The report focuses on how the Gulf Cooperation Council (GCC) countries must not only develop and scale new technologies, but also secure mitigation projects outside of their value chain if they are to achieve their climate goals.
“It is imperative for GCC governments to establish the infrastructure for the voluntary carbon market, as well as to clarify carbon ownership, a critical step if countries wish to align private sector efforts and capital allocation with their government’s sustainability plans. Going further, the provision of clear certification guidelines will provide investors with required clarity to make guided decisions”, said Othmane Boujemaoui, an associate Partner at Bain & Company Middle East when commenting on the value voluntary carbon markets can provide.
Major GCC economies announced their ambition to achieve net zero emissions (Kingdom of Saudi Arabia by 2060, United Arab Emirates and Oman by 2050) and revised their 2030 climate commitments as part of the Paris Agreement. They aim to achieve these ambitions through decarbonization strategies that build on the established levers (such as renewable energy and energy efficiency) coupled with forward-looking carbon reduction solutions such as clean hydrogen and carbon capture.
This is the heart of the voluntary carbon market. Essentially, it links the supply of carbon credits to the demand from organizations looking to reduce carbon emissions. While there are several exemplary initiatives in the region, such as setting up exchanges, the GCC approach is still in its infancy, with limited supply and demand compared to other regions.
“There is mounting urgency for swift action to reduce greenhouse gas emissions. What is clear is that to achieve net-zero a combination of mature and early-stage solutions will be required. Energy efficiency and renewable energy alone will not be sufficient for GCC nations to achieve their climate ambitions,” said Raja Atoui, a Partner at Bain & Company Middle East.
According to Atoui, unruly industries such as aviation and cement face a dilemma across the region due to the limited number of cost-effective emission reduction solutions available. Participation in carbon voluntary carbon markets can play an important role in accelerating decarbonization efforts.
With the focus on net zero at the highest levels of government in the region, large industrial companies will eventually be forced to operate in a voluntary carbon market, even though it certainly lacks maturity and transparency.
“Now is the right time to start building internal voluntary carbon market capabilities, including the development of an optimal operating model and strategic recruitment strategies to minimize the risk of misallocated capital,” advises Boujemaoui.