Saudi Arabia is the world’s biggest and most efficient exporter of oil – the fuel that has powered economies across the world into the modern era. Now, with oil gradually handing its share of the global energy mix to green energy, the Kingdom stands on the precipice of leading the next energy revolution.
The Kingdom remains one of the most important energy hubs in the world today, a role that Riyadh is poised to retain as Saudi leaders reinvent and transmute the country’s role at the helm of global energy in one era well into the next.
The transition of Saudi Arabia into a leader the realm of clean energy has been met with surprise by skeptics. What can an oil superpower possibly seek in advancing a rival technology?
The end of fossil fuels does not mean the end of nations that have thrived off them. In fact, the Kingdom is uniquely positioned to leverage its potential to reinvent its role as a global energy hub in the post-oil-era. The question instead is how and why the Kingdom is making this shift.
The answer lies in the country’s ambitious Vision 2030 plan. The plan aims to diversify the Saudi economy away from oil and prepare for post-hydrocarbon age while promoting a vibrant and ambitious society in the process. Vision 2030 explicitly emphasizes the centrality of clean energy to sustainable national development: An estimated 9.5 gigawatts of power is set to be generated wholly from renewable energy, as well as eight percent of installed capacity, and two percent of total 2030 energy demand. It is therefore clear that the Kingdom is looking far beyond merely managing the global energy transition, but instead plans to play a central role.
But how fast is that transition? And how soon will oil-exporting nations have to grapple with a low-carbon future? The answer depends on the nation in question. While acutely aware of its heightened responsibility in advancing the global fight against climate change, Riyadh has a ton to gain from the transition itself.
The Intergovernmental Panel on Climate Change (IPCC) produced a report outlining the impact of global warming hitting 1.5 degrees Celsius. The report also projected that global demand for crude will plummet to a range of 11 million to 57 million barrels per day in 2050. Today, the Kingdom produces over 10 million daily barrels at the world’s lowest production cost of just $2.80 a barrel. In addition, the Kingdom also produces the world’s greenest barrel, with less methane leakage and lower life cycle emissions than any other oil-producing state. This means that Saudi Arabia will effectively outlast any other oil producer, with more efficient, cheaper, and environmentally-friendly crude.
That longevity will come with welcome byproducts: Increased geopolitical leverage and recognition of the pivotal role the Kingdom is set to play in the global energy transition. Saudi Arabia’s centrality to a successful fight against climate change is most clearly seen in the role the country plays in maintaining a stable price of oil, with prices set not too low that competition with alternative energy sources becomes unfeasible. The Kingdom has continually embraced this responsibility and will continue to do so deep into a low-carbon future.
The Kingdom has already launched a serial succession of clean energy projects to showcase its deep-seated commitment to fighting climate change, while effectively leveraging Saudi experience as a leading global oil producer to navigate the world’s transition to a low-carbon future.
Crown Prince Mohammad bin Salman personally unveiled a number of those initiatives, signaling their importance and centrality to local and regional development. NEOM’s “THE LINE” – a 170-kilometer hyper connected smart-city powered by 100 percent renewable energy – as well as The Saudi Green and Middle East Green initiatives, are clear cases in hand. These two green initiatives alone aim to reduce regional carbon emissions by 60 percent and plant over 50 billion trees – the world’s largest afforestation project, eliminating more than 130 million tons of carbon emissions in the process.
Importantly, the Crown Prince also announced the opening of the Sakaka solar power plant, alongside seven new solar projects which together are projected to produce more than 3600 megawatts, simultaneously powering 600,000 homes while removing seven million tons of atmospheric greenhouse gases. The efficacy of these projects goes beyond local diversification efforts, and reflect a serious commitment to multilateralism and sustainable development.
Saudi Arabia has one of the highest direct normal irradiation (DNI) resources in the world. Put simply, this means that very few places across the globe receive the intensity and consistency of sunlight that falls on the Kingdom. The Saudi Green Initiative sets the goal of deriving 50 percent of the country’s grid power from renewables by 2030 – an ambitious goal made possible by the Kingdom’s boundless solar potential. The recent bundle of solar projects are clear indications that the Kingdom is looking to harness and amplify the unmet potential of solar power, paving the Saudi path to renewable energy leadership while diversifying economically. So far, these projects are producing record-breaking results including the lowest cost of purchasing electricity from solar energy in the world.
Saudi energy prowess doesn’t end with oil, and while fossil fuels gradually hand their share of the global energy mix to cleaner energy, the Kingdom’s leadership in energy is set to persist and navigate that transition. At the intersection of economic diversification and ecological sustainability, the potential for Saudi Arabia to maintain its role as one of the world’s most important energy hubs in a low-carbon future is very real, and solidifies the modern, innovative mindset with which the Kingdom will face the future. With Riyadh’s trajectory today, it’s just a matter of time.