and anticipates “significant” oil demand growth from the country’s petrochemicals sector. Global oil demand is projected to grow by 1.5 million barrels per day in 2025, Mr Nasser said. This is lower than Opec’s 2025 estimate of a growth of 1.64 million bpd growth but higher than the International Energy Agency’s prediction of a consumption increase of 1 million bpd. Officials at the event highlighted Saudi Arabia's potential as a prime location for energy-efficient and sustainable data centres. The US and some European countries are struggling to establish “green” data centres and “they have to come to Saudi Arabia to [build] green data centres”, Mohammad Abunayyan, Acwa Power's chairman said during a panel session. “We have seawater for cooling, and if you see the cooling system for data centres, Saudi Arabia is going to be the [most] competitive and [also in terms of] energy use,” he added. Saudi Arabia offers some of the lowest energy costs compared to other countries, making it an attractive destination for data centre development, Mr Nasser said. Gas-powered electricity in the kingdom costs 4.8 cents per kilowatt hour and power generated from renewable energy is priced 2 cents per kilowatt hour, he added. “[With the] combination of the two, you are going to have the lowest-cost energy.” The IEA has predicted that the total electricity consumption of data centres could exceed 1,000 terawatt-hours by 2026, nearly matching the electricity usage of Japan.