In brief

  • Saudi Arabia's voluntary carbon market is operational, the national authority for domestic project approvals is in place, and regulators are moving toward mandatory ESG reporting.
  • While corporate awareness of the Saudi green initiative is high, a severe lack of operational capability is stalling actual trading readiness.
  • A historic Fatwa now permits carbon credits to serve as underlying assets for Islamic Finance and green sukuk.

The transition from abstract climate pledges to actionable financial strategy has officially arrived in the Kingdom. Supported by the aggressive targets of the Saudi green initiative, corporate leaders are realizing that achieving net zero requires more than internal efficiency—it requires active participation in the emerging carbon economy.

However, an operational disconnect remains. Most businesses in KSA understand that Carbon Credits matter for the overarching Energy Transition. Yet, very few possess the technical architecture required to baseline, verify, and ultimately trade these assets.

Carbon Emissions

278 million tonnes Saudi Arabia's annual carbon emissions reduction target by 2030 under the Saudi Green Initiative. 

Carbon Credits

15 million+ Carbon credits expected to trade on Saudi Arabia's voluntary carbon market by end of 2026.

Carbon Credit Price

€60–65 per carbon credit Average cost of a carbon credit traded in Europe's ETS market. 

Saudi Arabia voluntary carbon market

Saudi Arabia's voluntary carbon market infrastructure

To execute effectively, financial institutions and corporate entities must understand the two primary pillars of Saudi Arabia's voluntary carbon market. These institutions govern how credits are approved domestically and how they flow into broader sustainable finance portfolios.

  • The carbon trading exchange: Backed by the Public Investment Fund (PIF) and Saudi Tadawul, Saudi Arabia's voluntary carbon market has been live since November 2024. It connects to registries including Verra VCS, Gold Standard, Global Carbon Council, ART TREES, Puro Earth, American Carbon Registry, Ecoregistry, and Climate Action Reserve — making credits internationally fungible provided they meet the ICVCM's Core Carbon Principles.
  • The Designated National Authority (DNA): Saudi Arabia's DNA governs domestic project approvals and operates in alignment with Article 6 of the Paris Agreement, giving locally generated credits cross-border compliance value, including CORSIA utility. Globally, trading exchanges and national authorities are separate institutions; in Saudi Arabia, these functions sit within a single governance structure.

Without clarity on financial value, carbon projects stall. Most firms also lack IFRS guidance to treat credits correctly on the balance sheet.

Three gaps holding mid-market firms back

Despite the infrastructure being in place, mid-market organizations frequently fail at the point of execution. In our advisory experience, three critical gaps consistently prevent successful sustainability reporting and market entry:

  1. No capability to evaluate and register projects: Additionality testing, GHG baseline work, and executing a robust life cycle assessment are prerequisites. These are highly technical skills most internal teams do not have.
  2. No financing readiness: Without a clear projection of financial value, CAPEX for carbon projects is rarely approved. Furthermore, firms lack the internal accounting guidelines to reflect credits accurately on their balance sheets.
  3. No continuous MRV system: High-integrity exchanges require continuous digital Monitoring, Reporting, and Verification (MRV)-not periodic spreadsheet surveys. Without auditable MRV, credits cannot be issued or traded.

The 5-step engagement path

To bridge these operational gaps, RSM Saudi Arabia has developed a rigid, structured pathway. This methodology ensures that corporate offsetting projects evolve from internal ideas to transactable commodities.

1

Opportunity screening

We map viable reduction projects across your operations, executing additionality testing and abatement cost analysis to shortlist the highest-yield opportunities.

2

Baseline and methodology

We identify the applicable registry methodology, secure endorsement from Saudi Arabia's Designated National Authority, and establish a definitive, audit-ready baseline.

3

MRV and verification

We guide the build-out of digital monitoring systems, followed immediately by engagement with Validation and Verification Bodies (VVBs) for independent sign-off.

4

Credit issuance

Registry management is handled end-to-end, resulting in the formal allocation of immutable serial numbers to your verified reductions.

5

Carbon market transaction

We support your Retire-vs-Sell strategy, assist with spot market or RFQ execution on Saudi Arabia's voluntary carbon market, and manage the ISAE 3000 assurance and VAT implications.

Islamic Finance

A breakthrough for Islamic Finance

Perhaps the most transformative development for regional liquidity is the alignment of carbon markets with Sharia principles. A recent Fatwa issued jointly by Saudi Arabia's voluntary carbon market authority and the International Islamic Trade Finance Corporation (ITFC) establishes carbon credits as an enabling commodity for Islamic Finance.

This ruling permits verified credits to be used as the underlying tangible asset for Murabaha structures and sovereign green sukuk. It unlocks a first-of-its-kind sustainable finance channel, allowing Saudi banks and corporate treasurers to leverage their ESG initiatives directly for capital generation.

Client FAQs: Navigating KSA carbon markets

Saudi Arabia's voluntary carbon market is a formal trading exchange for carbon credits meeting the ICVCM's Core Carbon Principles. Backed by PIF and Saudi Tadawul, it enables businesses to buy, sell, and retire verified credits in support of the Kingdom's net zero commitments.

Four steps are required. First, demonstrate additionality. Second, establish a GHG baseline using a methodology from a recognised registry. Third, secure endorsement from Saudi Arabia's Designated National Authority. Fourth, have an accredited Validation and Verification Body independently audit the project. Credits are then formally issued and assigned serial numbers on the registry.

Firms must baseline their GHG emissions, select a methodology from a recognised registry such as Verra VCS, Gold Standard, or Global Carbon Council, and build a continuous MRV system. Credits are then verified by an accredited third party before being issued and listed for trading.

Pricing fluctuates based on supply, demand, and project additionality. It benchmarks against global voluntary averages — European ETS units trade around €60 as a reference point. A life cycle assessment is required to maximise commercial value before market entry.

A joint Fatwa issued by Saudi Arabia's carbon market authority and the ITFC establishes verified carbon credits as a Sharia-compliant commodity. This permits credits to serve as the underlying asset for Murabaha structures and green sukuk, opening significant sustainable finance channels for regional institutions.