The Arab Petroleum Investments Corporation (Apicorp) signed a $75-million Murabaha agreement with Hartree Partners Power and Gas Company (UK) to fund high-quality voluntary carbon offsets.
The first-of-its-kind facility in the Mena region will be used to develop environment-friendly projects worldwide. Each carbon offset represents the ownership of one ton of carbon dioxide equivalent (CO2e) which offsets corresponding emissions by the holder. 
Khalid Ali Al-Ruwaigh, CEO of Apicorp, says: “Financial innovation plays a crucial role in ensuring a sustainable energy ecosystem. This Murabaha facility was created as part of our commitment to provide innovative financial solutions to enable a balanced energy transition, as well as support Arab countries' aspirations to reach net zero carbon emissions in line with the Paris Climate Agreement. The precedent-setting transaction serves as a major milestone for our vision of supporting the Mena region in its journey to sustain-ability.”
Robust voluntary carbon markets, where carbon credits are purchased voluntarily, have emerged as a cost-effective asset class enabling governments and corporations to immediately begin decarbonising their footprints in line with the global effort to reach net zero emissions by 2050.
This particularly applies to sectors and industries where emissions are not yet fully abatable due to technological or cost feasibility.
For investors, carbon offsets can also mitigate risks associated with energy transition by making their investment portfolios more resilient to evolving climate regulations. 
Regulators and rating agencies are also increasingly taking interest in climate finance and sustainability reporting disclosures by banks.  
“Banks and other financial institutions play an important role in the efforts to meet the Paris Agreement target because financing remains one of the most crucial challenges in the decarbonisation chain. The facility’s shariah compliance and syndication features can have major implications because they make it convenient for the regional market to adopt and enable additional banks to join and gain exposure to this asset class,” says Al-Ruwaigh.
Apicorp’s facility will fund carbon offsets that are registered with the non-profit platform Verra, the largest global registry for nature-based offsets.

REGION’S CARBON MARKETS
Voluntary carbon markets are particularly relevant to the Arab region. On a per capita basis, carbon emissions are substantially higher in Mena compared to peer economies.
In October, Saudi Arabia organised the largest carbon credit auction in the world involving one million tons of carbon credits as re-gional businesses accelerate their quest for net-zero emissions.