Saudi Arabia has led the energy-rich Middle East’s dramatic debut on the world’s climate finance stage this year. This week the Saudi sovereign wealth fund-owned Regional Voluntary Carbon Market Company held the largest-ever auction of carbon credits and announced the establishment of a carbon exchange in Riyadh.
The European Union has led the world’s decarbonisation effort for decades, putting in place a compliance carbon cap and trade system as well as leading on the corporate side with pledges and actions to decarbonise and fund carbon projects. The US has been patchy in their engagement, with some leaders, California, for example, on both compliance and voluntary market solutions, and some laggards, like the federal government, which has foregone a carbon market for a subsidy approach for tech-based carbon removals.
Other parts of the world are true bright spots. Singapore has put in place a stiff per tonne carbon tax that rises annually and allowed for carbon credits to be used to pay it, effectively making it the world leader in climate finance systems. Korea has an aggressive cap and trade system in place but allows certain carbon projects in the developing world to “count” in its calculus. Colombia’s $5 carbon tax also allows taxpayers to pay their tax in Colombian carbon credits, thereby driving funding to some of the world’s poorest farmers and indigenous people, paying them to protect and restore forests. China went online with the biggest carbon market in the world 18 months ago and will scale up its voluntary carbon system in the next few months.
The Middle East has been a recent, and welcome, participant in the climate and carbon markets discussion. Egypt hosted last year’s COP and the UAE will host this year. Saudia Arabia has swung into action just in the last 10 months, with two auctions, the new exchange and Aramco, the world’s largest emitter with five times the emissions of Shell, stepping up as the big buyer. Aramco and UAE governments and businesses are also financing mangrove restoration in the middle east and around the world, at a scale that is big for the carbon market, but just a toe in the water for these giant carbon emitters.
This is all good news for the climate, and for what will soon become a single global price on carbon. This makes good economic sense, as we need to lighten the burden of climate change on, and share the benefits of climate finance with, the world’s poorest people, many of whom own and have been stewarding healthy forests for millennia. That stewardship has been largely uncompensated so far. Similarly, the engagement from the Middle East, which is probably the world’s most dramatic case of development through fossil fuel extraction, is long overdue, but hopefully just in time.
Many in the global north are protesting the UAE’s hosting of the UN’s COP meeting this year, and their appointment of the national oil company’s CEO Sultan Al-Jaber as anathema to progress on climate. Our view is that this is a welcome development to bring the COP to ground zero of the world’s addiction to fossil fuels.
The climate crisis has no bad guys or good guys. We are all both good and bad; we are all hypocrites and angels. And we must trust each other to get the best out of ourselves. The future will not care about blame, only whether we’ve done what we can.