Saudi PIF launches Regional Voluntary Carbon Market Co. with $133m capital

Saudi Arabia’s Public Investment Fund (PIF) has announced the establishment of the Regional Voluntary Carbon Market Company.

PIF, one of the largest and most impactful sovereign wealth funds in the world, holds an 80 percent stake while Saudi Tadawul Group Holding Company holds the remaining 20 percent stake in the company.

The company will offer guidance and resourcing to support businesses and industries 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.

It is noteworthy that PIF and Saudi Tadawul Group announced the Voluntary Carbon Market (VCM) Initiative in September 2021. Crown Prince and Prime Minister Mohammed bin Salman, who is also chairman of PIF, highlighted at that time Saudi Arabia’s leading role in contributing to the reduction of the impact of climate change and encouraging institutions to reduce their carbon emissions as part of several initiatives that were launched in this regard.

Headquartered in Riyadh, the new company’s announcement will help facilitate the efforts of the world’s largest-ever carbon credit auction on Tuesday at the 6th edition of the Future Investment Initiative (FII) in Riyadh. The auction will involve a total of one million tons of carbon credits and will offer high-quality credits including CORSIA-compliant, Verra-registered certificates.

Yazeed Al-Humied, deputy governor and head of MENA Investments at PIF, said: “We are delighted to announce the establishment of the Regional Voluntary Carbon Market Company, as a major milestone for the Middle East and North Africa (MENA) region. We are passionate about the potential for voluntary carbon markets to deliver additional carbon reduction benefits throughout the region, thereby ensuring that the MENA region is at the forefront of climate action and that Saudi Arabia is a leading force in solving the climate challenge.

The company will play an important role in PIF’s wider efforts to drive the investment and innovation required to address the impact of climate change and support Saudi Arabia’s efforts to achieve net zero by 2060.

On his part, Eng. Khalid Al-Hussan, CEO of Saudi Tadawul Group, said that the Saudi Tadawul Group has an important role to play in championing Saudi Arabia’s efforts towards a sustainable future. “We continuously work towards encouraging the adoption of ESG disclosures in the Saudi capital market, to advocate for a better, more transparent future, and we are delighted to be an integral part, strategically and operationally, of the new company. We believe it will be instrumental in supporting Vision 2030 and in further realizing the Group’s vision of being a gateway to the MENA region for global investors.”

Riham ElGizy, director of VCM Initiative, said that the inaugural auction represents the first step towards becoming a leading presence in the global voluntary carbon market ecosystem. “With an expected one million tons of carbon credits available to trade, we predict that our auction will be the largest carbon credit auction to date,” he added.

The company’s establishment is a continuation of PIF initiatives to support Saudi Arabia’s green agenda and follows previous announcements by PIF, including the completion of its $3 billion inaugural green bond, and the various renewable projects PIF is spearheading as part of its commitment to developing 70 percent of Saudi Arabia’s renewable energy capacity, in line with Saudi Vision 2030.