Saudi Arabia released its green financing framework (pdf)on Thursday, identifying eight types of green projects to be funded through the sale of the bonds. The framework targets projects focused on renewable energy, energy efficiency, carbon capture and storage, green hydrogen, cutting emissions, sustainable water and wastewater management and climate adaptation measures.

How it works: Issuances will be made through the Finance Ministry, with net proceeds allocated for eligible budgetary programs in the general budget within two budget years following the green bond or sukuk issuance. Total spending for budgetary programs will be of an equal amount or exceed that of the bond proceeds, and an annual allocation report will be published within one year of any green bond or sukuk issuance to review the deployment of funds and environmental impact indicators.

Two committees to oversee the framework: The Finance Ministry will chair the Sustainable Financing Committee, which will oversee the framework and list of eligible projects. The National Debt Management Center (NDMC) will lead on the marketing of projects to fixed-income investors.

REMEMBER- The potential issuances are separate from the Public Investment Fund (PIF) venture into green financing. The sovereign fund closed two green bond offerings totaling USD 8.5 bn between 2022 and 2023. The push for sustainable bonds comes under Saudi’splan to slash emissions by 278 mn tons per year by 2030 and reach net zero by 2060.

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