Saudi Arabia Moves Closer To 2027 Carbon Market Launch

Saudi Arabia has made significant progress toward establishing a national carbon market, taking key steps at the Future Investment Initiative (FII) summit to improve Saudi Arabia carbon sustainability.

The country’s Regional Voluntary Carbon Market Company (RVCMC) and the Clean Development Mechanism Designated National Authority (CDMDNA) signed a Memorandum of Understanding (MoU) to begin developing the market’s framework, which is a critical component of Saudi Arabia carbon sustainability efforts.

RVCMC’s Role in Carbon Market Development

Founded in 2022, RVCMC was created through a partnership between Saudi Arabia’s Sovereign Wealth Fund and the Tadawul Group. The partnership aimed to lay the foundation for the country’s carbon market. Since then, the company has hosted several carbon credit auctions to enhance Saudi Arabia carbon sustainability.

At the 2022 FII summit, RVCMC auctioned 1.4 million tons of CO2 credits, with Saudi Aramco—the world’s largest oil producer—emerging as the leading buyer. Sixteen companies participated in the auction.

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Timeline for Carbon Market Launch

At the 2024 FII summit, Saudi Arabia’s energy minister, Prince Abdulaziz Bin Salman, outlined a gradual plan for the carbon market’s rollout. He stated that the country would begin a pilot phase within two to three years. A full launch is expected between 2026 and 2027. This is essential for Saudi Arabia carbon sustainability.

However, he emphasized that the timeline depends on Saudi Arabia’s ongoing reliance on oil and gas.

GCOM Mechanism Supports Carbon Offsetting

In 2023, Saudi Arabia launched its Greenhouse Gas Crediting and Offsetting (GCOM) mechanism. This allows companies to offset emissions by purchasing credits from projects that reduce or remove greenhouse gases. This initiative is part of Saudi Arabia’s broader strategy to reduce emissions and support a transition to a low-carbon economy. One can't overlook the role of this mechanism in driving Saudi Arabia carbon sustainability.

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RVCMC Focuses on Market Infrastructure

RVCMC is working to build the necessary infrastructure for the carbon market. In April 2024, the company selected Xpansiv, a technology provider, to develop the platform to support Saudi Arabia carbon sustainability.

Prince Abdulaziz confirmed that Saudi Arabia plans to launch the voluntary carbon exchange platform at the COP29 conference in mid-November 2024.