On November 10th 2015, Saudi Arabia submitted its Intended Nationally Determined Contribution (INDC), seeking to reduce its emissions annually by up to 130 MtCO2e in 2030 through measures that have co-benefits in pursuing economic diversification from oil while contributing to greenhouse gas abatement and adaptation to climate change. Achievement of this goal is not conditional on international financial support, but is contingent on the continuation of economic growth, and “a robust contribution from oil export revenues to the national economy.” Saudi Arabia would adjust its INDC between 2016 and 2020 if the consequences of the Paris agreement would create an “abnormal burden” on its economy.
Saudi Arabia has not stated the baseline from which its abatement target would be deducted, but specifies that a “dynamic baseline will be developed on a basis of a combination of two scenarios, ” which are scenarios based on whether more oil is consumed locally, or exported. The CAT’s “current policies projections,” based on recent national emissions projections (K.A CARE, 2014), are currently the best available estimate for baseline levels in Saudi Arabia. Assuming those baseline levels, the INDC results in emissions levels at around 1160 MtCO2e excl. LULUCF by 2030, a 132% increase above 2010 levels, or a 600% increase above 1990 levels.
Based on this target, we rate Saudi Arabia “Inadequate.” This rating means that Saudi Arabia’s commitment is not in line with interpretations of a “fair” approach to reach a 2°C pathway. It is not consistent with limiting warming to below 2°C: if all countries adopted this level of ambition, global warming would be likely to exceed 3-4°C this century. The proposed abatement of 130 MtCO2e/year is still far from being enough for Saudi Arabia to contribute fairly in limiting global warming by 2°C. To do so with a minimum effort, Saudi Arabia would need to at least quadruple its proposed abatement and overall ambition.
This is highly inconsistent with the fact that Saudi Arabia is very sensitive to climate change. Average warming for 2040 in Saudi Arabia is higher than the global average and, in a 3-4°C world, three quarters of the country will suffer from excessive dryness by the end of the century (Presidency of Meteorlogy and Environment, 2011). Equally alarming is the fact that important planned policies aiming at diversifying the energy mix and to achieve 54GW of renewable and 17 GW of nuclear energy by 2032 have been delayed by eight years in response to low oil prices. The delay appears also to be linked to the country’s desire to build its own renewable manufacturing business in line with its diversification strategy (DiPaola, 2015). Overall, we estimate this delay leads cumulatively to an additional 1GtCO2e emitted between 2017 and 2030 and additional emissions of 120 MtCO2e/year after 2030, representing 0.6% of the G20 emissions gap to hold global warming below 2°C.
Our assessment shows that the Saudi Arabian case is complex. The government acknowledges its significant vulnerability to climate change, yet this is by no means reflected in its INDC. It acknowledges the urgency of decoupling its energy supplies from its oil resources, yet it delays its plan of investing in renewable and nuclear energy. One fact is clear: international climate policies will have a strong impact on energy resource markets and suggest that Saudi Arabia, for the benefit of its own people, should move faster to a non-oil based economy while contributing with greater effort to fighting climate change.
On November 10th 2015, Saudi Arabia submitted its INDC, aiming to annually abate up to 130 MtCO2e by 2030 through contributions that have co-benefits in diversifying their economy and mitigate greenhouse gas (GHG) emissions.
The target does not refer to a baseline projection, as it is unclear whether to allocate the production of oil to domestic consumption or export, which impacts the economy of the country and its greenhouse projection in opposite ways.
The INDC mentions that in a scenario with high exports, greenhouse gas emissions would be lower, and the economy would grow faster, compared to a scenario where oil is consumed locally. The target outlined in the INDC is contingent on the high export scenario, and Saudi Arabia reserves the right to adjust its INDC between 2016 and 2020 if the proceeds from oil exports were to decrease.
In a scenario of high exports, Saudi Arabia would achieve its target through measures in energy efficiency, renewable energy, carbon capture and storage, increasing use of gas and methane recovery and flare minimisation. The measures are left unquantified in the INDC.
In a scenario where Saudi Arabia continues using only fossil fuels to satisfy its growing energy demand, which would inhibit its capacity to export, CAT projects that emissions will reach 1290 MtCO2e a year after 2030. In this case, the pledge would help reduce emissions by 10 % below reference.
