With an eye on its pledge to neutralise greenhouse gas emissions within its borders by 2060, the largest oil exporter in the world is taking steps to put a price on carbon and create a carbon credit market as part of its efforts towards diversifying away from its reliance on the oil and gas sector. The carbon credits allow companies to emit a specific amount of carbon dioxide, with one carbon credit being equivalent to one tonne of emissions.
The Saudi Arabia sovereign wealth fund, the Public Investment Fund (the “PIF”), has established the Regional Voluntary Carbon Market Co. (the “RVCMC”) with Saudi Tadawul Group. The PIF also auctioned a million tonnes of credits on 25 October 2022. A statement on the RVCMC set out that the new company “will offer guidance and resourcing to support businesses and industry in the region as they play their part in the global transition to net zero, ensuring that carbon credit purchases go above and beyond meaningful emission reductions in value chains”.
The RVCMC helped facilitate the auction of Verra-registered credits, which comply with the Carbon Offsetting and Reduction Scheme for International Aviation. The Verra Registry ensures the uniqueness of projects and credits in the system. The International Islamic Trade Finance Corp successfully bid for the RVCMC auction, resulting in the sale of 1.4 tonnes of carbon credit.
This should be contextualised as part of a PIF push towards its green initiatives and goals, as earlier in October the PIF raised $3 billion with its inaugural green bond.
