Saudi Arabia

We rate Saudi Arabia’s policies and actions against modelled domestic pathways as “Critically Insufficient”. This rating indicates that Saudi Arabia’s policies and action in 2030 reflect minimal to no action and are not at all consistent with limiting warming to 1.5°C. If all countries were to follow Saudi Arabia’s approach, warming would exceed 4°C.

Further information on how the CAT rates countries (against modelled domestic pathways and fair share) can be found here.

Saudi Arabia has not implemented any policies that would substantially bring down its emissions and reduce its reliance on fossil fuels. We expect its emissions to rise to 800–­830 MtCO₂e in 2030, a 15–­19% increase from 2021 levels. It remains difficult to assess whether Saudi Arabia’s current policies reach its NDC target, given the significant uncertainties around its target (see details in the Assumptions section).

Even if Saudi Arabia were to reach its 50% target for renewable energy in the electricity mix, we project that emissions would still rise to 730–­770 MtCO₂e by 2030— a 5–­10% increase from 2021 levels. Despite its vast solar energy potential, Saudi Arabia has only installed about 0.4 GW of renewable energy capacity as of 2022, generating less than 1% of total electricity.

Saudi Arabia’s “Vision 2030” aims to diversify its economy beyond oil, which accounted for around two thirds of total budget revenues in 2022. However, the government clearly has no intention to phase out fossil fuels and plans to increase oil production capacity. Instead of taking action to reduce emissions from fossil fuels, Saudi Arabia is betting on carbon capture and storage (CCS) technologies as a smokescreen to continue expanding oil and gas production.

Sectoral pledges

In Glasgow, a number of sectoral initiatives were launched to accelerate climate action. At most, these initiatives may close the 2030 emissions gap by around 9% - or 2.2 GtCO₂e, though assessing what is new and what is already covered by existing NDC targets is challenging.

For methane, signatories agreed to cut emissions in all sectors by 30% globally over the next decade. The coal exit initiative seeks to transition away from unabated coal power by the 2030s or 2040s and to cease building new coal plants. Signatories of the 100% EVs declaration agreed that 100% of new car and van sales in 2040 should be electric vehicles, 2035 for leading markets. On forests, leaders agreed “to halt and reverse forest loss and land degradation by 2030”. The Beyond Oil & Gas Alliance (BOGA) seeks to facilitate a managed phase out of oil and gas production.

NDCs should be updated to include these sectoral initiatives, if they're not already covered by existing NDC targets. As with all targets, implementation of the necessary policies and measures is critical to ensuring that these sectoral objectives are actually achieved.

• Methane pledge: Saudi Arabia signed the methane pledge at COP26. The majority of its methane emissions come from the energy and waste sectors (Gütschow & Pflüger, 2023). While its 2021 NDC does not have explicit emission reduction targets for non-CO₂ gases, it includes several measures to manage methane emissions, such as the objective to achieve zero flaring in the oil and gas industry (Kingdom of Saudi Arabia, 2021b). However, Saudi Arabia is still planning to ramp-up its oil production capacity towards the end of the decade, making it in practice difficult to reduce its methane emissions.

Carbon crediting schemes

In 2022, Saudi Arabia’s sovereign wealth fund, the Public Investment Fund (PIF), and the Saudi Stock Exchange Tadawul set up a voluntary carbon market in the Middle East and North Africa. The first auction in November 2022 offered 1 million tonnes of carbon credits (Bloomberg, 2022).

Saudi Arabia has also announced the launch of a domestic carbon crediting scheme in early 2024, which will purportedly enable companies to offset their emissions by buying credits compliant with Article 6 of the Paris Agreement. While specific rules have yet to be unveiled, the scheme will be voluntary, project-based and will cover all sectors (Carbon-Pulse, 2023).

Despite the apparent focus on companies procuring credits, Saudi Arabia appears to plan to also use the credits to meet parts of its national climate pledge through this scheme, including its 2060 net zero target. Based on the information published to date it is unclear how this could work in practice in a manner that avoids more than one entity claiming rights to the same emission reductions ("double counting") – an outcome that would undermine the integrity of the credits, and potentially lead to an overall rise in emissions.

