Firms from Saudi Arabia bought over 2.2 million metric tons of CO2 credits on June 14 at an auction in Nairobi, Kenya. 16 Saudi companies including Aramco, Saudi Airlines, and Saudi Electricity Company, paid 23.50 Saudi riyals ($6.27) per metric ton of CO2 credits, according to the auction’s organizer Regional Voluntary Carbon Market Company (RVCMC).
RVCMC plans to establish a full-time exchange in Saudi Arabia’s capital Riyadh in the first half of 2024. The company was founded by Saudi Public Investment Fund and Saudi Tawadul Group.
The auctioned CO2 credits come from certified carbon removal projects, according to RVCMC, Reuters reported.
In October 2022, the company held its first auction of 1.4 million tons of CO2 credits in Riyadh. This year, RVCMC told Reuters it chose Kenya to emphasize the need for climate investments in the country, as it is severely impacted by climate change.
The Voluntary Carbon Market is key to helping companies meet environmental goals as it allows them to invest in projects that reduce emissions they are not able to cut from their operations.
According to Ecosystem Marketplace, the annual global Voluntary Carbon Market was worth about $2 billion in 2021. It could reach $50 billion by the end of the decade, according to McKinsey.
As the number of firms that aim to achieve net zero by 2050 increases, the demand for carbon offsets also grows. Concerns, however, remain that tougher rules are needed to ensure transparency and the quality of some projects.
“If there are any red flags, we immediately exclude this from the auction,” RVCMC CEO Riham ElGizy told Reuters.
Around 70% of the CO2 credits at the auction were generated by African projects, according to RVCMC.