BrazilSaudi’s industrial decarbonization ambition is a conjoined effort
With Saudi Arabia’s industrial sector making up nearly half (around 46%) of the country’s total emissions, it comes as no surprise that the kingdom has launched an ambitious decarbonization agenda for the sector: by 2050, industrial emissions should have been reduced by 65%.
“Saudi Arabia has more than 10,000 industrial facilities, making industry (which spans sectors such as manufacturing, chemicals, heavy production, shipment) one of the key pillars of the economy,” said Adham Sleiman, a partner at Arthur D. Little.
In a new report Sleiman co-authored together with Amer Hage Chahine (a principal at the firm), the pair contend that in order to successfully drive its sustainability agenda, Saudi Arabia’s industrial private sector will need to deliver significant efforts across the entire value chain. At the same time, the government should act as an enabler for the entire ecosystem, and lead by example in the case of state-owned institutions.
The public sector contribution
“From supporting green practices to imposing eco-friendly requirements and regulations, governments have the power to initiate, accelerate, and – when necessary – enforce, plans and policies across the sustainability spectrum,” said the authors on the public side of the equation.
One example of public support is in the provision of green incentives. “The government has for example launched the Liquid Fuel Displacement Program, a large energy transformation project covering multiple sectors. The project aims to displace more than one million barrels per day of liquid fuels across utilities, industry, and agriculture by 2030, involving more than 10 governmental entities and more than 20 private companies.”
According to estimates, the program will enable the Kingdom to realize its ambition of deriving 50% of its electricity from renewables by 2030, while also reducing its GHG emissions.
Aside from reducing emissions, the Saudi government is also working to move the industrial sector away from fresh water. There are 16 industrial cities in the Saudi Authority for Industrial Cities and Technology Zones (MODON); the government aspires to source 70% of their water from treated industrial waste water by 2030.
The establishment of public-private partnerships is another strategy used by policy makers. “The Ministry of Industry and Mineral Resources Sustainability Council (MIMSC) is working closely with leading Saudi companies, which include Saudi Aramco, SABIC, and Sadara, public entities and SMEs to ensure new sustainability policies cater to the needs of businesses.”
Beyond national borders, the Saudi government is “collaborating closely with GCC countries as part of a wider agenda to tackle climate change. This includes efforts to reduce emissions, implement waste management solutions, and raise awareness of industrial sustainability,” stated Sleiman and Chahine.
One example of cross-border collaboration can be found in the joint GCC plan to adopt the concepts of circular economy within the industrial sector. The plan aims to ensure that the percentage of industrial facilities adopting circular economy practices reaches at least 50% of all industrial facilities within five years in each of the GCC countries.
The private sector contribution
Building on fundament set out by the government, the bulk of the decarbonization roadmap will however have to be delivered by the private sector. In designing their strategies, the authors call executives to focus on four areas of the industrial value chain where relatively much impact can be reaped.
Sustainable industrial inputs: Energy is essential to industrial operations; addressing its role in industrial development is necessary to a successful strategy. Transitioning from environmentally damaging sources to renewable energy alternatives is a critical step toward increased sustainability.
Refined manufacturing processes: Over 30% of total GHG emissions are generated by industrial processes. Focusing on improving industrial manufacturing processes is proving to be significantly impactful – improving the energy efficiency of industrial processes could result in reducing manufacturing emissions by 8%.
Efficient shipment & distribution: On top of industrial inputs and manufacturing processes, shipments and distributions of manufactured products are proving to be key contributors to the sector’s emissions. Shipping and distribution can be optimized by rolling out green storage logistics, adjusting routes, and applying fuel-efficient processes.
Green marketing: Adopting reusable packaging practices is an effective way for manufacturers to reduce their carbon footprint. Notably, replacing single-use plastic with eco-friendly alternatives not only benefits the environment, but can also help companies save money.
A conjoined effort
Sleiman and Chahine conclude: “Sustainable industrial development is now a requirement for both private businesses and governments due to Vision 2030 goals and increasing consumer environmental awareness.”
“Industrialists in the private sector are actively incorporating sustainability components in their corporate and business strategies, ensuring effective sustainability measures are being adopted across their industrial value chain. Saudi Arabia's government facilitates industries sustainable development through setting best practices, introducing innovation-related initiatives, and fostering knowledge sharing.”
“Together, the public and private sector can create long-lasting impact and chart the course for a sustainable future.”
