Is Saudi Arabia really quitting oil?

Summary

Saudi Arabia's ambitious 'Vision 2030' aims to diversify its economy and reduce oil dependency through mega-projects like the eco-friendly 'The Line' and the renewable energy-focused NEOM. Despite skepticism about achieving these goals, the kingdom plans to reach net-zero emissions by 2060. However, it continues to expand oil production and seeks new markets, illustrating a dual strategy of cleaning up its domestic energy while maintaining its status as a major oil exporter.

Takeaways

• 🌿 Saudi Arabia's Vision 2030 is an ambitious plan to diversify the economy and move away from fossil fuels towards renewable energy sources.
• 🏙️ 'The Line' is a proposed eco-city within the NEOM project, aiming to be carbon-neutral and house 9 million people in a 170-kilometer-long strip of skyscrapers.
• 💡 The Kingdom of Saudi Arabia is aiming for net-zero emissions by 2060, as announced by Crown Prince Mohammed bin Salman.
• 📈 Aramco, the state-owned oil company, is a major driving force behind Vision 2030, with a valuation of about $2 trillion and a record profit of $161 billion in 2022.
• 🔄 There is skepticism about whether Saudi Arabia can achieve its goals due to its history of setting overly ambitious targets.
• 💼 The diversification plans include 'giga projects' like NEOM, Qiddiya, and the Red Sea Project, which are expected to cost more than $500 billion.
• 🌞 Saudi Arabia aims to generate 50% of its energy from renewable sources by 2030, a significant increase from the current 99% reliance on fossil fuels.
• 🌍 The country has great potential for solar power due to its arid and mountainous geography, long coastline, and abundant sunshine.
• 💰 Despite the ambitious renewable energy goals, Saudi Arabia is also looking to increase its oil and natural gas production and find new markets for its fossil fuels.
• 🤔 There are concerns about the financial viability of the 'giga projects' and the country's ability to transition its desalination plants from oil to renewable energy.
• 🌳 While promoting a green vision domestically, Saudi Arabia continues to push for oil demand in developing countries and is active in global climate change talks.

Q & A

What is the main goal of the eco-city 'The Line' in Saudi Arabia?

The main goal of 'The Line' is to be a completely carbon-neutral city, housing 9 million people in a 170-kilometer-long strip of skyscrapers, with no roads, no cars, and running completely on renewable energy.

What is the larger plan that 'The Line' is a part of?

'The Line' is a small part of a larger plan called NEOM, which is an ambitious roadmap by Saudi Arabia to move away from fossil fuels and diversify its economy.

What is the historical significance of Aramco in Saudi Arabia's oil industry?

Aramco, originally a US-owned company, was the first to strike oil on Saudi Arabian land in 1938. It later became 98% Saudi-owned and played a crucial role in the development of the Kingdom's economy, which was heavily dependent on oil.

How has Saudi Arabia capitalized on its natural resources to succeed economically?

Saudi Arabia capitalized on its massive oil reserves, turning Aramco into a highly profitable company and using the revenue to develop its infrastructure and economy, making it one of the world's largest oil powers.

What is the Vision 2030 plan announced by Crown Prince Mohammed bin Salman?

Vision 2030 is an ambitious plan to diversify Saudi Arabia's economy, reduce its dependence on oil, and turn the country into a more vibrant society while also achieving net-zero emissions by 2060.

What are some of the 'giga projects' included in Saudi Arabia's Vision 2030?

Some of the 'giga projects' include NEOM, the entertainment, sports, and culture hub Qiddiya, and the Red Sea Project, all aimed at attracting millions of visitors and contributing to economic diversification.

What is Saudi Arabia's current status in terms of renewable energy production?

As of the script's information, Saudi Arabia is currently powered by 99% fossil fuels and has a target to get 50% of its energy from renewable sources by 2030. However, they are sitting at just 2.8 gigawatts of renewable energy capacity with about 21-24 gigawatts under development.

How does Saudi Arabia's geography and geology lend itself to achieving net-zero emissions?

Saudi Arabia's arid and mountainous geography, along with a long coastline, provides ideal conditions for wind power generation. Additionally, it has a lot of vacant land outside cities that receives ample sunshine, making it suitable for solar power projects.

What challenges does Saudi Arabia face in attracting foreign investors for its renewable energy projects?

Challenges include a reputational hit after the murder of journalist Jamal Khashoggi in 2018, skepticism around the financial viability of the 'giga projects', and concerns about the country's commitment to reducing fossil fuel production.

How does Saudi Arabia plan to address its desalination plants' energy consumption, which is currently very high?

The script does not provide specific plans for addressing the energy consumption of desalination plants. However, it highlights the need to find a solution for desalination as the country transitions from fossil-fuel electricity generation to renewable energy generation.

What is Saudi Arabia's stance on global climate change talks and negotiations?

