Saudi Arabia, the world’s biggest exporter of crude oil and the country that produced 15% of world-wide carbon emissions last year, has announced that it will eliminate planet-warming emissions by 2060. This announcement that could be one of the most important developments in the fight against climate change in quite some time. The country’s Prince Mohammad bin Salman Al Saud told Bloomberg that without a doubt there will be no investments in the oil sector after 2040. This announcement comes amidst growing pressure from the United States and European nations to speed up efforts to reduce emissions and increase green investments.
Saudi Arabia’s Oil-Driven Energy Economy
Saudi Arabia has used its immense oil reserves to develop a major energy economy. The nation became an oil giant after it struck black gold in 1938, and has since gained wealth through exporting black gold. Saudi Arabia has seen a subtle increase in production of the resource, with the country hitting a peak of 12 million barrels per day in 2012. This oil bounty makes up more than 90 percent of its export revenues as well as about 40 percent of total government revenue. In 2015, Saudi Arabia exported nearly $128 billion worth of crude, highlighting the country’s dependence on the resource. Most of these profits come from Saudi Aramco, which is one of the world’s largest extractors of crude oil with an estimated average annual production of 4.3 billion barrels. More than half of all Saudis work directly or indirectly for state-owned companies involved in extracting and exporting oil. However, low global prices the recent year have battered the economy.
New Climate Goals
Saudi Arabia’s announcement to eliminate planet-warming emissions came as a surprise given that the country has constantly argued against cutting investments to fossil fuels. This will require large change as the country still produces large quantities of oil. Saudi Arabia may be especially sensitive to climate change, which could be part of the motivation for the recent announcement. In recent years, it has seen multiple severe heat waves, with temperatures reaching 50 degrees Celsius (122 Fahrenheit). It is the world’s tenth greatest carbon dioxide emitter, and the most per capita among G-20 countries. Reaching net zero would involve abruptly reversing a two-decade trend of rising emissions. The recent climate goals set by the country are in line with recent trends and experts say other oil-dependent countries will soon follow suit. The United Arab Emirates this month became the first Persian Gulf nation to say it would neutralize its emissions by 2050. Russia followed less than a week later, though President Vladimir Putin set a later deadline of 2060.
How can they achieve this goal?
Many agree that oil production will continue to be a large part of Saudi Arabia’s energy consumption for many years to come, including past 2060. Oil production is expected to grow by over 50% between now and 2030 even with current technological advancements being considered. For this reason, reducing fossil fuel use alone won’t cut it in terms of reaching Saudi Arabia’s goal. If anything, increasing renewables in order to keep pace with increasing demand could see Saudi CO2 emissions rise through 2050 if nothing changes. That is why Carbon capture and storage, or CCS, has become an attractive technology for the oil-giant. CCS is a technology that allows us to store carbon dioxide from power plants instead of releasing it into our atmosphere. While there are some real concerns around CCS’s viability as a widespread solution, including being expensive, inefficient and often unreliable, CCS might be just what Saudi Arabia needs to achieve its clean energy goals, especially if there are impressive developments made in the coming years. If successful, Saudi Arabia’s pledge would be among one of most impressive commitments made by any nation to date. It is clear that clean energy solutions have a bright future in Saudi Arabia and beyond if companies can find a way to tap into these new opportunities without sacrificing growth.
Saudi Arabia wants to reach a 50 percent solar and wind energy mix in its local grid by 2030, with the rest being made up of natural gas. This will require the government to cease the burning of tens of thousands of barrels of oil per day in its power plants. It must also improve on previous efforts to boost renewable-energy output. The country is significantly investing in hydrogen, a fuel that is considered as critical to the country’s future transition away from oil and gas. Aramco intends to produce blue hydrogen by converting gas and absorbing carbon dioxide emissions. Other businesses, such as Air Products & Chemicals Inc., plan to export green hydrogen produced with renewable energy from Neom’s new metropolis. All of this is in light of Saudi Arabia’s plans to produce 29 million tons of blue and green hydrogen per year by 2030, according to the country’s energy minister.
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