By Abbas Nazil
The Kingdom of Saudi Arabia is aiming to become a central carbon trading hub for the Global South, targeting partnerships with Asian companies to boost activity on its voluntary carbon market.
The Kingdom’s Voluntary Carbon Market (VCM) recently signed a memorandum of understanding with Japanese trading company Marubeni to collaborate on carbon market initiatives and also partnered with Climate Bridge International, a Singapore-based carbon finance advisory firm.
Fadi Saadeh, acting CEO of VCM, highlighted the importance of establishing a platform to trade carbon credits generated from coal phase-out projects.
Carbon credits represent one tonne of CO2 or equivalent greenhouse gases reduced or removed through verified projects such as reforestation or carbon removal schemes.
In voluntary carbon markets, companies can purchase these credits to offset emissions and achieve net-zero targets, while sellers reinvest proceeds into green initiatives.
The VCM was launched in 2022 by Saudi Arabia’s Public Investment Fund and the national exchange operator, Tadawul Group.
Saadeh explained that Saudi Arabia’s geographic location provides a strategic advantage to serve carbon credit demand across the Global South and leverage longstanding investments and relationships, including those of Saudi Aramco.
He noted that in 2022 there were no project developers for carbon credits in the country, but the VCM ecosystem now supports more than 25 developers, reflecting rapid growth.
Saadeh acknowledged that the energy transition is a gradual process, requiring both market infrastructure and industry engagement.
The initiative aligns with global efforts to monetize emissions reductions while encouraging sustainable development projects across emerging economies.
Saudi Arabia’s move is expected to strengthen its leadership in carbon finance, attract foreign investment, and provide an economic incentive for environmental responsibility.
The VCM’s development demonstrates the Kingdom’s commitment to integrating climate solutions into its economic framework, fostering collaboration with international partners, and positioning itself as a key player in shaping carbon markets for developing nations.