The establishment of a voluntary carbon market in Saudi Arabia should complement and not serve to distract from or displace critically-needed domestic mitigation efforts. Information on how the Kingdom intends to use its carbon crediting scheme are lack in detail - or are unclear - and present major risks that it will seek to use carbon credits with questionable integrity as a smokescreen to justify continuing its trajectory of maintaining high levels of domestic emissions. For more information on the role of voluntary carbon markets under the Paris Agreement and their associated risks, see Fearnehough et al. 2020.

General — emissions and consumption

Saudi Arabia’s energy sector is dominated by fossil fuels, which represented almost 100% of the total energy supply in 2020 (IRENA, 2023a).

The Saudi government expects the overall demand for energy, including for oil and fossil gas, to continue increasing until 2030 and beyond (KAPSARC, 2021). Electricity consumption per capita is high and electricity prices continue to be subsidised.

Oil production

Oil extraction has been the backbone of the Saudi economy for decades. Saudi Arabia is the world’s second largest oil producer after the United States and is OPEC’s leading oil producer (BP, 2023). It produced ~12% of the world’s oil in 2022 and held 17% of proven oil reserves. While the government has taken small steps to diversify the economy, Saudi Arabia remains highly dependent on hydrocarbons revenue. In 2022, oil revenues accounted for 68% of Saudi Arabia’s total budget revenues (KMPG, 2023).

Saudi Arabia does not plan to end investment in new oil production—which is required to hold global warming to 1.5°C (IEA, 2023a). On the contrary, it is aiming to increase oil production to 13 million barrels per day (mb/d) by 2027—up from around 12 mb/d currently (Al Jazeera, 2023a).

The government’s current diversification plans include no scenario with a decline in global oil consumption in the coming decades—which is required to meet the objectives of the Paris Agreement and reach net zero CO₂ emissions by mid-century (IEA, 2023a; IPCC, 2018). Both the “business-as-usual” and the “2030 renewable energy target” scenarios outlined in KAPSARC’s Energy Policy Solutions project hydrocarbon exports to significantly increase until 2050 (KAPSARC, 2021).

Following the recent global energy crisis, Saudi Arabia’s national oil company, Aramco, reported earning USD 160 bn in profits in 2022, the highest-ever recorded annual profit by a publicly listed company (Aramco, 2023). Research by the Climate Accountability Institute shows that Aramco has contributed more than any other company to global carbon dioxide emissions since 1965 (Heede, 2019; Taylor & Watts, 2019).

CSS

Saudi Arabia is betting on carbon, capture and storage (CCS) technologies to reach its climate goals while sustaining its fossil fuel production and exports. As of 2022, it only had one operational CCS plant—which is used for enhanced oil recovery (EOR), rather than reducing emissions from fossil fuels (Global CCS Institute, 2023).

The government has a target to capture and store 44 million tonnes of CO₂ annually by 2035. Saudi Arabia is in the process of building a CCS hub at the industrial complex of Jubail, which will capture CO₂ from fossil gas plants. The hub is expected to be operational from 2027 and capture up to 6 million tonnes of CO₂ per year from three Aramco fossil gas plants (The CCUS hub, 2023).

CCS technologies are not commercially viable, nor are they proven at scale despite large public subsidies for research and development globally. Relying on CCS to the extent Saudi Arabia does diverts attention and resources away from cost-effective mitigation options. The use of CCS should be limited to industrial applications where there are fewer options to reduce process emissions—not to reduce emissions from the electricity sector where there are cost-effective mitigation alternatives, not least because CCS doesn't remove 100% of emissions from power plants.

Saudi Arabia is promoting the concept of a Circular Carbon Economy (CCE) to reduce emissions from oil and gas production (Luomi et al., 2021). This, however, only addresses a fraction of relevant emissions as most emissions come from fuel combustion rather than oil and gas extraction and processing. Saudi Arabia’s CCE plans largely rely on the development and deployment of CSS technologies (Kingdom of Saudi Arabia, 2022).

Fossil fuel subsidies

In 2022, Saudi Arabia had the highest share of fossil fuel subsidies per capita in the G20 (IMF, 2023). Fossil fuel subsidies, both direct and indirect, continue to distort energy prices by keeping oil and fossil gas prices artificially low, discouraging investment in cleaner alternatives.

Saudi Arabia, acknowledging the need for reform in its “Vision 2030” strategy, took initial steps to address this issue (Kingdom of Saudi Arabia, 2021c). The government introduced a 5% VAT on fuel (General Authority of Zakat & Tax, 2018) and increased VAT rate for goods and services from 5% to 15%, including those in the hydrocarbons sector (SPA, 2020).