We rate Saudi Arabia’s INDC “inadequate.” This implies that the projected emissions levels are not in line with any interpretation of a “fair” approach to reach a 2°C pathway: if all countries adopted this level of ambition, global warming would likely exceed 3-4°C in the 21st century. Saudi Arabia would need to at least quadruple its pledge to enter the “medium” range. This would mean that the target is at the least ambitious end of what would be a fair contribution. Other countries would need to make much deeper reductions and comparably greater effort than Saudi Arabia to limit warming to below 2°C.
As the world leading oil exporter, oil extraction has been the backbone of Saudi economy, with proceeds from exports covering 90% of total government revenues and the sector contributing to more than 35% since 1970 (Al-Rushaid, 2010; Alshahrani & Alsadiq, 2014). Given the current policy framework in the energy supply sector, Saudi Arabia is projected to follow baseline levels using fossil fuels to supply its energy needs. Currently implemented policies would propel Saudi Arabia from the 10th GHG emitter in 2012 in terms of total emissions (IEA, 2012) to the 6th emitter in 2030 (CAT global estimate). Under this scenario, the country will likely become a net importer of oil by 2038 (Lahn & Stevens, 2011).
However, facing an oversupply in the market with the recovery of supply production from Iran, Iraq and Libya, the development of new, unconventional, oil supplies, a less energy-intensive phase of Chinese and East-Asian growth and the gradual commercial viability of renewables, the country is increasingly steering its focus towards diversification from oil dependence (Alsweilem, 2015).
In addition to international pressure, Saudi Arabia has one of the world’s highest rates of per capita energy consumption, forecast to triple by 2030 compared to 2010 levels (Al-Ghabban, 2013). This issue presents two hitches: it will significantly reduce Saudi Arabia’s capacity to export oil because of increased domestic needs, and it will increase government spending because oil is heavily subsidised for domestic consumption.
In light of these developments, the government has prioritised energy efficiency as a key energy policy to reduce local oil consumption. The government has recently introduced measures such as fuel economy standards for imported vehicles by 2020, insulation standards for new buildings, and tightened minimum energy performance standards for air conditioners (IEA, 2014). In 2013, the government announced its plan to build 54GW of renewable power and 17GW of nuclear power by 2032 to cover 40-45% of future electricity production (Al-Ghabban, 2013).
With the fall of oil prices in January 2015, the plan has been delayed by eight years (DiPaola, 2015). Part of the delay appeared to also be linked to the Saudi Arabia’s desire to build its own renewable manufacturing business in line with its diversification strategy (DiPaola, 2015). However, there are still no policies mandating the use of renewable energy and no official information regarding contracts to build nuclear power plants. The CAT estimates that this plan had the opportunity of reducing emissions in 2030 by 14% compared to BAU, equivalent to 175 MtCO2e. The delay will cause a cumulative 1 GtCO2e emitted between 2017 and 2030 and additional emissions of 120 MtCO2e/year after 2030.
With currently implemented policies that signals fossil fuels will still be used to cover the national demand, but with stringent energy efficiency measures, Saudi Arabia is expected to achieve emissions levels, excluding LULUCF, of 1290 MtCO2e in 2030. This is equivalent to a 158% increase compared to 2010 levels, or 680% compared to 1990.
The planned policy projection is derived from the King Abdullah City for Atomic and Renewable Energy (Babelli, 2014), where the deployment of renewable energy power plants and nuclear power plants from 2017 to 2032 has been delayed by eight years. The CAT finds that, if Saudi Arabia endorses energy policies that offer secure returns to investors in renewable and nuclear energy, annual emissions are projected to reach 1235 MtCO2e in 2030.
Historical emissions for the year 1990 and 2000 were obtained from the latest UNFCCC GHG Inventory, with interpolation for the years in between. The historical dataset was extended to 2012 using growth rates for CO2 from fuel combustion from IEA and growth rates for non-energy related CO2 emissions and non-CO2 emissions from the EDGAR database.
Current policy projections
The current policy projection is based on the following sources:
CO2 emissions (Energy and non-Energy) were based on the baseline scenario of the King Abdullah City for Atomic and Renewable Energy (K.A CARE) projection which takes into account energy efficiency improvements in the next 30 years, and assumes the plan of installing 54 GW of renewables and 17 GW of Nuclear was going to be executed in 2032 (K.A CARE, 2014). We discounted the effect of the renewable and nuclear energy by multiplying the weighted average emission factor of power generation in Saudi Arabia by the forecasted amount of clean energy generated. We assume that the shares of oil and gas power plants will not change, hence the emissions factor of 2012 is constant until 2030.
