Minister of Energy launches market mechanism to compensate, ‎balance greenhouse gases

Prince Abdulaziz bin Salman, Minister of Energy, announced the launch of the market mechanism for offsetting and balancing greenhouse gases (carbon equivalent), which aims to issue carbon certificates to stimulate investments in projects to reduce greenhouse gas emissions in all sectors in the Kingdom of Saudi Arabia and help achieve the Kingdom’s contributions nationally determined under the umbrella of the Framework Convention on Climate Change and the Paris Agreement.

The announcement was made in two major forums, the first during the first day of the second edition of the Green Saudi Initiative, held in Sharm El-Sheikh in the Arab Republic of Egypt, which hosts the 27th Conference of the Parties to the United Nations Convention on Climate Change (COP27) and the second during the conference activities and in the presence of a number of ministers and Saudi and international officials and experts, and the announcement was welcomed by everyone.

It is worth noting that the Public Investment Fund announced the establishment of a voluntary platform for trading carbon certificates in the Middle East and North Africa, and then the establishment of the Regional Voluntary Carbon Market Company to support companies and sectors in the region to enable them to reach zero neutrality and to achieve the objectives of the market mechanism for offsetting and balancing greenhouse gases.

The mechanism for offsetting and balancing greenhouse gases is in line with the objectives of the United Nations Framework Convention on Climate Change and the Paris Climate Agreement, as well as with international standards of climate, sustainability and ISO agreements in order to give international value to the certificates issued by the mechanism, and this contributes to increasing the economic feasibility of investing in projects, reducing emissions by increasing the value and reliability of issued certificates.

The National Committee for the Clean Development Mechanism, which is the entity responsible for issuing carbon certificates in the Kingdom, has followed the best international practices to come up with this mechanism, taking into account national and regional conditions through the application of a holistic approach to the carbon circular economy that adopts all solutions to reduce carbon emissions, which It was approved by the Group of Twenty at the Riyadh Summit in 2020.

This announcement comes in line with the Kingdom’s climate ambitions and goals, which are represented in the nationally determined contributions that aim to reduce emissions by 278 million tons of carbon equivalent annually by 2030 AD, in addition to reaching zero neutrality by 2060 AD, and its joining the Global Undertaking initiative on Methane to reduce global methane emissions by 30% by 2030 compared to 2020 levels.