Saudi
Arabia accelerating carbon-neutrality efforts
Saudi Arabia is ramping up its
carbon-neutrality efforts with a groundbreaking partnership between Enowa,
NEOM’s energy and water subsidiary, and the Voluntary Carbon Market Company
(VCM). This deal, a first of its kind, promises to deliver 30 million tonnes of
high-quality carbon credits by 2030, with an emphasis on supporting global
climate action, especially in developing regions. The first carbon credits were
delivered in December 2024.
VCM:
Saudi Arabia’s Carbon Credit Exchange Pioneer
VCM, launched in November 2024, is
Saudi Arabia’s first institutional carbon credit exchange. Founded by the
Public Investment Fund (PIF) (80% ownership) and the Saudi Tadawul Group (20%),
the platform offers advanced trading tools, including auctions, RFQ features,
block trades, and a soon-to-be-launched spot market in 2025. It also provides
global registry access and supports Islamic finance structures, opening new
opportunities for regional investors.
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With the carbon market predicted to
skyrocket from $2 billion in 2020 to $250 billion by 2050, the demand for
carbon credits is escalating. This partnership demonstrates the growing need
for high-integrity carbon credits, particularly as more companies and projects
pursue sustainability goals.
A
Pioneering Carbon Credit Agreement
The VCM-Enowa agreement shifts the
landscape of voluntary carbon markets from ad-hoc purchases to long-term
commitments. Enowa will secure an estimated 3 million tonnes of carbon credits
per year, totaling 30 million tonnes by 2030. This predictable, consistent
supply of credits helps stabilize the market and unlocks long-term financing
for crucial climate initiatives worldwide.
For developers, particularly in the
Global South, long-term contracts like this reduce risks, promote scalability,
and improve planning capabilities. As VCM CEO Riham ElGizy explained, this
agreement is “a significant moment in Saudi Arabia’s journey to drive growth in
global voluntary carbon markets” and reflects Enowa’s strategy to offset
unavoidable emissions while advancing sustainable infrastructure.
NEOM
and Enowa: A Vision for 100% Renewable Energy
Enowa plays a vital role in NEOM’s
ambitious goal of establishing a fully renewable-powered energy system. By
leveraging solar, wind, and green hydrogen alongside cutting-edge technology,
Enowa is helping shape a model for low-emission urban living. Its collaboration
with VCM underscores the company’s commitment to achieving carbon neutrality
through high-integrity carbon credits and innovative sustainability solutions.
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The
Expanding Voluntary Carbon Market
As global demand for voluntary
carbon credits continues to surge, market forecasts show a dramatic increase in
market value—from $2 billion in 2020 to $250 billion by 2050, with interim
predictions ranging from $45 billion to $100 billion by 2030. Companies,
especially in tech, energy, and manufacturing, seek reliable carbon offsets to
meet net-zero targets, and long-term agreements like the VCM-Enowa deal offer
greater stability and transparency than one-time transactions.
Addressing
Credibility Concerns in the Carbon Market
Despite its rapid growth, the
voluntary carbon market faces challenges in ensuring credibility. Recent
high-profile cases, such as issues with Kenya’s Northern Rangelands project,
have raised concerns. However, platforms like VCM are responding by ensuring
compliance with international standards and Shariah-compliant financial
structures, fostering greater trust and market integrity.
Saudi
Arabia’s Global Carbon Strategy
Saudi Arabia is positioning itself
as a leader in the regional and global carbon market. With VCM backed by the
PIF and Tadawul, the platform is on track to drive billions in investments
toward climate action in emerging economies. This move aligns with Saudi
Arabia’s broader strategy to bridge the climate finance gap, which the UN
estimates at $1.5–$2 trillion annually.
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The VCM-Enowa partnership not only
sets a new benchmark for voluntary carbon trading but also provides long-term
financial security for climate projects in developing regions. As the voluntary
carbon market matures, deals like this will play a pivotal role in the global
effort to reach net-zero emissions.
Source: https://carboncredits.com
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