However, fossil fuel subsidies (explicit and implicit) provided by the government jumped from USD 141bn in 2019 to USD 253bn in 2022, accounting for 16% of Saudi Arabia’s GDP in 2019, to 27% in 2022 (IMF, 2023). Driven by soaring energy prices and the demand rebound following the pandemic, these subsidies have primarily benefited the oil sector.

Research shows that adequate pricing of fossil fuels could help cut 36% of global CO₂ emissions (Parry et al., 2021). Setting prices that reflect the true costs of fossil fuels would also further increase the cost-competitiveness of mitigation technologies, such as renewable energy.

Electricity supply

In 2020, Saudi Arabia still produced nearly 100% of its electricity with fossil fuels—around 58% with fossil gas and 42% with oil (IEA, 2023b). The share of electricity generated by fossil gas has increased since 2015, when it stood at just 37%, thereby contributing to some emissions reductions in the electricity sector. However, fossil gas remains a fossil fuel and needs to be phased out as part of the global decarbonisation needed to reach the 1.5˚C temperature warming limit—by 2035 in developed countries and 2040 in developing countries (Climate Action Tracker, 2023).

Renewable energy

Saudi Arabia’s renewable energy sector has been mired in uncertainty, with ambitious announced plans and projects having yet to materialise. In 2013, the government announced its plan to build 54 GW of renewable power and 17 GW of nuclear power by 2032 to cover 40–45% of future electricity production (Al-Ghabban, 2013). However, the nuclear energy plans were abandoned altogether in 2015 (World Nuclear Association, 2022) and the renewable energy target has been revised several times.

In the first iteration of “Vision 2030” released in 2016, the government revised its renewable energy target downward to an ‘initial’ 9.5 GW installed capacity by 2023 (Borgmann, 2016; Kingdom of Saudi Arabia, 2016). In 2019, the Ministry of Energy released an updated version of the strategy, which aimed to install 27.3 GW of renewable energy capacity by 2023 and 57.8 GW by 2030. The latest version of the “Vision 2030” strategy, released in 2021, aims for 50% of electricity to be generated with renewable energy and 50% with fossil gas in 2030, part of the Saudi Green Initiative.

The government will need to significantly increase the pace of renewable energy development if it hopes to meet its latest 2030 target. In 2022, installed renewable energy capacity only stood at around 0.4 GW, generating less than 1% of electricity, with no additional capacity installed between 2021 and 2022 (IRENA, 2023b). The government aims to install an additional 11 GW of capacity by the end of 2023 (Kingdom of Saudi Arabia, 2023). However, little of this capacity has come online as of November 2023.

Our current policy projections assume renewable energy continues to develop at the current, slow pace, reaching only 5 to 6 GW by 2030. This assumption is in line with KAPSARC’s “business-as-usual” scenario. Our planned policies scenario reflects a 30% share of renewable energy share in electricity production in 2030, in line with KAPSARC “2030 renewable energy target” scenario. For further details, see the Assumptions section.

Grid infrastructure

In 2019, Saudi Arabia’s Renewable Energy Project Development Office (REPDO) completed a study claiming that 13.5 GW of renewable energy could be integrated without major grid upgrades (National Renewable Energy Program, 2018). Beyond this, and in order to meet its 2030 renewable energy target, the government will need to significantly invest in grid infrastructure. Saudi Arabia is moving ahead with grid interconnection plans with neighbouring countries, which could facilitate a future uptake and integration of renewables. As of October 2023, Saudi Arabia is working on grid interconnection project with Iraq, India, Jordan and Egypt (RE Global, 2023).

Hydrogen

Saudi Arabia hopes to position itself as a leader in the global hydrogen market. The government announced plans to build a large green hydrogen production facility in its smart city NEOM (Al Arabiya News, 2023b). The plant is expected to be operational in 2026 and produce 600 tonnes per day of green hydrogen.

The government is pursuing “clean hydrogen” development, with a view to diversify its revenues and be less reliant on hydrocarbon exports. However, the definition of clean or low emissions hydrogen is still ambiguous. Fossil fuel-driven hydrogen production will lead to carbon lock-in.

