BrazilSaudi Arabia's strategy for sustainability and energy diversification
As part of its Vision 2030, Saudi Arabia is aiming to diversify its reliance on oil receipts – which currently account for over 80% of fiscal revenue and approximately 40% of gross domestic product.
Prompted by oil price shocks in 2015, Saudi Arabia crafted its Vision 2030, an ambitious plan largely focused on economic diversification from an oil-based economy to other forms of economic activity. In parallel, the Kingdom is committed to meeting climate targets stipulated in the Paris Agreement.
In order to achieve the diversification and sustainability goals, Saudi Arabia has according to Abdulsamad Mayet and Jamie Scott from Q5 in the Middle East (who both are involved in the development of the Kingdom’s energy transition roadmap) developed three core strategies:
1: Circular Carbon Economy
Saudi Arabia’s presidency during G20 2020 gave it a platform to take the lead in circular carbon economy as a potential solution for sustainable hydrocarbon use. G20 energy ministers endorsed the proposed Circular Carbon Economy Platform and its “4Rs” framework (reduce, reuse, recycle, remove).
As such, Saudi Arabia plans to invest in research & development and take leadership in developing technologies that will support a circular carbon economy. This includes renewable energy technologies (reduce), converting emissions into high value products (reuse), using natural processes to recycle emissions (recycle) and using geological and technological methods to capture carbon (remove).
2: Hydrocarbon sustainability program
Saudi Arabia aims to displace domestic hydrocarbon liquid consumption at a rapid pace. Its domestic power mix target includes using natural gas and renewable energy to meet 100% of domestic power demand by 2030. Freed up liquids and increased gas production will then be used as feedstock to develop high value petrochemical industries.
The goal is to establish strong foundations for the petrochemical industry to grow in tandem with decreasing crude demand in the future. As consumption of crude declines in the future, the petrochemical industry will take the lead in sustainable hydrocarbon sales by converting excess production capacity into high value, zero emission hydrocarbon products.
3: Hydrogen market leadership
In September 2020, Saudi Arabia became the first country to export blue hydrogen for zero-carbon power generation. The recipient Japan, is the first of many customers Saudi Arabia is targeting to take supply leadership in the rapidly growing hydrogen market. Saudi Arabia also signed an agreement with industrial gas supplier Air Products to develop and operate a $5 billion facility to supply green hydrogen to the world. The facility will be entirely powered by renewable energy.
To support this effort, Saudi Arabia has been developing agreements to supply green hydrogen to Europe. This reinforces Saudi Arabia’s commitment to implementing the circular carbon economy framework, supporting the global energy transition and taking leadership in new energy markets.
