Saudi Gazette report

RIYADH — The Voluntary Carbon Market (VCM), a carbon credit company established by the Public Investment Fund (PIF) and Saudi Tadawul Group, and Enowa, the energy and water subsidiary of NEOM, have announced a long-term agreement to facilitate the delivery of approximately 30 million tons of carbon credits within this decade.

This agreement supports Saudi Arabia's net-zero ambitions and will help ENOWA offset its emissions as it develops renewable energy infrastructure for NEOM. The scale and duration of the agreement mark a significant milestone in VCM’s ambition to create a thriving voluntary carbon market in the region.

According to a recent VCM press release, the deal will involve delivering high-integrity carbon credits to Enowa from climate action projects worldwide, with the majority of projects based in the Global South and transacted on the VCM platform. The first delivery under this arrangement took place on December 19, 2024.

CEO of VCM Riham ElGizy said: "The long-term agreement between VCM and Enowa to facilitate the delivery of over 30 million tons of carbon credits by 2030 marks a significant moment in Saudi Arabia’s journey to drive growth in global voluntary carbon markets. It helps Enowa compensate for today’s emissions while creating sustainable infrastructure for the long term."

She added: "Equally, the deal aims to give climate action projects in the Global South and beyond funding certainty so that they can plan for the next few years with confidence. To achieve global net zero, climate projects that reduce or remove carbon from our atmosphere need not just finance but certainty too. Enowa’s leadership has been representative of what the VCM exchange platform in Saudi Arabia can help unlock at a time when finance is at the forefront of the global climate agenda."

Executive Director Energy at Enowa Jens Madrian said: "Enowa is striving to ensure NEOM’s energy needs are met sustainably. Over the past two years, we have purchased high-integrity carbon credits from VCM’s auctions. This year, we are delighted to be the first company in Saudi Arabia to agree to a large-scale, long-term agreement with VCM."

The statement also highlighted that VCM launched Saudi Arabia’s first voluntary carbon credit exchange platform on November 12, 2024. The platform is designed to meet market requirements for a transparent, scalable, and increasingly liquid marketplace by offering institutional-grade infrastructure to enable secure transactions and price and data discovery for carbon credit projects, which are key to growing the market globally and providing a price signal for projects from MENA regions.

The platform features open market connectivity and is integrated with leading global registries. It also provides an opportunity to develop specialized infrastructure for trading carbon credits to enable Islamic Finance. In addition to the auction market, RFQ and block trade functionality, followed by spot market and other functions are launching in 2025.

"The voluntary carbon offset market is expected to grow from $2 billion in 2020 to around $250 billion by 2050. To promote the growth of the voluntary carbon market in Saudi Arabia and the region, VCM’s exchange is being designed to offer buyers and sellers institutional-grade infrastructure, enabling fast and secure transactions," the release stated. It also noted that Enowa has been a leading participant in VCM’s previous auctions, which took place in Saudi Arabia in 2022 and in Kenya in 2023.

VCM was established by PIF and the Saudi Tadawul Group in October 2022. The fund owns 80 percent of the company, while the group owns a 20 percent stake. Through its mandate to realize NEOM, Enowa serves as a blueprint for sustainable urban development worldwide, enhancing the planet's future while promoting economic diversification and improving quality of life.