(Bloomberg) -- Saudi Arabia started a carbon-trading market, launching the program a day after climate negotiators secured a major breakthrough by agreeing rules for a United Nations-administered global emissions market.
Over 2.5 million tons of carbon credits will be auctioned on the kingdom’s Regional Voluntary Carbon Market Co. exchange from Tuesday, according to a statement. The trading will help fund climate projects across the global south and also support Saudi Arabia net zero goals, it said.
Supporters of carbon markets argue they unlock billions of dollars in financing, while allowing polluters to be able to meet their climate goals by buying credits from projects that cut emissions. But global demand for credits has been dampened in recent years after allegations of greenwashing.
The Saudi platform is following guidelines issued by the Integrity Council for the Voluntary Carbon Market, Riham ElGizy, chief executive officer of the kingdom’s RVCMC said in an interview. Credits generated from renewable energy projects and clean cooking stoves are therefore excluded from the exchange, she said.
RVCMC has two teams carrying out due diligence on the projects that generate credits and accreditation must be secured from verifiers Sylvera or BeZero, ElGizy said. “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,” she said.
The Saudi Arabian platform — which is targeting becoming one of the largest voluntary carbon markets in the world by 2030 — will in the first auction include credits from climate projects in countries including Bangladesh, Brazil, Ethiopia, Malaysia, Pakistan and Vietnam. Twenty Saudi Arabian companies and two international firms are registered to buy credits.
RVCMC previously held two rounds of voluntary carbon credit auctions, first in Riyadh and then in Nairobi. Saudi Arabia’s Public Investment Fund owns 80% of the firm, while the stock exchange owner Tadawul Group holds 20%.
In the Middle East, Abu Dhabi was the first to launch a carbon exchange but the company running the platform closed its operations last month after only one year. Governments in the region don’t require companies to compulsorily offset their emissions.
(Updates with CEO comments from the fourth paragraph.)
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