S&P affirms Saudi Arabia’s A/A-1 rating

With a proven track record in carbon capture, utilization and storage technology, Saudi Arabia has the potential to become a leader in this sector, according to a new study.

In its latest report, the International Energy Forum said the Kingdom and the wider Middle East and North Africa region should work together to deploy CCUS solutions which will ensure a smooth energy transition.
“Recognizing the important role CCUS plays in reducing emissions and supporting sustainable economic growth, there is a growing interest across the region to further develop CCUS with supportive measures,” said IEF.
It added: “This presents an opportunity for the MENA region to become a leader in the deployment of CCUS solutions and to set standards to scale CCUS globally.”

Saudi Arabia leading the energy transition journey
In its latest report, the IEF also highlighted several measures taken by the Kingdom to advance the developments in CCUS technology, which includes the launch of the Voluntary Carbon Market, a pivotal tool in incentivizing emission reduction activities.
According to the IEF, the establishment of the VCM, a joint initiative by Saudi Arabia’s Public Investment Fund and the Kingdom’s stock exchange, will help the country achieve its net-zero targets.
“The creation of VCM aligns with PIF’s broader efforts to drive investment and innovation in clean technologies including CCUS to combat climate change and support Saudi Arabia’s national goal of achieving net-zero emissions by 2060,” said the IEF.
The energy think tank added that Saudi Arabia could soon emerge as the global leader for CCUS by 2027 with the opening of the world’s largest carbon capture hub on the east coast of the Kingdom in Jubail.
The project is a joint initiative of Saudi Aramco and the Kingdom’s Ministry of Energy and will have a storage capacity of up to 9 million tonnes of carbon dioxide a year by 2027.

“These endeavors form part of Saudi Arabia’s broader efforts to reduce greenhouse gas emissions and address climate change challenges,” noted the IEF.
The report also lauded the Kingdom for taking a significant step toward environmental sustainability by launching the Greenhouse Gas Crediting and Offsetting Mechanism.
This initiative aims to incentivise entities within Saudi Arabia to actively engage in greenhouse gas reduction and removal activities that go beyond national laws and regulations.
GHG crediting and offsetting mechanisms function by rewarding entities for their activities that successfully reduce emissions beyond the standard environmental regulations and best practices.
“With the right policy and regulatory approach, CCUS will play a significant role in the transition to a low carbon future while creating economic opportunities and reducing environmental impacts within the MENA region and beyond,” said the IEF.

IEF’s recommendations to strengthen CCUS in MENA
In its report, the IEF also made various recommendations that could strengthen the growth of CCUS in the MENA region.
The forum states that deployment of this practice must reach at least 5.6 gigatonnes of CO2 by 2050 globally from 40 million tonnes today in order to meet the 2015 Paris Agreement and UN Sustainable Development Goals.  
The Paris Agreement is an international treaty on climate change that compels signatories to work toward limiting the global temperature increase to 1.5 degrees Celsius above pre-industrial levels.
According to the energy think tank, developing a regulatory framework for CCUS implementation is crucial to reducing GHG emissions, which will help to advance the region’s climate ambitions and ensure that it sets or helps to co-create international standards.
“The MENA region can collaboratively develop a comprehensive regional framework for CCUS deployment. This framework can include guidelines for CCUS projects, ensuring
consistency and clarity in regulatory procedures across countries,” noted the IEF.
The report noted that governments in the MENA region could design robust financial incentives to attract investments in CCUS projects.
These incentives may include tax credits, grants, or carbon market mechanisms that create a favorable economic environment for businesses to adopt CCUS technologies.
The IEF further stated that establishing a clear and stable policy landscape will encourage greater private sector engagement and can spur innovation in emission reduction efforts.

The report pointed out that the successful implementation of CCUS regulatory frameworks requires strong political leadership and government-wide support.
According to IEF, governments that are committed to the reduction of greenhouse gas emissions and the promotion of sustainable development are more likely to develop and implement effective regulatory frameworks for CCUS projects.
Moreover, public awareness and education are essential for building up support for CCUS projects. The IEF noted that governments should promote public awareness and education campaigns to inform citizens about the benefits of CCUS technologies, how they work, and the importance of reducing GHG emissions.
Enhancing research and development for CCUS technologies is also essential for the region to advance in this sector.
“Governments can establish funding programs and public-private partnerships to accelerate innovation in CCUS. R&D efforts should focus on improving technology efficiency, reducing costs, and adapting CCUS solutions to the region’s unique industrial and environmental context,” added the IEF.

Moreover, it is also necessary to ensure policy coherence and maximize the impact of CCUS through initiatives, dialogues, and collaboration among member countries in the MENA region.
The report also highlighted the necessity of carbon market integration to establish a regional carbon market, as it will increase the market’s attractiveness for investors.
“Working toward a more harmonized approach for carbon markets will also help foster a coordinated response to climate change in the region,” noted the IEF.
The non-profit organization added that governments in the MENA region should also prioritize capacity-building programs to develop a skilled workforce capable of implementing CCUS policies and realizing projects.
According to the IEF, these programs should focus on technical expertise, project management, regulatory compliance, and public engagement to support the successful deployment of CCUS technologies in the region.
The report also underscored the necessity to ensure international cooperation to advance in the CCUS technology sector.
“The MENA region should actively engage in international cooperation on CCUS, collaborating with global partners and organizations. By participating in international initiatives, the region can access funding, technical expertise, and policy insights, enhancing its ability to address climate change and sustainable development challenges effectively,” said the IEF.