Saudi Arabia's PIF and Tadawul establish Regional Voluntary Carbon Market Company

The company will support businesses and industry in the region as they work towards the global transition to net zero

Saudi Arabia, the world's biggest crude exporter, has set ambitious targets to fight climate change and cut carbon emissions as part of its Vision 2030 plan. EPA

Saudi Arabia's Public Investment Fund (PIF) has joined forces with Saudi Tadawul Group, the holding company that operates the kingdom's stock exchange, to establish the Regional Voluntary Carbon Market Company.

Headquartered in Riyadh, the new company will support regional businesses as they contribute to the global transition towards net zero.

It aims to ensure that carbon credit purchases go “above and beyond meaningful emission reductions in value chains”, an official statement said.

The kingdom’s sovereign wealth fund holds an 80 per cent stake in the company while Saudi Tadawul Group owns a 20 per cent stake in the firm, it added.

“The company will play an important role in PIF’s wider efforts to drive the investment and innovation required to address the impact of climate change and support Saudi Arabia’s efforts to achieve net zero by 2060,” said Yazeed Al Humied, deputy governor and head of Middle East and North Africa investments at PIF.

“We are passionate about the potential for voluntary carbon markets to deliver additional carbon reduction benefits throughout the region, thereby ensuring the Mena region is at the forefront of climate action and that Saudi Arabia is a leading force in solving the climate challenge," the statement continued.

The company’s establishment is a continuation of PIF initiatives to support Saudi Arabia’s green agenda. Earlier this month, it raised $3 billion through its first bond issuance as it considers financing or refinancing its investments in renewable energy, energy efficiency, green buildings and clean transport.

The fund is making various efforts as part of its commitment to develop 70 per cent of Saudi Arabia’s renewable energy capacity in line with Saudi Vision 2030.

Saudi Arabia, the world's biggest crude exporter and the Arab world's biggest economy, has set ambitious targets to fight climate change and cut carbon emissions to overhaul its economy and reduce its reliance on oil.

It has set a target of achieving net-zero carbon emissions by 2060.

The kingdom plans to more than double its target of reducing annual carbon emissions to 278 million tonnes by 2030, Crown Prince Mohammed bin Salman said in October last year. This was up from a previous target of 130 million tonnes.

“We continuously work towards encouraging the adoption of ESG (Environment, Social and Governance) disclosures in the Saudi capital market, to advocate for a better, more transparent future,” said Khalid Al Hussan, chief executive of Saudi Tadawul Group.

“We are delighted to be an integral part, strategically and operationally, in the Regional Voluntary Carbon Market Company. We believe it will be instrumental in supporting Vision 2030 and in further realising the group’s vision of being a gateway to the Mena region for global investors.”

The new company will also enable the efforts of the carbon credit auction on Tuesday at the sixth Future Investment Initiative in Riyadh.

The auction will involve one million tonnes of carbon credits and will offer high-quality credits including Carbon Offsetting and Reduction Scheme for International Aviation (Corsia)-compliant, Verra-registered certificates.

Corsia is a global market-based measure designed to offset international aviation carbon dioxide emissions to stabilise the levels of such emissions.

“The inaugural auction represents the first step towards becoming a leading presence in the global voluntary carbon market ecosystem,” said Riham ElGizy, director of Voluntary Carbon Market (VCM) Initiative.

“With an expected one million tonnes of carbon credits available to trade, we predict that our auction will be the largest carbon credit auction to date.”

The announcement of the new company followed the VCM initiative by PIF and Saudi Tadawul Group unveiled in September last year.

The platform intends to become the primary destination for companies and institutions that aim to reducing their emissions or contribute towards reductions through the trading of verified, approved and high-quality carbon equivalent credits certificates.