The Saudi Public Investment Fund (PIF) has revealed that five leading Saudi Arabian businesses have signed a separate non-binding Memorandum of Understanding (MoU) to become the first potential partners of the MENA regional Voluntary Carbon Market (VCM).
The announcement follows the VCM initiative led by PIF and Tadawul in September 2021, in which His Royal Highness Prince Mohammed bin Salman bin Abdulaziz Al Saud, Crown Prince, Deputy Prime Minister, Chairman of the Council of Economic and Development Affairs and Chairman of PIF, stated that the Kingdom will play a leading role in contributing to the reduction of the impact of climate change effects.
The partners are Aramco, SAUDIA, ACWA Power, Ma’aden, and ENOWA, a subsidiary of NEOM. As per the agreement, the Partners will support PIF in the development of the VCM through the supply, purchase and trading of carbon credits as the market is expected to be established in 2023. Additional partners will be announced in the coming months ahead of an initial round of auctions expected in the final quarter of this year.
Saudi Arabia aims to reach Net Zero by 2060 through the Carbon Circular Economy approach, in line with its development plans and enabling its economic diversification. These efforts contribute to developing the country’s green economy, creating quality jobs and providing significant investment opportunities for the private sector, in accordance with Vision 2030.
“We would like to thank our Partners for their commitment to the VCM, the first of its kind in the MENA region. The support of Saudi businesses, which are world leaders in their fields, is a strong demonstration of the exciting potential of this market. PIF contributes to the Kingdom of Saudi Arabia’s efforts through driving the investment and innovation required to address the impact of climate change and achieve net-zero carbon emissions by 2060.”
The VCM will connect the supply of carbon credits with demand from investors, corporates and institutions wanting to reduce their carbon footprint by offsetting carbon emissions they generate. While corporates’ internal decarburization targets should remain the priority, the VCM can effectively complement their efforts until they reach net zero. It will seek out carbon credits possessing the highest integrity and quality.