RIYADH: A unified regional carbon market is increasingly likely as Saudi Arabia takes the lead in this growing area of sustainability, experts have told Arab News. 

Through Vision 2030, the Kingdom’s investments in renewable energy, advanced carbon capture technologies, and a regulated carbon credit market are growing, driving innovation in these areas.

At the UN Climate Change Conference in Baku on Nov. 12, Saudi Arabia launched its first carbon trading exchange — a platform that places the Kingdom at the forefront of the GCC in this field.

Managed by the Regional Voluntary Carbon Market Co. — a joint initiative by the Public Investment Fund and the Saudi Tadawul Group — the exchange underscores Saudi Arabia’s commitment to sustainability and establishes a model of environmental responsibility for neighboring nations.

The inaugural auction on the exchange brought together 22 local and international companies offering 2.5 million high-quality carbon credits, certified by leading standards like Verra, Gold Standard, and Puro.earth. 

These credits largely originate from impactful projects across the Global South, including countries such as Bangladesh, Brazil, and Ethiopia.

The market, projected to grow at a compound annual growth rate of 32.2 percent and reach $3.27 billion by 2030, will also drive investment in carbon capture, storage, and emissions reduction. 

“Saudi Arabia is following a careful approach in setting up a carbon market and avoiding the mistakes made by the EU and other regions. Investing in voluntary carbon markets is a part of the Kingdom’s efforts to diversify its economy and achieve its goal of net-zero emissions by 2060,” explained Arun Leslie John, chief market analyst at Century Financial. 

He added: “By establishing a domestic exchange and regulated marketplace for carbon credits, Saudi Arabia is leading the way for local companies to mitigate reputational risk in an increasingly cleaner energy generating world along with generally boosting liquidity conditions.”

The RVCMC has auctioned high-quality credits supporting projects with measurable environmental impact, most notably through initiatives in Africa, where it sold over 1.4 million tons of carbon credits in its first carbon offset auction in 2022. 

Approximately 70 percent of these credits were allocated to climate projects across Africa, benefiting countries like Egypt, Mauritania, and South Africa.

Saudi Arabia’s commitment to stringent standards and regulatory oversight in its carbon credit market is setting a benchmark for other GCC countries. Unlike other regional markets, the Kingdom prioritizes quality and transparency. 

“By developing standardized frameworks aligned with global benchmarks, the Kingdom can tackle the issue of lack of standardization, ensuring consistency and reliability across the market,” Louay Saleh, principal at Arthur D. Little, told Arab News.

Saleh added: “Saudi Arabia can ensure real impact and limit greenwashing by leveraging advanced technologies such as drones, satellite imaging, and AI. These tools can provide more accurate baselining and measurement throughout the project lifecycle, enhancing transparency and accountability”. 

This dedication to transparency strengthens Saudi Arabia’s carbon market and positions it as an attractive destination for international investors, encouraging other GCC nations to adopt similar standards.

Economic opportunities and new revenue streams

The carbon credit market offers substantial economic potential for Saudi Arabia. 

The energy sector, including companies like Aramco, is investing in carbon capture and storage technologies that allow them to generate tradable credits. 

Investing in voluntary carbon markets is a part of the Kingdom’s efforts to diversify its economy and achieve its goal of net-zero emissions by 2060.

Arun Leslie John, chief market analyst at Century Financial

This potential extends beyond energy to other sectors, such as petrochemicals, aviation, and construction, which could reduce emissions through clean technologies and sell excess carbon credits. 

“Industries such as petrochemicals, aviation, construction, agriculture and tourism in Saudi Arabia are most likely to benefit from or contribute to the carbon credit market,” emphasized Saleh, highlighting the extensive opportunities for both new revenue and emission reductions across these sectors.

In parallel with the growth of its carbon credit market, Saudi Arabia has attracted substantial foreign investment through green finance incentives. Programs like the Saudi Green Initiative and the Middle East Green Initiative, paired with green bond issuance, have provided essential funding for renewable energy and carbon capture projects. 

The Kingdom aims to achieve a carbon capture capacity of 44 million tons annually by 2025, enhancing its ability to offset emissions and solidify its position as a high-quality carbon credit provider.

A vision for regional cooperation and the unified GCC carbon market

Saudi Arabia’s leadership in the carbon credit market is likely to have far-reaching effects across the GCC.  The prospect of a unified GCC carbon credit market appears promising, with countries like the UAE and Oman also investing in their carbon market infrastructure. 

“The outlook for a unified GCC carbon credit market is promising, with Saudi Arabia, the UAE, and Oman making significant steps forward in their respective carbon market infrastructures,” said Carlo Stella, managing partner and global head of sustainability practice at Arthur D. Little. 

“Regional cooperation is very likely to facilitate key aspects such as standardization of methodologies, cross-border trading mechanisms, and the development of a shared carbon registry system,” he added. 

