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Saudi Arabia must rein in emissions

5 February 2024

Commentary
Jennifer Aguinaldo
Energy & technology editor

The successive and pending tenders for gas-fired, renewable energy and, potentially, battery storage plants in Saudi Arabia speak of the urgency of the kingdom's need to keep its carbon emissions in check while delivering the economic targets of Vision 2030.

The principal buyer issued the request for proposals for the country's next combined-cycle gas turbine (CCGT) plants to be located in Riyadh and the Eastern Region on 31 January, barely three months since it awarded the contracts for four CCGT independent power projects (IPPs) in Taiba and Qassim.

The schemes, split into eight contracts, will deliver 14.4GW of gas-fired power generation capacity by 2027, if everything goes to schedule.

This adds to about 10.5GW of solar photovoltaic (PV) capacity under construction and 1.8GW of wind projects under bid evaluation, and over 40GW more that is expected to be tendered and directly procured between now and 2030.

These projects, along with the recent directive by the kingdom’s energy ministry to stop Saudi Aramco's oil production capacity expansion drive – which some experts say has to do with propping up oil prices in the current environment – could have increasing emissions reduction as an unintended consequence, if implemented.

Source: World Bank

As it is, the region's largest economy and projects market faces the challenge of delivering projects across all economic and industrial sectors in line with Vision 2030 while keeping to its sustainability objectives by lowering greenhouse gas emissions and setting the stage for achieving net-zero carbon emissions by 2060.

According to regional projects tracker MEED Projects, the Saudi market enjoyed its best year on record in 2023 with $95bn of contract awards across all sectors. With a net project value of $181bn of deals at the tender stage, more contract awards are expected in 2024.

Data from the World Bank shows that Saudi Arabia's carbon dioxide emissions per capita peaked in 2015, and have since declined significantly from 2015 to 2020.

The absence of data for 2021 and 2022 – when the projects and economic activities started to ramp up following the Covid-19 pandemic, and as the multibillion-dollar gigaprojects reached their execution stage – precludes the conclusion that the kingdom is on its way to decoupling economic expansion from emissions, a trend that has been quite visible in developed economies.

However, the urgency in the kingdom's procurement of greener and cleaner electricity to enable its economic programmes, in addition to the separate measures that are embedded in the Saudi Green Initiative and circular carbon economy ethos, indicates that Riyadh is aware that there are not many other options going forward. 

MEED's October 2023 special report on Saudi Arabia includes: 

> COMMENT: Riyadh reshapes its global role
> POLITICS: Saudi Arabia looks both east and west
> SPORT: Saudi Arabia’s football vision goes global
> ECONOMY: Riyadh prioritises stability over headline growth
> BANKS: Saudi banks track more modest growth path
> UPSTREAM: Aramco focuses on upstream capacity building
> DOWNSTREAM: Saudi chemical and downstream projects in motion
> POWER: Riyadh rides power projects surge
> WATER: Saudi water projects momentum holds steady
> GIGAPROJECTS: Gigaproject activity enters full swing
> TRANSPORT: Infrastructure projects support Riyadh’s logistics ambitions
> JEDDAH TOWER: Jeddah developer restarts world’s tallest tower

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Jennifer Aguinaldo

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