Is Saudi Arabia really quitting oil?

Is Saudi Arabia really quitting oil?

This eco-city aims to be completely carbon-neutral.
Internet-famous ‘The Line’ wants to house 9 million people
in a 170-kilometer-long strip of skyscrapers
towering 500 meters above sea-level.
And that’s just one small part of a much bigger plan
called NEOM.
No roads, no cars, zero emissions
and run completely on renewable energy,
this is the glitzy face of Saudi Arabia’s Vision 2030 –
an ambitious roadmap to move the world’s largest oil power
away from fossil fuels.
"The world needs NEOM, because the world needs change."
It all sounds great on paper, but there’s skepticism about
whether Saudi Arabia can actually pull it off.
"You know, the Saudis have been
making a lot of wildly over-ambitious goals."
The Kingdom is looking to massively expand
its green energy production
to help diversify its economy and reduce dependency on oil.
It could be a huge step in the world’s quest
to halt climate change.
But is Saudi Arabia really quitting oil?
The Kingdom of Saudi Arabia was only founded in 1932.
As a young nation, its infrastructure was fairly basic
and the new monarchy had to rely on outside help
in order to tap into its massive oil reserves.
Which is why a US-owned company, later renamed Aramco,
was the one that first struck oil on Saudi-Arabian land in 1938.
But it wasn’t long before the Saudis
wrested away control of the company.
In 1950, Aramco was convinced to split profits
down the middle
rather than risk King Ibn Saud
nationalizing the Kingdom’s oil industry.
A blossoming diplomatic relationship developed.
In return for fossil fuels, the US offered Saudi Arabia
crucial political and security support.
From there, Saudi Arabia succeeded
where many other developing countries have failed –
it capitalized on its natural resources.
Aramco is now 98% Saudi-owned
and valued at about $2 trillion.
It posted a record profit of $161 billion in 2022.
And this war chest is now driving the Kingdom’s Vision 2030.
It’s a plan that sounds as ambitious as it is paradoxical:
a country built on oil…
wants to move away from oil.
But why?
"Today I announce that the Kingdom of Saudi Arabia
aims to reach net zero by 2060."
De facto ruler Crown Prince Mohammed bin Salman
is the face of Vision 2030.
"It’s an attempt to diversify the economy,
reduce its dependance on oil,
and turn it into a more vibrant society
that also reaps the benefits."
This is Karim Elgendy,
a climate consultant based in London,
who focuses on the Middle East.
"As the world moves away,
or signals that it wants to move away,
from buying this oil and gas,
there’s limited time before
that becomes a risk to the Saudi economy.
So in a way, it’s in a race against time."
That requires a major overhaul.
When Saudi Arabia announced Vision 2030,
oil and gas accounted for 50% of Saudi’s GDP,
70% of government revenue,
and 90% of export earnings.
The diversification plans include eye-catching ‘giga projects’
such as NEOM,
entertainment, sports and culture hub Qiddiya,
which aims to host millions of visitors each year,
and the Red Sea Project,
a string of luxury eco-tourism destinations.
NEOM alone is expected to cost more than $500 billion.
As for green energy, the Saudis are also going big:
they want to get 50% of their energy
from renewable sources by 2030.
Currently they’re powered by 99% fossil fuels.
"As everybody knows, Saudi Arabia’s economy has been
kind of a one-trick pony for a long time."
This is Jim Crane, who specializes in energy geopolitics.
"International organizations,
the IMF, the World Bank etc.,
have been urging the Saudis to diversify their economy
for a long time.
Finally those warnings have been taking hold."
The initial target?
About 54 gigawatts of renewable energy capacity.
Saudi recently said they’re sitting at just 2.8 gigawatts,
while there’s about 21-24 gigawatts under development.
"I’m not a betting man, but if you had asked me whether
a 50% target can be achieved…
I would say that looks very difficult."
Yet according to Saudi media,
Energy Minister Prince Abdulaziz bin Salman recently targeted
130 gigawatts of renewable energy –
more than double the former target.
Planet A’s interview requests have fallen on deaf ears.
But either someone’s math doesn’t add up,
or there is indeed cause for such optimism.
Saudi Arabia has a hell of a lot going for it
when it comes to clean energy.
While data analytics company Global Data
ranks them just 45th in the world for solar-power capacity,
the World Bank places them 7th in terms of potential.
Arid and mountainous geography,
as well as a long coastline,
means large parts of the country are very windy –
ideal conditions for power generation.
They really couldn’t be better placed to turn green.
"Net zero in the Kingdom actually makes a lot of sense.
They’ve got great geography and great geology
to reach net zero.
They’ve got a lot of vacant land right outside their cities
that gets a lot of sunshine.
It’s a country that has spare cash laying around, right?
In the central bank and in investment funds.
So they are able to build,
especially solar-power-generation projects,
at a really, really low cost."
But building up large-scale infrastructure takes time,
and more cash than the Kingdom itself is willing to spend –
which is why Saudi Arabia has been courting foreign investors.
So far, however, they haven’t exactly been banging
on the gates of the Kingdom.
Saudi Arabia had expected to boost
annual Foreign Direct Investment
to $19 billion by 2020.
As of 2021, they’d only pulled in $5.5 billion.
Investors were spooked after the murder
of journalist Jamal Khashoggi in 2018,
when Saudi Arabia’s reputation took a nosedive.