The plant-specific load factor, as given in (K.A CARE, 2014), is used to forecast the renewable and nuclear energy generated. Our CO2 emissions projection for Saudi Arabia differs significantly from our March update. An additional 400-500 MtCO2 is expected in 2030. The reason is that, in the past, we used the estimated growth rates of the World Energy Outlook 2014 for the CO2 projections of the Middle East. The latter assumed GDP growth rates of 3.7% between 2012-2020 and 3.9% between 2020-2030 and population growth rates of 1.7% for the region. These assumptions do not correspond to the economic growth patterns of Saudi Arabia which are highly dependent on oil price development (K.A CARE, 2014). We used a detailed, non-linear projection, based on nonlinear growth trends between 1970-2000 and 2000-2010 in the recent national projection to project GDP, population and floor space. After calibration, the 2040 final consumption projection results are defined as a median between a quadratic and polynomial of degree three extrapolation (K.A CARE, 2014).
Non-energy related CO2 emissions were taken from JRC/PBL (2012). Average annual growth rates between the years 2000 and 2010 are used to project non-energy related CO2 emissions.
Non-CO2 emissions were taken from JRC/PBL (2012). Projected growth rates from US EPA (2012) are used to estimate the growth in non-CO2 emissions.
The planned policy projection represents the delay of the K.A CARE plan by 8 years. It is derived from (Babelli, 2014) where the deployment of renewable energy power plants and nuclear power plants from 2017 to 2032 is delayed linearly till 2040.
Al-Ghabban, A. (2013). Saudi Arabia’s Renewable Energy Strategy and Solar Energy Deployment Roadmap, King Abdullah City for Atomic and Renewable Energy.
Alshahrani, S. a., & Alsadiq, A. J. (2014). Economic Growth and Government Spending in Saudi Arabia: an Empirical Investigation. IMF Working Papers, 14(3), 1.
Alyousef, Y., & Abu-ebid, M. (2012). Energy Efficiency Initiatives for Saudi Arabia on Supply and Demand Sides. Energy Efficiency - A Bridge to Low Carbon Economy, Dr. Zoran Morvaj (Ed.), ISBN: 978-953-51-0340- 0, 280–308.
Babelli, I. (2014). Building the Renewable Energy Sector in Saudi Arabia, King Abdullah City for Atomic and Renewable Energy.
DiPaola, A. (2015). Saudi Arabia delays $109 billion solar plant by 8 years. Bloomberg Business. BloombergBusiness
IEA. (2012). CO2 Emissions from Fuel Combustion, 111. World Energy Outlook. International Energy Agency, Paris.
IEA. (2014). World Energy Outlook. International Energy Agency, Paris.
Kriegler, E., Bauer, N., Edmonds, J., & Et Al. (2013). Roadmaps towards Sustainable Energy futures and climate protection?: A synthesis of results from the RoSE project. Rose, 33.
Lahn, G., & Stevens, P. (2011). Burning Oil to Keep Cool: the Hidden Energy Crisis in Saudi Arabia
Presidency of Meteorology and Environment (2011). Second National Communication to the UNFCCC
US EPA (2012). Global Mitigation of Non-CO2 Greenhouse Gases, Washington, D.C., USA.
UNFCCC (2014). GHG emission profiles for non-Annex I countries.
JRC/PBL (2012). Edgar Version 4.2 FT2010. Joint Research Centre of the European Commission/PBL Netherlands Environmental Assessment Agency.
Hisham Akhonbay, Saudi Arabia’s Energy Policy – A Disciplined Approach to Forward-Looking Policymaking – A Report of the CSIS Energy and National Security Program (August 2012).
 Refer to the CAT assessment on the G20 emission gap.
 To stabilize the climate at 2°C over the century, fossil fuel rents expected to decrease by US$ 10-15 trillion in middle eastern and African countries (Kriegler, Bauer, Edmonds, & Et Al., 2013).
 The King Abdullah City for Atomic and Renewable Energy is the royal agency established in 2010, and is responsible for building a sustainable future for Saudi Arabia.