Saudi Arabia’s voluntary carbon market is moving from a platform that supports climate action toward a channel that directs money into emissions-cutting projects. The Voluntary Carbon Market Co. (VCM) says it is now watching more than 30 local and international project developers, and that demand for credits at home is outpacing supply.
Three Years of Trading
VCM has traded more than 15 million carbon credits since it began operating three years ago. That equals about SR350 million ($93.3 million) in financing for climate projects around the world. In 2024, the platform facilitated trades of more than 2.5 million credits at SR37.5 per tonne.
CEO Fadi Saadeh gave these figures in an interview with Al-Eqtisadiah. He said the company first focused on building demand for credits and is now seeing growing interest, along with a rise in the number of developers who could become suppliers in the Saudi market.
The Pipeline of Projects
The developers VCM is following work across a wide range of areas. Their projects include methane capture, waste treatment, nature-based solutions, direct air capture and low-carbon concrete. They are spread across different parts of the country, which Saadeh described as a chance for Saudi Arabia to become a major regional hub and a leading global market for carbon credits.
Because demand has exceeded supply for the past three years, the market needs a bigger pipeline and a wider mix of credit sources. Saadeh expects supply to grow as projects develop and more credits are issued. International investors, he said, are showing interest in building projects in the Kingdom to generate credits.
Linking Markets to National Targets
The expansion fits into Saudi Arabia’s goal of reaching net-zero emissions by 2060. The Kingdom plans to do this through its Circular Carbon Economy framework, which rests on four principles: reduce, reuse, recycle and remove. It also aims to reduce, avoid and remove emissions equivalent to around 280 million tonnes a year by 2030, rising to about 320 million tonnes in the 2040s.
VCM operates with backing from the Public Investment Fund and Saudi Tadawul Group. Saadeh said the company is building the infrastructure needed for carbon trading and hopes to make the Kingdom a trusted hub for the international market.
One point he stressed is that company purchases of credits do not automatically count toward national targets. Transfers of credits between countries under Article 6 of the Paris Agreement need proper authorization and safeguards to protect the integrity of results.
Who Is Buying
Interest comes from several sectors. Saadeh said companies representing about 65 percent of corporate emissions in Saudi Arabia are present on the trading platform. They include oil and gas firms, along with heavy industries such as cement, metals and steel.
He also pointed to growing participation from companies listed on the stock market since the start of last year. As the market opens to foreign investment, international investors are paying closer attention to environmental, social and governance performance. That pushes companies to improve in those areas and publish reports, and credits are one tool they can use.
Motives vary. Some firms join voluntarily, while others want to strengthen their position in international markets. Reasons for buying include confidence in a project’s quality, expectations from customers and investors, reputation, and the need to secure future supply.
How Prices Are Set
There is no single price for carbon credits, since each one represents a real project on the ground. Price depends on the project itself, its reliability and quality, the year the credit was issued, and other factors.
To make pricing clearer, VCM uses what it calls a “core basket,” a group of projects whose credits the company verifies in advance. These are traded in large deals or at events such as auctions. In November 2024, the company’s third auction saw more than 2.5 million tonnes change hands at SR37.5 per tonne.
The Global Picture
Saadeh noted that growth in energy-related emissions worldwide has slowed to around 0.4 percent this year. Progress in the Middle East is slower, though countries in the region are starting to bring in regulations.
Compliance markets, which put a direct price on carbon, now cover more than 29 percent of global emissions. Saudi Arabia has announced plans to launch its own compliance market. Globally, carbon credit retirements exceeded issuances for the first time in the first half of 2026, with retired credits topping 100 million tonnes.
A key difference between global and regional markets is the spread of forward purchase agreements. Major companies such as Google and Microsoft are showing strong interest in them, while the trend is developing more slowly in the region. Saadeh said long-term agreements can give developers clearer visibility over revenue, which helps them plan and secure financing.
The Challenges Ahead
Building a credible market is harder than simply supplying enough credits. VCM is working to create a market with enough liquidity and transparency for companies to take part. Varied project quality and prices make this harder, and clear standards for measuring and verifying real emissions cuts are essential.
Saadeh said reliable measurement, accurate registries and open disclosure all strengthen investor confidence. He also said credits should support, not replace, direct emissions cuts and efficiency gains, and should not become a financial burden. Companies should fit credit purchases alongside spending on operational efficiency and cleaner technology.
Outlook
VCM expects growth to continue at the pace of the past three years over the next five to 10 years. Saadeh said the market will support the tools Saudi Arabia uses to reach net zero, including the planned compliance market and company and government sustainability projects. The platform already draws participants from Europe, the Americas, Asia and Japan.
What to Watch Next
- Supply growth: Whether the 30-plus developers turn into a steady flow of issued credits.
- Compliance market: The launch of the planned mandatory market and its effect on voluntary trading.
- Forward agreements: Whether regional buyers follow global firms in signing long-term deals.
- Price clarity: How the core basket and auctions shape transparent pricing.
For now, the Kingdom’s carbon market is gaining ground, and its next test is building enough supply and trust to match rising demand.
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