The second Middle East and North Africa Climate Week (MENACW) was held from 9-12 October 2023 in Riyadh, Saudi Arabia, under the theme, “Advancing Inclusivity and Circularity for Just and Equitable Energy Transitions” and marked the attendance of over 9000 participants and over 240 sessions. It was organized by the UN Environment Program (UNEP), the UN Development Program (UNDP), UNFCCC, the World Bank Group, the Islamic Development Bank (IsDB), the International Renewable Energy Agency (IRENA), the UN Economic and Social Commission for Western Asia (ESCWA), and the League of Arab States. During the event, discussions focused on four thematic tracks: Energy Systems and Industry; Cities, Urban and Rural Settlements, Infrastructure, and Transport; Land, Ocean, Food, and Water; and Societies, Health, Livelihoods, and Economies.

During the event, Saudi Arabia announced the launch of the Greenhouse Gas Crediting and Offsetting Mechanism (GCOM) in early 2024. The greenhouse gas credit scheme is a voluntary program compliant with Article 6 of the Paris Climate Agreement. It will be open to the public and private sectors and foreign companies’ subsidiaries. Under this program, companies that exceed their permitted carbon emissions must buy credits from other firms that produce lower emissions than their allocation. For this purpose, in October 2022, Saudi Arabia’s sovereign wealth fund, the Public Investment Fund, in partnership with Riyadh-based Saudi Exchange, Tadawul Group, set up the Regional Voluntary Carbon Market Company (RVCMC) as the country’s auctioning authority to trade carbon credits from projects that voluntarily cut or remove greenhouse gas emissions and allow other companies to offset their emissions. In June 2023, some 16 Saudi firms, including oil giant Aramco and electric transmission monopoly the Saudi Electricity Company, bought more than 2.2 million tons of carbon credits that were certified as coming from projects that avoid emissions by using sustainable technologies or removing carbon from the atmosphere. The program’s impact will likely grow as the number of participating local and foreign companies increases. The program is currently at an early stage, but climate financial data shows that the market for this financial instrument is expected to be more than $50 billion by 2030.

MENACW, marked by its inclusive and circular approach to energy transitions, appears sustainable due to the collaboration of major international organizations and regional entities. The introduction of the Greenhouse Gas Crediting and Offsetting Mechanism (GCOM), aligning with the Paris Climate Agreement, incentivizes emission reduction through a market-driven approach. This program’s sustainability is bolstered by the involvement of significant local and regional players, ensuring it’s rooted in regional economic structures.

The potential future impact of this initiative seems promising, indicated by the expected market growth of over $50 billion by 2030 and early successes, such as significant carbon credit trading by major firms. The alignment with global carbon neutrality trends and ESG investing further suggests a growing impact. To accurately assess its effectiveness, ongoing monitoring using data on carbon credit trading, emission reductions, and participation metrics is crucial. The comparative analysis with similar programs can also provide valuable insights into its effectiveness.

This post was submitted by Saudi Arabia Country Managers Abeer Abdulkareem & Amgad Ellaboudy.