Toward a carbon-neutral Kingdom

Days before the COP26 climate change summit, Saudi Arabia made a historic commitment to achieving net-zero emissions by 2060¹ and to reducing its greenhouse gas emissions by 278 million tons per annum by 2030². These goals are particularly challenging given the energy-intensive economic engine of the Kingdom.³

To navigate this complex landscape, KAPSARC researchers Puneet Kamboj and Mohamad Hejazi, in collaboration with researchers from the Pacific Northwest National Laboratory in the United States, have analyzed the overall energy system of the Kingdom in the coming decades. Their findings offer invaluable insights into the potential challenges and opportunities that lie ahead as the country moves toward meeting its climate targets⁴. 

Steps toward sustainable development

As part of its Saudi Vision 2030, the government has announced and invested in several initiatives to reduce the country’s carbon footprint.² These efforts have yielded positive results, but significant challenges remain. 

Two energy price reforms in 2016 and 2018 raised domestic fuel prices and contributed to a decrease in electricity and gasoline consumption. Additionally, energy efficiency improvements in residential buildings further reduced electricity consumption between 2014 and 2018.

To further accelerate its energy transition, the country has invested in several renewable energy projects and committed to have 50% of its power capacity from renewable sources by 2030.² Other actions include the Circular Carbon Economy National program, Saudi Arabia’s Energy Efficiency Program, and the development of a new metro system in the capital and other cities.^2,5 

Several studies have examined the effect of carbon-mitigation initiatives on single sectors of the Saudi economy, but a comprehensive analysis was lacking. Kamboj and Hejazi’s report, ‘Long-Term Decarbonization Pathway for Saudi Arabia to Reach Net Zero GHG Emissions by 2060,’ and paper ‘The path to 2060: Saudi Arabia’s long-term pathway for GHG emission reduction’ are some of the first works to quantitatively assess the long-term implications of various climate-related initiatives and policies across different sectors.^4,6

Modelling Saudi Arabia’s energy system and its emissions

The team adapted the Global Change Analysis Model—which has already been validated to model climate policies and emissions globally—to simulate Saudi Arabia’s current and future energy system and its emissions.

The model includes a detailed representation of the energy sector with an exhaustive list of resources and technologies for both supply and demand sectors. It covers processes converting energy resources into energy carriers like electricity and hydrogen, which are used in residential and commercial buildings, transportation, and industrial sectors. 

The researchers simulated four scenarios based on some of the current climate mitigation initiatives and potential future efforts. 

In the ‘current policy’ scenario, the team assumed that rapid decarbonization of electricity generation, energy price reforms, and energy efficiency measures would be implemented. These actions could reduce carbon emissions by 185 million tons of carbon dioxide equivalent (MtCO₂eq) by 2030 from a counterfactual baseline constructed by the authors. 

However, the suite of implemented measures in the current policy scenario fall short of the 2030 target of 278 MtCO₂eq. 

Also, in the current policy scenario, total greenhouse gas emissions will rise to 1,127 MtCO₂eq by 2060. While this is 18% lower than a ‘No policy’ scenario, it’s still far from achieving net-zero emissions. This underscores the urgency of developing and implementing additional decarbonization strategies. 

“It is important to note that this is an active and evolving area in the country with many new initiatives, which are not accounted for in our report and paper. In particular, the scenarios for the study were designed two years ago and the calculations do not include some recent announcements in the Kingdom,” explains Kamboj, KAPSARC’s Climate and Sustainability researcher and lead author of the study.

“Our model shows that reaching net zero by 2060 will demand a collective effort, a solid long-term strategy and strong collaboration among the government, the private sector and broader society.”

The ‘Nationally Determined Contributions (NDC)’ scenario shows that if important improvement commitments made to reduce greenhouse gas emissions from 2020 to 2030 continue until 2060, an annual emission decline of 1.2% can be achieved. However, reaching net zero by 2060 would require a more ambitious annual emission reduction rate of 3.3% between 2030 and 2060 as described in the ‘NZ 2060’ scenario. 

“Achieving economy-wide net-zero greenhouse gas emissions will be complex and challenging for Saudi Arabia. It will require a substantial reduction in emissions across all sectors of the economy, including the power sector, buildings, industry, transport, and resource production,” says Hejazi, who is executive director of the Climate and Sustainability Department at KAPSARC. 

Electrifying the economy

Power generation, transport, buildings, and industry all play vital roles in Saudi Arabia’s pursuit of net-zero emissions by 2060. Electrifying the economy and reducing hydrocarbon use are critical steps in this journey. 

For example, the model indicates that increasing renewable energy capacity can save 140 MtCO₂ emissions by 2060. “Decarbonizing electricity generation is a low-hanging fruit, as solar and wind technologies are mature and relatively cheap,” explains Kamboj.

Shifting to public transport can cut emissions by 136 MtCO₂ emissions, implementing fuel efficiency standards can reduce emissions by 81 MtCO₂, and the adoption of electric vehicles can save an additional 78 MtCO₂, while in buildings sector, implementing measures to lower energy consumption in residential and commercial buildings can further contribute to 55 MtCO₂ emission saving. 

The complete decarbonization of the industrial sector, however, is a monumental challenge. Strong sectors of Saudi Arabia’s economy, such as the production of petrochemicals and fertilizers, continue to rely on oil. The Kingdom is working to can be reduce emissions through energy efficiency improvements, switching to cleaner fuels wherever applicable, and adding carbon capture and storage (CCS) technologies to capture emissions from combustion of hydrocarbons.

“Despite the challenges, even carbon-intensive industries can reduce their footprint by 2060. The petrochemical industry could reduce emissions by up to 56 MtCO₂ emissions, while the cement sector has the potential to cut emissions by 41 MtCO₂,” says Kamboj. 

Finally, since hard-to-decarbonize sectors will remain a part of Saudi Arabia’s energy mix for a long time, the researchers stress the importance of developing energy-efficient carbon dioxide removal (CDR) technologies that are also cost effective. According to the model, CDR would allow the removal of an extra 371 MtCO₂ per year from the atmosphere, helping to achieve the net-zero goal. 

“It is important to explore alternative net-zero scenarios including ones that do not require large scale deployment of removal technologies such as direct air capture (DAC) in case their costs do not drop rapidly as anticipated or hoped,” says Hejazi. “It is also important to investigate future fuels such as e-fuels, e-methane, and ammonia, which are not currently included in our modelling framework for Saudi Arabia but are essential to ensure scalability when these technologies become necessary in the transition.”

“Despite the challenges, even carbon-intensive industries can reduce their footprint by 2060.”

By promoting renewable energy, investing in research and development on carbon removal technologies, as well as fostering collaboration, Saudi Arabia can chart its path toward a low-carbon future. Beyond environmental benefits, transitioning to net-zero emissions could create new opportunities for economic growth, job creation, and technological innovation. “Our model shows that reaching net zero by 2060 will demand a collective effort, a solid long-term strategy and strong collaboration among the government, the private sector and broader society,” concludes Kamboj.