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Saudi Arabia launched a new carbon trading platform, with an inaugural 2.5 mn tons of carbon credits for projects across 17 countries available for auction starting yesterday, according to a press release (pdf) from the Regional Voluntary Carbon Market Company (RVCMC). The platform — which was first established in 2022 — is 80% owned by the Public Investment Fund (PIF), with Tadawul Group holding the remaining 20%. The story got ink from Bloomberg and S&P Global.
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Trading kicked off yesterday and saw participation from 23 Saudi and international companies including Aramco Trading, Ma’aden, Flynas, SABIC, PIF, Luberef, SNB, Eastern Province Cement, Red Sea Global, and others. International players taking part in the inaugural transactions included US-based Energroup and climate portfolio manager Valitera. The core basket clearing price stood at SAR 37.50 per tonne of carbon credits.
RVCMC’s launch comes one day after negotiators from across the world hammered out new rules for carbon trade at COP29 following years of deadlock, laying the groundwork for a global emissions market administered by the UN.
This has been in the works: RVCMC hired global ESG commodities exchange platform Xpansiv in April to provide a tech base for the carbon credit exchange. The company also signed two MoUs with Kenya’s main dry cell battery maker Eveready East Africa and Carbon Vista Nigeria to set up high-quality and impactful carbon projects in the two countries last year. RVCMC and the National Committee for the Clean Development Mechanism of Saudi Arabia inked an agreement to ensure the carbon markets in the Kingdom are transparent, robust, and credible.
The carbon market is already active: RVCMC auctioned 1.4 mn tons of carbon credits in 2022. Saudi Aramco, Olayan Financing, and Ma’aden purchased the largest number of carbon credits in the auction, with 12 other Saudi and regional companies participating. It also held a voluntary carbon credit in Nairobi in 2022, offering over 2 mn tons of carbon credits to over 15 companies from various countries, including Saudi Arabia. It also signed an MoU with Plastics manufacturer Saudi Top to trade carbon credits in July.
RVCMC applies new guidelines to address greenwashing claims that have stifled previous carbon market initiatives, Bloomberg said. This means that credits from renewable energy projects and clean cooking stoves will no longer make the cut. The platform is also deploying two teams dedicated to due diligence on each credit-generating project, while accreditation must also be secured from independent verifiers Sylvera or BeZero. “It’s a lot of overhead on companies but this is the only way we can protect our buyers and provide some confidence to them,” Bloomberg cites the platform’s CEO Rihm ElGizy as saying.
More than three quarters of the credits on offer are connected to projects in the Global South, including Bangladesh, Brazil, Ethiopia, Malaysia, Pakistan, and Vietnam, the statement said. About a fifth of the auctioned credits are “removal credits,” which are designed to pull greenhouse gasses out of the atmosphere rather than simply cut emissions, in line with international standards. These include landfill gas projects which capture methane emissions, a reforestation drive in Ethiopia that will also boost local incomes, and a US-based construction technology project that looks to embed captured CO2 in concrete.
This is the region’s second go at a carbon offset market: Abu Dhabi was first out of the gate with a carbon exchange in the Middle East, but the platform — dubbed ACX — shut down just one year after launch and moved shop to Singapore due to limited market pull and policy gaps, EnterpriseAM UAE reported previously. A lack of mandates requiring regional firms to offset their emissions and a downturn in the global carbon offset market on the back of widespread greenwashing claims contributed to ACX’s failure to generate traction.
IN OTHER CARBON CREDIT NEWS-
Egypt amends carbon credit rules on EGX: Egypt’s Financial Regulatory Authority (FRA) amended the rules for listing and delisting carbon emission reduction certificates on the EGX, according to a statement. The changes aim to cut red tape and encourage companies to participate in carbon reduction projects by simplifying the registration process for emission-reduction projects. The new regulations allow projects to be registered in the database before validation reports are issued, provided that these reports are submitted within a year. The FRA has also introduced a requirement for verification and validation entities to obtain ISO certifications to enhance their capabilities.
FRA has been busy: The authority registered 12 new carbon reduction projects to its newly-launched carbon market in September. All 12 projects are certified under Egyptian Biodynamic Association’s Economy of Love standard, which aims to support small-scale farmers as they switch to organic and biodynamic farming methods. They will offer over 13.2k carbon credits that will help reduce 13.3k tons of carbon emissions.
