RIYADH: Voluntary carbon markets, even in their premature stage, are evolving quickly as the world sees a sustainable future, according to a top official at the Saudi Arabian Oil Co. 

In an interview with Arab News, Musaab Mulla, Saudi Aramco’s vice president for energy and economic insights, said the recent voluntary carbon credits sale in Kenya on June 14 witnessed the auctioning of 2.2 million tons of carbon offsets. 

In October 2022, 1.4 million tons of carbon offsets were auctioned during the Future Investment Initiative in Riyadh, and Saudi Aramco was the lead buyer at the auction. 

“We are only interested to purchase high-quality credits, as demonstrated by our participation in the two auctions held by Regional Voluntary Carbon Market Co. We will also monitor if there is a pickup in key potential demand streams, such as demand for carbon-neutral fuels. All VCMs are relatively in a premature stage currently and are evolving at a fast rate,” Mulla said.

Carbon credits allow companies to emit a specific amount of carbon dioxide or other harmful gases — with one credit the equivalent of 1 ton of emissions. They are known to be generated through projects such as tree planting or using cleaner cooking fuel.  

The certified credits will either fund projects that avoid emissions using sustainable technologies or eliminate carbon from the atmosphere altogether. 

During the exchange, Mulla further noted that carbon credits are crucial as the globe is on an energy transition journey.

“Carbon offsets are an important additional role that will help us build our pathway to net zero, and that can be done by carbon credits, which are tradable instruments backed by projects that can reduce CO2 emissions to help compensate for GHG (greenhouse gas) emissions elsewhere and complement the internally generated offsets we are investing in, be it mangroves,” added Mulla.

Saudi Aramco has already set its net-zero target in 2050, and these recent efforts, including participation in the voluntary carbon markets, could accelerate this journey. 

“We are actively monitoring market developments when it comes to what defines high-quality credit. We are using the latest available information to create high-quality boundaries for the credits we aim to purchase,” he said.

Mulla added that the company plans to reduce its upstream carbon intensity by at least 15 percent to 8.7 kilograms of CO2 by 2035, even as its 2022 figures stood at 10.3 kg. 

Saudi Aramco also aims to reduce emissions by 2035 through renewables investment, investing in carbon capture and storage and energy efficiency improvements, methane and flaring reduction and offsets.

“Our innovative low-carbon practices and technologies already position us as one of the lowest carbon emitters in our industry,” he said while adding that the company follows a decarbonization strategy that targets energy efficiency, reduced methane and flaring, increased renewables, CCS  and offsets.

In June, RVCMC CEO Riham ElGizy noted after the auction in Kenya that such initiatives could play a crucial role in driving funding where it is most needed to deliver climate action and improve livelihoods. 

“Our aim is to be one of the largest voluntary carbon markets in the world by 2030, one that enables compensation of hundreds of millions of tons of carbon emissions per year and contributes to global net-zero goals,” ElGizy said then.

He added: “Our achievements to date, in such a brief period, demonstrate commitment to long-term success and ability to deliver on our ambitions.”