Saudi Arabia’s Path to Sustainability and Economic Diversification
Saudi Arabia is making strides in economic diversification and sustainability, aiming for net-zero emissions by 2060. The nation’s energy strategy balances reliable supply, environmental impact, and cost-effectiveness, crucial for economic and environmental health. The second edition of the Saudi Economy Watch highlights the Kingdom’s progress in these areas.
Renewable Energy Expansion
The Kingdom is significantly expanding its renewable energy capacity, targeting an addition of 20GW annually to reach 130GW by 2030. This shift supports job creation and economic growth, with plans to export up to 150GW of green electricity or hydrogen. The Saudi Green Initiative aims to protect 30% of national land and reduce carbon emissions by 278 million tonnes annually by 2030.
Economic Resilience Amid Oil Production Adjustments
Despite a temporary reduction in oil production, Saudi Arabia plans to rebound by late 2025. The non-oil private sector showed robust growth, particularly in trade and hospitality. The OPEC+ agreement extends production adjustments through 2025, stabilizing oil prices, although concerns about global demand persist.
Non-Oil Economic Growth
In H1 2024, the non-oil economy grew by 3.8%, led by the private sector. Trade and hospitality were key contributors, with a notable rebound in manufacturing. Despite a slight slowdown in Q3, growth is expected to pick up in 2025, driven by new projects and post-COVID-19 recovery efforts.
Key Sustainability Milestones
Saudi Arabia has set ambitious sustainability goals, building on Vision 2030. Initiatives include the King Salman Renewable Energy Initiative and the Circular Carbon Economy framework. The Saudi Green Initiative, launched in 2021, aims for net-zero emissions by 2060. Efforts also focus on integrating sustainability into finance and regional cooperation.
Energy Supply and Demand Strategy
The Kingdom is investing in lower-carbon energy sources, enhancing efficiency, and promoting electrification to reduce emissions. Gas production is expanding, with a focus on unconventional fields like Jafurah. The aim is to eliminate oil in power generation by 2030, freeing up oil for export.
Renewable Energy and Nuclear Potential
Saudi Arabia is committed to renewable energy, with targets set for 2030. Several projects are underway, including solar and wind plants. While nuclear energy remains a long-term interest, current focus is on renewables and gas expansion.
Industrial and Infrastructure Greening
The Kingdom is localizing renewable energy components and developing green hydrogen projects. Electric vehicle manufacturing is expanding, with targets for production and infrastructure development. Sustainability is also integrated into tourism and environmental conservation.
Energy and Resource Efficiency
Efforts to improve energy efficiency and reduce carbon intensity are ongoing, supported by initiatives like the Saudi Energy Efficiency Program. Water sustainability is also a priority, with investments in desalination technology and conservation measures.
Future Vision 2050
Looking beyond Vision 2030, Saudi Arabia may introduce a Vision 2040 or 2050 to further its sustainability goals. This could include more ambitious renewable energy targets and a focus on clean energy exports. The Kingdom’s commitment to sustainability positions it as a leader in the global green economy.