As part of the 29th session of the United Nations Climate Change Conference of the Parties (COP29), held in Baku, Saudi Arabia, the world’s largest oil exporter, launched the first exchange for trading quotas of carbon.
The “Report” reports that this happens in the context of developing countries’ efforts to strengthen carbon pricing and trading mechanisms to achieve carbon neutrality goals.
The exchange platform, managed by Saudi Arabia’s Regional Voluntary Carbon Market Company (RVCMC), is part of a national strategy to expand the voluntary carbon market.
“Our message at the COP is clear: to accelerate global decarbonization, large-scale financial flows for climate projects are needed. Voluntary carbon markets with high integrity can play an important role in closing the climate finance gap this decade. But more assets “The participation of the private sector is needed to harness the potential of the market, we need an institutional infrastructure that allows this,” said RVCMC CEO Riham Al-Gizi.
At the inauguration of the platform, an auction was held with the participation of 22 companies from Saudi Arabia and other countries. Since 2020, 2.5 million high-quality carbon credits have been auctioned from 17 projects certified by “Verra”, “Gold Standard” and “Puro.earth”. The majority of the loans came from projects in countries in the Global South, including Bangladesh, Brazil, Ethiopia, Malaysia, Pakistan and Vietnam. This is RVCMC’s third carbon credit auction, following events in Nairobi and Riyadh.
Last year, RVCMC demonstrated its commitment to strengthening Saudi Arabia’s position in the carbon sector by selling 2.2 million metric tons of carbon credits in a second auction in Kenya. Middle Eastern countries such as Saudi Arabia and the United Arab Emirates are actively expanding their participation in the voluntary carbon market.
RVCMC is supported by the Sovereign Public Investment Fund (PIF) of Saudi Arabia (80%) and the “Saudi Tadawul Group” (20%). PIF manages a significant portion of Saudi Arabia’s investments in renewable energy, including solar projects, as part of its Vision 2030 plan to diversify the economy. However, Saudi Arabia remains dependent on oil revenues and has committed to achieving carbon neutrality by 2060.
The international exchange “Intercontinental Exchange” (ICE) also announced its intention to cooperate with Middle Eastern companies to create a carbon market center in the region. This comes amid criticism of the voluntary carbon market for the poor quality of some projects and carbon credits, which has reduced liquidity and led to lower offset prices. However, with quality initiatives, many hope to restore confidence in the market.
Starting Nov. 11, the value of carbon credits could range from $3.85 per metric ton for appliance offsets to $125 per metric ton for carbon capture technology offsets, according to Platts, which includes S&P Global Commodity Insights.
