Saudi’s Public Investment Fund (PIF) signed an agreement forming the Middle East and North Africa (MENA) Voluntary Carbon Market (VCM).

PIF is Saudi Arabia’s sovereign wealth fund that is now targeting the carbon credit market.

Another member of MENA VCM is Saudi Aramco, the world’s biggest oil producer – by a longshot.

The other partners are ACWA Power, Saudi Arabian Airlines, Saudi Arabian Mining Company, and ENOWA. Each PIF partner signed a separate non-binding MoU.

What’s The MENA Voluntary Carbon Market?

The creation of MoUs is part of the Crown Prince’s efforts to achieve net-zero goals by 2060.

Signing partners will aid PIF’s VCM initiative by supplying and trading carbon credits. PIF expects that establishment of the market will materialize in 2023. More partners will be invited to join the MENA voluntary carbon market in the last quarter of this year.

Public officials are optimistic about the potential of this VCM. They are confident in the commitment of the first five private companies that took part in it. Their cooperation is the first of its kind in the MENA region, giving excitement to everyone.

How Does VCM Initiative Benefit The Partners?

The governor said that the pact will indeed drive net-zero innovations in the country. But since it’s a partnership, the benefits go two-way. It will also help the partners align their own carbon emissions reduction efforts.

For example, Saudi Aramco said that carbon credits are vital in their move to net-zero. They’re contributing to achieving secure and more sustainable energy that powers their business.

The same goes for Saudi Arabian Airlines. Their participation in MENA VCM serves a pivotal role in the airline’s history. They expect it to contribute big to their carbon offsetting and sustainability goals.

The utility company, ACWA Power, even has more to say about its involvement. They acknowledge their essential role in driving carbon emissions reduction globally. And so, taking part in the MENA voluntary carbon market is a great opportunity for them.

As for the other partners, both said that the VCM is a crucial step to achieving their net-zero ambitions, too.

On top of all those pledges is another desirable outcome of creating this very first VCM in the MENA region. That is it will pursue carbon credits that offer the highest quality and integrity in the market.

Other middle east countries, such as UAE have also stated their own net-zero 2050 pledge and could potentially join the MENA VCM in the future.

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The designer of China’s carbon market said that expansion into new sectors would be delayed.

China is the world’s biggest source of carbon emissions. In 2021, China’s carbon emissions were over 11.9 billion tons.

New Industries Added to China Carbon Market

Originally, big aluminum and cement producers in China would be part of its carbon market this year. But the country is going to postpone such expansion in 2023 instead.

They are most likely to start trading in China’s carbon market in 2024. By participating in the market, the sectors will meet their carbon emissions allowances.

This delay serves as another blow to the already rough beginning for China. Many consider the nation’s carbon trading system as a game-changer.

In effect, companies have to pay for their carbon emission permits. This is to reduce their carbon pollution and use more efficient fuel.

Effects of Delays in Carbon Market

Since the launch of China’s carbon market last year, it has seen less promising carbon prices. The same is true for carbon trading volumes.

Worse is that there was a crackdown on fabricated data committed by a couple of consulting firms. Regulators have to penalize them for doing such market misconduct. They shamed the companies in the public for committing data fault and negligence.

SinoCarbon, China’s leading verifying entity, is one of those firms. The company defended that they failed to identify faulty reports due to a tight schedule. Add to this the strict pandemic protocols that made the verification process harder.

Since correct data is the lifeline of China’s carbon market, data fraud must not happen again. Otherwise, it will make the expansion even more problematic.

In the meantime, the country’s officials gave a head’s up to focus on coal. This is because energy security is more important than climate issues for Beijing.

In effect, an analyst said that the country would see an increasing carbon emission. And so, it’s the environment that has to pay the price.

The Future of China’s Carbon Market

It was last July 2021 when the carbon market first launched. The carbon trading event largely included the power sector. Big companies in this sector accounted for about 40% of China’s total GHG emissions.

There’s no final date announced when the new sectors can take part in the market. Yet, market regulators expect to see them trading their carbon allowances by 2025. They are also expecting to welcome more firms from other industries.

Market leaders consider this addition essential to the success of China’s carbon market. Still, the series of delays in expansion can also postpone the market’s effectiveness.

In fact, power companies traded only 179 million tons of emissions in 2021. This is very low in comparison with the 4.2 billion tons given to them. Also, the price per ton of carbon emission is too low in China compared with Europe.

So, with very few market players, it will take years before it can help China reduce its carbon emissions.

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The U.S. Securities and Exchange Commission (SEC) is proposing that all public companies report their carbon emissions.

In general, it will increase the reporting transparency of public corporations. It will help investors know more about how climate risks affect their investments.

What to know about the new rule?

One major mandate is that companies disclose both their Scope 1 and Scope 2 emissions. The same goes for their Scope 3 emissions, if “material”.

Some firms have announced their carbon footprint reduction pledges already. The SEC will mandate them to share how they would achieve such commitments. If corporations set their own carbon price, the SEC will demand them to report about it.

Climate activists are vigilant on carbon offsets strategy for reducing carbon emissions.

How would this impact public companies?

Most companies are already disclosing their carbon emissions in their annual sustainability reports. But significant discrepancies remain.

The former SEC chair Schapiro noted that there are still many big companies that won’t do it unless it’s mandatory. The present SEC chair said that both companies and investors would value the new law.

Companies will need help from climate tech experts for their climate risk reports. This is good news for carbon accounting due to increased carbon emissions reporting.

How important is the disclosed information?

According to SEC, it is the investors that pushed them to draft the rule. They demand better and more transparent climate risk information disclosure. This is because climate change disasters impact the environment.

Likewise, climate risks are also becoming essential for investors to make informed decisions. The information will also show which companies commit to reducing their carbon footprint. The public and investors can put pressure on businesses that are true to their words, not actions.

This rule will make the SEC the leading enforcer of climate-related financial disclosures. The draft proposal will be more likely finalized before this year ends.

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Rio de Janeiro is launching a stock exchange for carbon credits and sustainable assets. Rio signed a protocol of intent Tuesday with the Nasdaq and Global Environmental Asset Platform (GEAP).

Rio’s goal is to have a leading role in the green economy. Once approved, they hope to have their Environmental Assets Exchange running soon.

According to Carlos Alberto Reis, former president of the Rio de Janeiro Stock Exchange (BVRJ), the partnership with Nasdaq is “very positive news.”

Ricardo Nogueira, director of the Union of Securities Brokers and Distributers of Rio de Janeiro, agreed.

“Having an environmental asset exchange headquartered in Rio is very good, both economically and institutionally for Rio de Janeiro.”

According to Governor Castro, the government team has worked on this agreement for nearly eight months. The goal is that the carbon stock reaches 73 million tons (or $25 billion).

The importance of carbon credits.

Countries that have reduced their emissions sell carbon credits to other counties that haven’t.

Simply put, one carbon credit is equal to one metric ton of carbon.

While carbon credits aren’t the only way countries can take the necessary steps to fight climate change, it’s a start. Nations typically use any profits to reduce greenhouse gas (GHG) emissions – like reforestation or cover crops.

Rio de Janeiro believes this will help the environment create domestic and international jobs.

According to Secretary of State for Finance Nelson Rocha, “We are going to create a favorable environment for this expansion to take place in the coming years. We want to make Rio a hub (base) for investments in environmental assets.”

Currently, 31% of Rio has natural forests. They expect to increase that coverage by 10% by 2050 by investing $410 million into reforesting projects.

This program will create more than 5,000 jobs.

Rio is actively working towards carbon neutrality – with the goal of 2045.

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