SAUDI ARABIA: Enowa, an energy and water company founded in NEOM, the planned sustainable city and economic zone in northwest Saudi Arabia, has announced a long-term agreement with the Voluntary Carbon Market Company (VCM) to deliver approximately 30 million tons of carbon credits by 2030. The carbon credits involved in the deal could potentially be used as underlying assets for Islamic finance transactions, following VCM securing its Fatwas in 2022.
VCM, a carbon credit company jointly set up by the Public Investment Fund and the Saudi Tadawul Group, secured Fatwas from the International Islamic Trade Finance Corporation (ITFC) and Saudi National Bank (SNB), permitting carbon credits as Shariah compliant assets in transactions like Murabahah and Tawarruq.
The carbon credits under the Enowa-VCM agreement will be sourced from global climate action projects – many located in the Global South – and transacted through VCM’s exchange platform, which launched in November 2024. The first tranche of credits under the agreement was delivered in December 2024.
Jens Madrian, the acting CEO of Enowa, commented: “Enowa is striving to ensure NEOM’s energy needs are met sustainably. Over the past two years, we have purchased high-integrity carbon credits from VCM’s auctions. This year, we are delighted to be the first company in Saudi Arabia to agree to a large-scale, long-term agreement with VCM.”
Enowa previously participated in VCM’s voluntary carbon credit auctions in Saudi Arabia in 2022 and in Kenya in 2023. The latter was the largest-ever voluntary carbon credit auction, selling over 2.2 million ton of carbon credits sourced largely from projects in the Middle East and Africa. Participants included the ITFC and SNB.
VCM’s exchange platform, launched in 2024, offers institutional-grade infrastructure, with a scope to develop specialized mechanisms for trading carbon credits in line with Islamic finance principles and promote the liquidity of carbon credit trading. The model is aligned with platforms including Malaysia’s Bursa Carbon Exchange – the world’s first Shariah compliant multi-environmental product exchange that facilitates the trading of carbon credits.
