Saudi Arabia is making headlines as it launches its first carbon exchange during the UN Climate Change Conference on November 12. This initiative marks the Kingdom’s commitment to sustainability and establishes it as a leader within the global carbon market.
According to experts interviewed by Arab News, Saudi Arabia’s advancements come as part of its Vision 2030 strategy, which focuses on eco-friendly growth through investments in renewable energy, carbon capture technologies, and regulated carbon credit markets.
During the inaugural auction, the exchange—operated by the newly formed Regional Voluntary Carbon Market Company (RVCMC)—saw participation from 22 domestic and international firms, offering two-and-a-half million certified carbon credits. These credits, certified by major standards such as Verra and Gold Standard, originate from impactful projects primarily located within the Global South, including countries like Bangladesh, Brazil, and Ethiopia.
This carbon market is projected to grow at 32.2% annually, potentially reaching $3.27 billion by 2030, indicating significant investment potential for carbon capture and emissions reduction initiatives. Arun Leslie John, Chief Market Analyst at Century Financial, remarked, “Saudi Arabia is cautiously launching the carbon market to avoid mistakes made by the EU and others. The investment is part of the Kingdom’s broader efforts to diversify its economy and achieve net-zero emissions by 2060.”
With the aims of enhancing liquidity and improving the Kingdom’s reputation for clean energy initiatives, John added, “By establishing domestic trading and regulated markets for carbon credits, Saudi Arabia is leading local enterprises.” The RVCMC’s mission supports projects with measurable environmental impacts, aiming to contribute over one million carbon credits from various climate initiatives, with approximately 70% from Africa.
Saudi Arabia’s regulatory oversight aims to set stringent standards, making the Kingdom’s carbon credit market noteworthy within the Gulf Cooperation Council (GCC). Louay Saleh, Principal at Arthur D. Little, highlighted, “The Kingdom can address the issue of standardization by developing standardized frameworks aligned with global benchmarks.”
Utilizing advanced technology like drones and AI is expected to bolster transparency, and accountability within these projects. Such measures are envisioned to attract international investors, paving the way for other GCC nations to adopt similar models.
Saudi Arabia’s carbon credit market heralds vast economic opportunities. Key players like Aramco are investing heavily to enable the creation of tradeable credits, thereby promoting emissions reductions across various sectors such as petrochemicals, aviation, construction, and agriculture.
With significant green finance incentives, the Kingdom has already seen inflows of foreign investments, aided by initiatives like the Saudi Green Initiative and the Middle East Green Initiative. By 2025, Saudi Arabia aims to achieve annual carbon capture capabilities of 44 million tons, reinforcing its status as a provider of high-quality carbon credits.
The vision of regional cooperation within the carbon market is also taking shape, with Saudi Arabia, the United Arab Emirates, and Oman leading the way. Collaborative efforts such as standardized methodologies and cross-border trading mechanisms are expected to gain momentum.
Through Vision 2030, Saudi Arabia is cementing its role as the GCC’s climate change leader. The Kingdom’s initiatives serve as models for sustainable growth and environmental responsibility, painting it as both a regional and global player.
Saudi Arabia’s commitment to establishing its carbon credit market signifies not only its dedication to sustainable development but also outlines its strategy for diversifying the economy and addressing climate change effectively. This ambitious pathway directly shapes the Kingdom’s future and offers valuable lessons for other countries pursuing sustainable practices.
