Demand for carbon offsets, which are generated by projects such as reforestation or the use of clean cooking fuels, is expected to increase as companies seek to use the credits to help them meet zero emissions goals.
About 16 Saudi companies, including Aramco and the Saudi Electricity Company, paid 23.50 Saudi riyals ($6.27) for each metric ton of carbon credits, said the Regional Voluntary Carbon Market, organizer of the auction.
The Saudi Public Investment Fund and the Saudi Tadawul Group are the founders of the regional voluntary carbon market company.
The company said the credits sold at auction are certified and the result is projects that avoid emissions by using sustainable technologies or removing carbon from the atmosphere.
Reham Al-Gizi, CEO of the regional voluntary carbon market company, told Reuters that Saudi Airlines was among the participants because the approval of credits includes offsetting airline emissions.
The company, which held its first auction in Riyadh in October for 1.4 million tonnes of carbon credits, said Kenya was chosen to highlight the need to invest in climate projects.
Although Kenya emits negligible emissions, contributing less than 1% of annual global emissions, it has been hit hard by climate change in recent years, with devastating droughts that have wiped out crops, destroyed wildlife and killed animals. .
“We are here to implement what we say,” al-Jizi said.
Companies see the voluntary carbon market as an important part of helping them achieve their environmental goals, as the market allows companies to invest in projects that do not generate greenhouse gas emissions.
With many companies targeting net zero emissions by 2050, demand for offsets is expected to increase, although some companies have lost interest in doing so due to concerns about the quality of some projects, prompting calls from the from climate advocates, industry and other potential buyers . To set stricter rules.
McKinsey consultants said the annual global market for voluntary carbon credits, which was worth around $2 billion in 2021 according to the nonprofit Ecosystems Market Place, could grow to $50 billion by 2030.
Critics of carbon markets have previously cited concerns such as a lack of transparency, an insufficient supply of credits and questions about the quality of projects.
Al-Gezi dismissed such criticism and said the regional VCC works with two separate and independent teams of experts to assess projects that bring credits for sale.
“If we find anything alarming, we immediately exclude it from the auction,” El-Gezi said.
About 70% of Wednesday’s auction assets were generated by projects in Africa, a regional voluntary carbon market company said.
“This includes clean and improved stove projects in Kenya and Rwanda, and renewable energy projects in Egypt and South Africa,” the company added.
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