Saudi Arabia sets up carbon market firm to support net zero goal

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Saudi Arabia’s sovereign wealth fund started a voluntary carbon market firm and plans to auction a million tons of credits, supporting the Kingdom’s net zero target.

The Public Investment Fund said it started the Regional Voluntary Carbon Market Co. with Saudi Tadawul Group. The new company aims to help facilitate the auction on October 25, the first day of the three-day Future Investment Initiative in Riyadh, a summit seeking to attract billions of dollars to Saudi Arabia.

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“The company will offer guidance and resourcing to support businesses and industry in the region as they play their part in the global transition to net zero, ensuring that carbon credit purchases go above and beyond meaningful emission reductions in value chains,” according to a statement.

Tuesday’s auction will offer high-quality credits including Corsia-compliant, Verra-registered certificates, it said. Corsia is a program run by the International Civil Aviation Organization, or on some commodities exchanges, which offers carbon offsets contracts.

The $620 billion wealth fund is a major backer of many of Saudi Arabia’s green ambitions. Earlier this month it raised $3 billion with its debut dollar bond sale.

Saudi Arabia -- the world’s largest oil exporter -- is seeking to diversify away from crude sales. The Kingdom pledged to neutralize greenhouse gas emissions within its borders by 2060, and has earmarked billions for carbon-capture technology as part of that goal.

It plans to increase the mix of solar and wind energy in its local power grid to 50 percent by 2030, with natural gas set to make up the rest. The country is also investing heavily in hydrogen, which is seen as crucial to its eventual shift away from oil and gas.

Read more: Sixth edition of FII opens in Riyadh with eyes firmly set on new global order