GCC Carbon Management: Early Progress, Emerging Opportunity

Early Progress, Emerging Opportunity

The Gulf Cooperation Council (GCC) is accelerating its transition toward a lower-carbon future. Governments and corporates across the region are aligning national energy strategies with net-zero pathways, advancing investments in renewables, hydrogen, and carbon-management solutions that bridge conventional energy with new-economy climate goals.

Building the Foundations

Momentum is increasingly visible. Saudi Arabia’s Circular Carbon Economy framework, the UAE’s updated Net Zero 2050 initiative, and Oman’s evolving climate regulations all signal a decisive shift toward structured carbon management.

Meanwhile, leading entities are investing in enabling technologies—from large-scale carbon-capture and storage infrastructure to emerging carbon-trading platforms, green-hydrogen projects, and energy-efficiency innovations. These efforts are beginning to knit together the region’s broader decarbonization architecture.

A notable step in this direction is Saudi Arabia’s launch of the Regional Voluntary Carbon Market (VCM), led by the Public Investment Fund (PIF) and the Saudi Tadawul Group. With carbon-credit auctions in 2022, 2023, and 2024, the VCM has begun forming a formal marketplace for verified emission reductions across the region. While still early, it signals a growing institutional push to give structure and credibility to carbon trading in the GCC.

Where the Market Still Feels Early

Despite clear intent and expanding technical capability, the financial and commercial layer of carbon management remains nascent.

Market instruments—carbon credits, verified offsets, and transition-finance products—are still evolving. Regulatory frameworks, measurement standards, and verification methodologies are developing but not yet harmonized across the GCC.

For investors, this creates a mixed picture: strong policy direction and industrial capacity, but limited depth in tradable markets and financial structures. In effect, the region is building the infrastructure of carbon management before establishing the mechanisms that will ultimately monetize it.

Dialogue and Coordination

The conversation is expanding quickly. Regional forums such as the World Future Energy Summit in Abu Dhabi, the Gulf Climate & Carbon Forum in Riyadh, and the Hydrogen MENA Summit in Dubai have become regular hubs for policymakers, developers, and financiers.

I attended the World Future Energy Summit in early 2025 and witnessed firsthand the deeper engagement around carbon management. What was once a policy-led discussion has matured into structured dialogue on financing frameworks, carbon-pricing mechanisms, and project bankability. The tone across the public and private sectors has shifted: regional players are no longer asking if decarbonization will happen, but how to align capital, regulation, and technology to make it commercially viable at scale.

Yet even as dialogue matures, caution remains. Many stakeholders hesitate to adopt more advanced carbon-management solutions. Discussions often stop short of carbon-credit utilization, structured carbon trading, or derivative instruments linked to emissions reduction. Appetite is growing, but openness to sophisticated market mechanisms continues to evolve.

Our Perspective

At Merchant Edge, we believe the GCC’s carbon-management value chain is entering its formative phase.

The technological direction is clear, and capital appetite—public and private—is steadily increasing. What remains fluid are the market instruments that will underpin long-term investability: pricing mechanisms, crediting standards, and liquidity in carbon-related financial products.

As these components develop, early collaboration between policymakers, industrial players, and capital providers will be critical in shaping the region’s trajectory.

For now, the market is still early, but the groundwork being laid today will define how the GCC participates in the global carbon economy over the coming decade.

Abdul Kader El Haraki
Managing Director

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