While there has also been concern 
that some of these ambitions are quite simply, a bit loopy.
"There’s some skepticism around some of these giga projects.
Whether they’re financially viable
or if there’s going to be much of a return from them.
But even speaking to some Saudis
about some of the giga projects,
there are doubts and skepticism."
Another question mark is
Saudi Arabia’s many desalination plants.
The population heavily depends on them
for fresh drinking water.
But removing brine from saltwater
is extremely energy-intensive,
and transforming these oil-run plants won’t be an easy task.
"That means that for every gigawatt that you transition
from fossil-fuel electricity generation
into renewables electricity generation,
you have to find a solution for desalination."
Mohammed bin Salman nevertheless appears
to be giving it a very decent crack.
His success as Saudi ruler could be judged
on this green energy hill.
And the Saudis are indeed talking a big game.
"We need to attend to climate change,
it’s an admission from the Saudi Government
that we are up to the challenge."
"Climate change is real
and if we want to leave the world in a better place
than we found it, we have to do something about it.
And we have to do it now."
But… here’s the thing:
irrespective of this green vision,
Saudi Arabia isn’t exactly plotting a course to quit fossil fuels.
It’s quite the opposite.
It still plans to pump out as much oil
as is humanly possible.
And fill its coffers to the brim.
In fact, Saudi Arabia also wants to increase
natural gas production by 50%.
And it’s actively searching for new markets
to export its fossil fuels.
"The Saudis have been not just diversifying,
but they’re also doubling down on oil as well.
They’ve been buying a lot of refining capacity
in developing countries.
Their targets lie mainly in Asia…
and Africa.
An investigation involving Britain’s Channel 4 recently found
that the Saudis were aiming to "artificially raise"
oil demand in developing African nations,
through cheap cars, supersonic commercial aviation
and floating power plants.
A director for an African climate and energy think tank
described Saudi Arabia as a 
"drug dealer trying to get Africa hooked" on oil.
And on the global stage, Saudi Arabia is doing its best
to ensure it’s in the driver’s seat
when it comes to climate change talks.
"Rather than becoming an obstructionist
and trying to slow down the process at every turn,
it’s decided in recent years that it’s in its best interest
to jump on the bandwagon,
take part in the negotiations,
become more active participants,
but also try and steer the direction of this negotiation
in a way that serves its own national interest."
That was highlighted most recently at the UN’s COP28.
While scientists screamed at the top of their lungs
for an end to fossil fuel production,
Politico uncovered that Saudi Arabia had claimed emissions
from the manufacture and transport
of wind turbines and solar panels
were just as problematic.
They’re just a fraction, by the way.
Instead, it wants to divert the world’s attention
towards a different solution.
"It argues that the problem, the enemy is the emissions
and not fossil fuels.
And if we manage the carbon in a way by recycling it,
reusing and ultimately capturing and storing it,
then there will be no problem with having some emissions."
There’s just one tiny problem:
the tech to do that isn’t anywhere near advanced enough.
Skeptics say it’s merely a distraction
by fossil-fuel-producing nations
and will funnel investment away from renewable energy.
Karim Elgendy estimates that the tech –
if it works at all –
won’t be available at scale until potentially 2040.
"I think 2040 is too far and we don’t have enough time.
I accept the technology agnostic approach
that we shouldn’t be wedded to one technology
in our drive towards decarbonization.
But to depend on a technology
that isn’t available until 2040 at scale is a great risk."
So while Saudi Arabia marches on
into its brave new green energy world,
they’re still looking to convince developing countries
to take their oil,
and persuade the world’s leaders that managing carbon
is the solution to the climate crisis.
So far, the plan is on track.
Aramco predicts oil demand will actually increase
to 105 million barrels per day in 2025.
"You could argue that if the demand is there,
that they’re only satisfying demand.
But that’s a completely different conversation
as to whose responsibility does emissions,
whose shoulders does it lie upon,
is it the producers or the consumers."
Saudi’s domestic green energy targets
may be cause for lavish announcements such as these.
It could help develop new and more efficient technology.
But don’t be fooled, it doesn’t look like there’s a plan
to help developing countries move in a similar direction.
"The Saudis are going to be able to outcompete
anybody on crude prices.
That’s their strategy, to be the last man standing."
For all their talk about fighting climate change
and building a better world in flashy promo videos,
this Arabian leopard hasn’t changed its spots.
Quitting oil just isn’t a consideration.
Instead they’ll just sell it elsewhere,
while cleaning up their own energy system
to meet the world’s carbon-reduction targets.
It’s a win-win for Saudi Arabia.
And if the Kingdom pulls it off,
it could be in a more powerful
and lucrative position than ever before.
What do you think of Saudi Arabia’s plans?
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Saudi Arabia has ambitious green energy goals, aiming to go carbon neutral by 2060. But what does that mean for their fossil-fuel production? Well, the Kingdom is aiming to have its cake and eat it too.

