Last month, Saudi Arabia’s Public Investment Fund (PIF) issued green bonds — a financial instrument used to raise funds for environmentally friendly projects — for the first time. Entering debt capital markets for the first time, PIF raised $3 billion, which will contribute to the overall sum of $10 billion that the fund aims to invest in green projects by 2026. PIF has been tasked with helping the Saudi economy diversify away from oil.

Saudi Arabia has committed to a number of ambitious climate goals. The country aims to reduce carbon emissions by 278 million tons a year by 2030, as well as increase its renewable energy generation capacity by 50%. The country’s leading oil powerhouse — Saudi Aramco — has also committed to net zero operational emissions by 2050, with the country itself aiming for net zero by 2060. PIF aims to finance this transition through green bonds.

Faisal Siddique, a C-suite executive operating in Saudi’s financial sector, believes this is “a positive step forward” in the kingdom realizing its green ambitions. He told Al-Monitor, “The issuance was eight times oversubscribed, which shows great interest from investors.” That said, Siddique also argued that Saudi Arabia’s climate targets will “require significant investment” and that other sources of capital, such as “government funding, public and private investment, and conventional loans from financial institutions,” will also be required.

However, Charlene Cranny, sustainable finance specialist at Volans, a London-based think tank that advises on green transformation, believes that the green bonds are “a positive sign rather than step.”