By developing standardized frameworks, KSA can tackle the issue of lack of standardization, ensuring consistency across the market.

Louay Saleh, principal at Arthur D. Little

Through Vision 2030, Saudi Arabia’s investments in renewable energy, advanced carbon capture technologies, and a regulated carbon credit market are positioning it as a leader in climate action within the GCC, demonstrating that economic growth and sustainability can go hand in hand. 

The Kingdom’s carbon credit initiatives are shaping not only its own future but also setting a model for the GCC to follow toward a more sustainable path. 

Poised to play a pivotal role in global sustainability, Saudi Arabia’s carbon credit market — driven by large-scale projects, cutting-edge technology, and a commitment to transparency — is leading the GCC on a transformative journey toward climate-responsible economic development. 

Through these initiatives, the Kingdom is not only raising the bar for carbon markets but is also creating a blueprint for the region and beyond in green finance and environmental responsibility.

DAVOS: Saudi Arabia’s Vision 2030 has enabled the Kingdom to “leapfrog other countries,” creating a robust ecosystem that aligns with Intel’s digital transformation strategy, the company’s executive vice president and chief commercial officer told Arab News.

Speaking on the sidelines of the World Economic Forum in Davos, Christoph Schell emphasized the Kingdom’s commitment to growth and its importance as a key market for Intel, building on a 20-year legacy of collaboration.

“Having lived for eight years in the Middle East, I know that once you define a plan, and you work that plan, that plan will also work out,” Schell said. “So there’s a lot of trust that this vision will become reality.”

Schell, who previously served as HP’s general manager for the Middle East, described the region — and Saudi Arabia specifically — as being at an “exciting historical moment” in terms of technology, innovation and business, positioning the Kingdom as a “crucial market in size and influence.”

Intel has maintained a strong presence in Saudi Arabia for more than two decades, with its innovation and priorities evolving in response to the Kingdom’s changing needs.

“There’s a very long legacy that the Kingdom has of engaging with Intel and for the population of Saudi Arabia to actually use Intel in their daily lives. That’s true on the consumer side, but that’s also true for the large corporations,” Schell said.

“What I see happening for the first time is that the Saudi customers have been, over these 20 years of engagement, buying monolithic products that Intel had to offer. I think this industry is changing as such that we are talking more and more about custom solutions, custom chips, and these are the first (type of) engagements that we have with Saudi customers now, cross-customization.”

He attributed this shift to significant investments in digital infrastructure and the growing tech sophistication of Saudi consumers and businesses.

“I see Saudi not just consuming technology that is off the shelf, but to demand technology that is best in the very specific requirements that you have,” he said.

Highlighting examples, Schell said that Saudi Arabia’s extreme temperatures had led to customized design requests for products operating in harsh conditions, such as on oil platforms and in peak summer heat.

“That requires different design principles across different products. And that’s the opportunity for us,” he said.

In January 2024, Intel announced a partnership with Aramco Digital to establish Saudi Arabia’s first Open RAN (radio access network) development center. Open RAN technology, which allows multiple service providers to deliver services over the same network infrastructure, is expected to accelerate innovation and drive the Kingdom’s digital transformation in line with Vision 2030.

“If you want to scale a data center, if you want to grow a data center, if you want to grow a cloud operation, getting access to power is super important,” he said.

“Obviously the Kingdom has a lot of power, but on the other hand, it is also demanding for that power to be delivered in the most efficient way, and for the computer to be cognizant of power not being there in abundance, but to be managed in a way that is responsible.”

Schell argued that this evolution is a consequence of the cultural and societal shifts in Saudi Arabia, emphasizing the country’s focus on innovation and bridging the digital divide.

“Technologies (are) at the heart of societal development. And I think a lot of the goals that you have as a society is to innovate, is to make sure that there’s no digital divide within the country,” he said.

As part of its vision for the future, Saudi Arabia is prioritizing the development of a robust tech ecosystem by attracting manufacturers, creating jobs and nurturing local talent — a strategy that Schell described as “sustainable.”

“It has a lot to do with education, but I think beyond educating, the ability to design products together, to engineer products together, is something that needs to start, in particular, working together with select universities,” he said.

Schell emphasized the role of AI in shaping the Kingdom’s future, particularly in practical applications such as education and daily life.

“The output that an AI engine delivers is based on the model it uses. And I think what is very important for Saudi Arabia in this context is to have models that have cultural awareness, that have cultural content.”

Drawing on his own experience, Schell highlighted the importance of localization.

“I live in the US right now. I’m German. If I use a US model, a US-centric model, I will get US-centric answers. (While) If I use a Saudi-centric model, I will get Saudi-centric answers.

“This is very important from a culture and from a historic point of view,” he added, stressing the “government’s responsibilities” in fostering an ecosystem that supports culturally relevant AI.