#SaudiArabia #FossilFuels #renewableenergy #planeta

Disclaimer: After our deadline in April 2024, reports emerged that Saudi officials had greatly reduced the proposed size of The Line for budgetary reasons. At the time of publishing, those reports have not been officially confirmed.

We’re destroying our environment at an alarming rate. But it doesn’t need to be this way. Our new channel Planet A explores the shift towards an eco-friendly world — and challenges our ideas about what dealing with climate change means. We look at the big and the small: What we can do and how the system needs to change. Every Friday we’ll take a truly global look at how to get us out of this mess.

Follow Planet A on TikTok: https://www.tiktok.com/@dw_planeta?lang=en

Credits:
Reporter: Janek Speight
Video Editor: Neven Hillebrands
Supervising Editor: Malte Rohwer-Kahlmann
Factcheck: Jeannette Cwienk
Thumbnail: Émilie Chabridon

Read more:
Saudi plan to artificially raise oil demand:

Cheap cars, supersonic jets and floating power plants: Undercover in Saudi Arabia’s secretive program to keep the world burning oil

Saudi Arabia’s giga-projects:
https://www.pif.gov.sa/en/our-investments/giga-projects/

Karim Elgendy:
Tweets by NomadandSettler

Jim Krane:
Tweets by jimkrane

Chapters:
00:00 Intro
01:10 Birth of an oil nation
02:28 Clean energy goals
08:05 True intentions