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Saudi Arabia to launch national carbon offset credits scheme

October 10, 2023 at 8:10 am

Convention centre before the opening session of the Middle East and North Africa (MENA) Climate Week, a UN-organised conference hosted in the Saudi capital Riyadh, on October 8, 2023 [FAYEZ NURELDINE/AFP via Getty Images]

Saudi Arabia is set to launch its national scheme to provide greenhouse gas credits in order to allow companies to offset emissions, the kingdom has announced.

According to the state-run Saudi Press Agency (SPA) on Monday, the kingdom launched its Greenhouse Gas Crediting and Offsetting Mechanism (GCOM) at the United Nations’ MENA Climate Week in the kingdom’s capital Riyadh last week.

According to GCOM’s website, the scheme aims “to incentivise the deployment of emission reduction and removal activities at scale to support and enable climate-related national strategies, policies, and programs.”

Participation in the scheme will reportedly be voluntary and based on specific projects, covering greenhouse gas and non-greenhouse gas “metrics across all sectors”, as well as being open to the public and private sectors and subsidiaries of foreign firms.

Carbon credits – also known as carbon offsets – serve as permits allowing companies to emit a certain amount of carbon dioxide or other greenhouse gases. The funds from the sale of the credits are then used to finance projects supposedly tackling climate change.

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The Saudi decision comes a year after its sovereign wealth fund, the Public Investment Fund (PIF), announced that it would set up the Regional Voluntary Carbon Market Company (RVCMC) with the Tadawul Group or Saudi Exchange.

Then, in June this year, around 16 Saudi firms – including giants like Saudi Aramco and the Saudi Electricity Company – purchased over 2.2 million tonnes of carbon credits, reportedly coming from projects that avoid emissions by using sustainable technologies or removing carbon from the atmosphere.

Saudi Arabia’s moves and the launch of its carbon credits scheme makes it one of the first in the world that is set to be operational next year, and aligns with Article 6 of the Paris climate agreement. It subsequently fits in the kingdom’s goal to tackle climate change in order to achieve net-zero emissions by 2060.

According to the consultancy firm McKinsey, the market surrounding such a scheme is projected to be worth over $50 billion by 2030.

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