Considering its strategic location near global shipping lanes and its vast renewable energy potential, Saudi Arabia is also well-positioned to lead the decarbonisation of the maritime sector. It has the potential to lead the way by producing green hydrogen for export as an alternative fuel source (KAPSARC, 2023b). However, without a massive scaling-up of renewable electricity to produce ‘green’ hydrogen, Saudi Arabia will only be able to rely on natural gas and unproven CCS technologies to produce ‘blue’ hydrogen. On the other hand, redirecting large shares of renewable energy to hydrogen production could make it more difficult to decarbonise the electricity, building, and transport sectors.

The land transport sector accounted for 19% of total energy consumption in 2021 (Saudi Energy Efficiency Center, 2022).

In recent years, Saudi Arabia has sought to expand its public transportation network. The King Abdulaziz Public Transport project is a major initiative to modernise transportation in the city of Riyadh. The capital is set to become the second city in Saudi Arabia with a metro network after the Makkah metro opened in 2010 (Saudi Gazette, 2020). Following a slight delay, the Riyadh metro system is set to become operational by the end of 2023 at the earliest (Railway Technology, 2023).

The Saudi government has also taken steps to invest in rail transport; however, it remains unclear whether the new networks will be electric or diesel-powered. In 2010, it launched the Saudi Railway Master Plan, aiming to construct a 9,900-km network by 2040 (Oxford Business Group, 2020). The first phase, running until 2025, includes constructing and upgrading 5,500 km of tracks for freight and passenger transport, including interlinkages to the wider Gulf Cooperation Council (GCC) railway network. As of 2020, 1,500 km of new tracks have been built and the total length of the network stands at 5000 km.

Electric vehicles

Saudi Arabia has taken steps to develop its own electric vehicle (EV) industry. As part of its “Vision 2030” strategy, the government is aiming for 30% of Riyadh’s vehicles to be electric by 2030 (Kingdom of Saudi Arabia, 2021c).

In 2022, Saudi Arabia introduced its first domestic brand of EV called Ceer, through a joint venture between PIF and Taiwanese car manufacturer Foxx conn (Al Arabiya News, 2023a). Manufacturing facilities for Ceer vehicles are under construction and expected to be operational by 2025 (Al Jazeera, 2023b). To promote the use of EVs, the government aims to install 50,000 domestic charging stations by 2025 (Al Arabiya News, 2023a).

Additionally, in June 2023, Saudi Arabia signed a USD 6bn deal with Chinese EV manufacturer Human Horizons to collaborate on the development, manufacture, and sale of electric vehicles (Reuters, 2023).

Despite the progress made, achieving Saudi Arabia’s 2030 EV target remains challenging. The government will need to accelerate the deployment of charging infrastructure and introduce incentives to promote greater EV adoption (Apricum, 2022).

In Saudi Arabia, per capita emissions in the buildings sector remain above regional and world average, despite a slow decline in recent years (Climate Transparency, 2022).

In 2012, the Saudi Energy Efficiency Center (SEEC) launched the Saudi Energy Efficiency Program (SEEP), which targets key sectors of the country’s economy (Kingdom of Saudi Arabia, 2022). Through this program, SEEC has introduced a series of measures in the building sector, including mandatory labelling for insulation materials and air conditioners (ACs). SEEC has also developed guidelines designed to optimise energy consumption in buildings, with a focus on ACs, washing machines, refrigerators, lighting, and heaters. Since their introduction, these standards and guidelines have been further refined and continue to be enforced.

Saudi Arabia is taking steps to improve energy efficiency in buildings. Through the national Energy Services Company, TARSHID, the government aims to renovate numerous government buildings, public schools, hospitals, and mosques throughout the country (Kingdom of Saudi Arabia, 2021b).

The government has announced plans to plant 450 million trees by 2030 and 10 billion trees over the coming decades as part of the Saudi Green Initiative. According to the government, this initiative foresees afforestation and land restoration measures increase the Kingdom’s forestry sink to 200 MtCO₂e by 2030.

These targets are unrealistic: at the end of 2021, Saudi Arabia had reportedly planted 10 million trees (Kingdom of Saudi Arabia, 2021c). In 2012, the latest year for which national data is available, the land use and forestry sink only stood at 9 MtCO₂e (UNFCCC, 2020), with forests covering a mere 0.5% of Saudi Arabia’s total land area in 2021 (World Bank, 2023).