Saudi Arabia’s grandiose climate plans struggle to take off

When Crown Prince Mohammed bin Salman announced Saudi Arabia’s “green initiative” this year he did so with the type of eye-catching pledge that has come to characterise the young royal’s grandiose plans to modernise the kingdom.

Promising that the world’s top oil exporter would lead the “next green era”, Prince Mohammed vowed that 50 per cent of Saudi Arabia’s power generation would be provided by renewables by 2030, with the other 50 per cent fuelled by gas. Riyadh would also plant 10bn trees in the desert nation in the coming decades.

“As a leading global oil producer, we are fully aware of our share of responsibility in advancing the fight against the climate crisis,” the prince said as he unveiled the plan in March. “And as [with] our pioneering role in stabilising energy markets during the oil and gas era, we will act to lead the next green era.”

But as with many of the prince’s ambitious schemes, sceptics question whether his rhetoric will be matched with tangible action on the ground. The kingdom burns about 1m barrels of oil equivalent a day to fuel its power system, a figure that rises sharply in the scorching summer months when Saudis rely on air-conditioning to keep cool.

The Climate Action Tracker, an independent research group, rates Saudi Arabia’s climate commitments as “critically insufficient”, citing a lack of clear policies or data about its emissions.

“It’s not very clear how they actually aim to achieve these [climate goals], it’s not very transparent at all,” said Mia Moisio, analyst at the NewClimate Institute, which helps collate the Climate Action Tracker data. “I am quite cautious about [the kingdom’s] announcements . . . There’s no reason why it wouldn’t be possible in Saudi. But there’s a lot of inertia.”

Saudi Arabia plans to plant 10bn trees in the coming decades © Fayez Nureldine/AFP/Getty

Riyadh said in its 2015 emissions reduction plan that it would decrease greenhouse gas emissions by 130m tonnes by 2030, but it did not outline how it would do that.

During negotiations with scientists, Saudi officials objected to some of the wording in this month’s landmark UN climate report, according to several people involved in the discussions, wanting to replace references to “carbon emissions” with “greenhouse gas emissions”.

Riyadh also unsuccessfully requested the removal of the term “net zero” from several sections of the report’s summary on the grounds that it was “policy prescriptive”, according to the International Institute for Sustainable Development.

Saudi officials insist the government is committed to taking action, saying Riyadh’s objections to the use of carbon emissions in a section of the UN report related to their argument that to address the Paris Agreement climate goals, including net zero, “we really need to look at greenhouse gases not only carbon dioxide”.

The officials said the kingdom, built on hydrocarbons, had taken great strides since putting climate change on the national agenda in 2015, with Prince Mohammed promising to ease the economy’s addiction to oil.

“Now we are much more comfortable, back then we had a really big question mark,” a senior Saudi official told the Financial Times. “But the progress we have made since then has been just amazing.”

Three years ago, in a politically sensitive move, Riyadh doubled petrol prices and increased utility tariffs, partly to raise revenue but also to improve energy efficiency. It has also made multiple pronouncements on renewable energy projects, including hugely ambitious plans to create the world’s first carbon-zero city, The Line, intended to be powered by hydrogen, in Prince Mohammed’s flagship megaproject Neom.

And in 2018, he announced a $200bn joint venture with Japan’s SoftBank to develop the world’s largest solar power project. But months after the announcement, the Public Investment Fund, which the prince chairs, was forced to issue a statement denying that the project had been shelved. In the three years since, there has been no detail on its progress.

The PIF, which invested $40bn in SoftBank’s Vision Fund and is spearheading Prince Mohammed’s development plans, did not respond to a request for comment.

SoftBank’s chief executive Masayoshi Son and Crown Prince Mohammed bin Salman in New York in 2018
SoftBank’s chief executive Masayoshi Son and Crown Prince Mohammed bin Salman in New York in 2018 © Jeenah Moon/Bloomberg

But the fund is expected to oversee 70 per cent of Saudi Arabia’s renewable projects targeted in the kingdom’s 2030 development plan. This month, ACWA Power, a utility 50 per cent owned by the PIF, announced the financial close for a SR3.4bn ($907m) solar project, Sudair, that is expected to generate 1.5GW of electricity. PIF also invested in the $5.4bn TPG Rise Climate fund, chaired by Hank Paulson, a former US Treasury secretary.

Saudi officials said there was currently 300MW of installed solar capacity, adding that Riyadh was developing 13 projects that would raise that to 5GW by 2024.

But Tim Buckley, director of energy finance studies, Australia/South Asia, at the Institute for Energy Economics and Financial Analysis, said the stop-start nature of Saudi projects had put potential investors off.

“The market’s cynical: they announced the biggest solar project in the world three to four years ago and nothing came of it,” he said.

However, he added that the kingdom’s vast desert lands and hot climate meant it was endowed with resources that give it the potential to become “the solar capital of the world having been the oil capital of the world”.

Government officials said they also planned to capture the emissions generated by the production of hydrocarbons — a much smaller volume than that generated when the fuels are burned — using carbon capture utilisation and storage (CCUS) and direct air capture (DAC).

Both the state oil company Saudi Aramco and the petrochemicals group Sabic were developing programmes in that field, Saudi officials said.

The Saudi Aramco-operated Hawiyah Natural Gas Liquids Recovery Plant
The Saudi Aramco-operated Hawiyah Natural Gas Liquids Recovery Plant © Maya Siddiqui/Bloomberg

“We realise we have to go beyond renewable, beyond electrification into making sure CCUS and DAC are well in hand; hydrogen becomes a clean fuel that needs to be established [and] we realise that even for aviation fuel we need to work hard on the e-fuel side,” the senior Saudi official said.

He said with clean hydrocarbon technologies there was no conflict between “utilising hydrocarbons and addressing climate”.

The kingdom remains dependent on oil for revenues and foreign currency. It also faces massive financial commitments to fund a raft of megaprojects that are part of Prince Mohammed’s plans to diversify the economy.

“The reality is that [the Saudis] have got no economic incentive to switch away from fossil fuel production at the moment,” said Richard Black, senior associate at the Energy and Climate Intelligence Unit.

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