The Arab Petroleum Investments Corporation (APICORP) has signed a $75 million Murabaha agreement in favor of Hartree Partners Power & Gas Company (UK) Limited, an affiliate of Hartree Partners LP.
The first-of-its-kind facility in the MENA region will fund high-quality voluntary carbon offsets, which will be used to develop environmentally friendly projects worldwide. Each carbon offset represents the ownership of one ton of carbon dioxide equivalent (CO2e) which offsets corresponding emissions by the holder.
“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 sustainability,” said CEO of APICORP Khalid Ali Al-Ruwaigh.
Every year, it is estimated that more than 50 billion tons of greenhouse gases are emitted into the atmosphere. 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 decarbonizing 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 decarbonization 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,” added 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.
Stephen Hendel, Founding Managing Director of Hartree, said: “Robustness, reliability and integrity are at the heart of Hartree’s investments in the Carbon markets, and we thank APICORP for its expertise and leadership in structuring this unique Islamic facility.”
