Oil and gas giant Saudi Arabian Oil Co. (Aramco) and other Saudi and international companies bought more than 2.42 million tonnes of carbon credits at the Regional Voluntary Carbon Market Company (RVCMC) auction held in Nairobi, Kenya on Monday, RVCMC said.
A total of 16 Saudi and international companies participated in the auction, with Aramco, Saudi Electricity Company (SEC) and NEOM subsidiary ENOWA buying the largest number of carbon credits, the RVCMC said in a press release on Thursday.
The auction broke the previous record for the largest voluntary carbon credits ever sold, which was 1.54 million tonnes (1.4 million metric tons) in October 2022, the RVCMC said. The auction offset price was $6.27 (SAR 23.50) per metric ton of carbon credits.
Carbon credits are certificates that represent the reduction, avoidance or elimination of one ton of carbon from a specific activity.
Two of the globally accepted carbon credit standards are the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) and the Verra Verified Carbon Standard. The auction sold “high-quality CORSIA-eligible and Verra-registered carbon credits that can enable buyers operating in various industries to play their part in the global transition,” RVCMC said.
The carbon credits offered in the auction included 18 projects representing a combination of carbon dioxide avoidance and removal, such as improved clean stoves and renewable energy projects. Three-quarters of the carbon credits come from countries in the Middle East, North Africa and sub-Saharan Africa, including Kenya, Uganda, Burundi, Rwanda, Morocco, Egypt and South Africa, the statement said.
“This auction demonstrates the role that Voluntary Carbon Markets (VCMs) can play in driving finance where it is needed most, to deliver climate action and improve livelihoods in the Global South,” said Riham ElGizy, CEO of RVCMC.
RVCMC was founded by the Public Investment Fund of Saudi Arabia and the Saudi Tadawul Group to “provide guidance and resources to support business and industry in the MENA region as they play their role in the global transition to Net Zero,” according to the press release. Its goals include an “investment fund for climate mitigation projects, an exchange for trading carbon credits and advisory services that help organizations understand how to decarbonize.”
“Our goal is to be one of the world’s largest voluntary carbon markets by 2030, one that enables the offsetting of hundreds of millions of tonnes of carbon emissions per year and contributes to the global Net Zero goals,” ElGizy said. “Our achievements to date, in such a short period, demonstrate the commitment to long-term success and the ability to deliver on our ambitions.”
According to an earlier report by S&P Global Ratings, momentum for VCM is growing, which could indicate that “some stakeholders believe that carbon credits can support decarbonisation claims”. The report said that “potential problems may arise for carbon credits that are based on perceived benefits that may be difficult to justify or simply lead to adverse effects elsewhere.”
The World Bank reported a significant increase in VCM activity over the past five years, with 275 million voluntary credits issued by 2022, while Ecosystem Marketplace estimated the market value of VCM at $2 billion, according to the report. While this represents only a fraction of current global emissions, demand is expected to increase substantially, according to the report.
To contact the author, send an email to rteodoro.editor@outlook.com