Saudi Arabia has been actively participating in climate change talks and negotiations, aiming to steer the direction in a way that serves its national interest. It has been advocating for carbon management solutions, such as recycling, reusing, and capturing and storing carbon, rather than focusing solely on ending fossil fuel production.

How does Saudi Arabia's plan for domestic green energy align with its global fossil fuel strategy?

While Saudi Arabia is investing in domestic green energy and aiming to meet the world's carbon-reduction targets, it is simultaneously planning to increase oil and natural gas production and find new markets for its fossil fuels, particularly in developing countries.

Outlines

00:00

🌿 Saudi Arabia's Vision for a Carbon-Neutral Future

The script introduces 'The Line,' a proposed eco-city within the larger NEOM project, which aims to be carbon-neutral and house 9 million people in a 170-kilometer-long strip of skyscrapers. This is part of Saudi Arabia's Vision 2030, an ambitious plan to diversify the economy and move away from fossil fuels. The country's historical reliance on oil is highlighted, with Aramco's pivotal role and the nation's economic growth tied to oil exports. The current de facto ruler, Crown Prince Mohammed bin Salman, has set a goal for the Kingdom to reach net-zero emissions by 2060. The plan includes massive 'giga projects' like NEOM, Qiddiya, and the Red Sea Project, with a significant investment in renewable energy, aiming for 50% of energy from renewables by 2030. However, there is skepticism about the feasibility of these goals and whether Saudi Arabia can truly transition away from its oil-based economy.

05:05

💡 Saudi Arabia's Renewable Energy Potential and Challenges

Despite being ranked low in solar-power capacity, Saudi Arabia has high potential for clean energy due to its arid climate, mountainous terrain, and long coastline, which are ideal for wind power. The country has vast vacant lands suitable for solar power generation and financial resources to invest in such projects. However, there are challenges, including the need for foreign investment, which has been slow due to factors like the murder of Jamal Khashoggi and doubts about the financial viability of the 'giga projects.' Additionally, the energy-intensive desalination plants used for fresh water pose a significant hurdle in the transition to renewable energy. While the country talks about addressing climate change, it continues to expand oil and gas production and seeks new markets for its fossil fuels, indicating a dual strategy of cleaning up domestically while maintaining its position as a major oil exporter.

10:07

🛑 The Paradox of Saudi Arabia's Green Ambitions and Fossil Fuel Expansion

Saudi Arabia's approach to climate change involves promoting the management of carbon through recycling, reuse, and capture and storage technologies. However, these technologies are not yet advanced enough for large-scale implementation, with estimates suggesting they may not be available until 2040. Critics argue that this focus distracts from the more immediate need to invest in renewable energy. The country's strategy includes increasing oil demand in developing nations, particularly through initiatives in Africa and Asia, which some have likened to promoting dependency on oil. Internationally, Saudi Arabia has been active in climate change negotiations, positioning itself to influence the direction of talks in a way that aligns with its national interests. Despite domestic efforts to develop green energy, there is no indication that Saudi Arabia plans to help other countries follow a similar path, and its primary strategy appears to be to maintain its dominance in the oil market while cleaning up its own energy system to meet global carbon-reduction targets.

Keywords

💡Carbon-neutral

The term 'carbon-neutral' refers to a state where the carbon dioxide emissions produced are balanced by an equivalent amount being captured or offset, effectively reducing the net carbon footprint to zero. In the context of the video, the eco-city 'The Line' aims to be completely carbon-neutral, indicating a commitment to sustainability and environmental responsibility, which is a central theme of the video.

💡NEOM

NEOM is a proposed economic zone and smart city in Saudi Arabia, which is part of the country's Vision 2030 plan. It is designed to be a hub for innovation and sustainability, aiming to be powered entirely by renewable energy and free from cars and roads. The video discusses NEOM as a significant component of Saudi Arabia's ambitious goals to diversify its economy and reduce its reliance on oil.

💡Renewable energy

Renewable energy is energy derived from natural resources that are replenished on a human timescale, such as sunlight, wind, and water. The video highlights Saudi Arabia's goal to obtain 50% of its energy from renewable sources by 2030, which is a key aspect of its transition away from fossil fuels and its efforts to combat climate change.

💡Fossil fuels

Fossil fuels are hydrocarbon-based energy sources, such as coal, oil, and natural gas, formed from the remains of ancient organisms. The video discusses Saudi Arabia's historical reliance on oil, a type of fossil fuel, and its current efforts to move away from these non-renewable resources towards a more sustainable energy future.

💡Vision 2030

Vision 2030 is an ambitious plan launched by Saudi Arabia, spearheaded by Crown Prince Mohammed bin Salman, aiming to diversify the country's economy, develop public service sectors, and reduce its dependence on oil. The video frames Vision 2030 as a roadmap for the country's transformation, including the development of projects like NEOM and a push towards renewable energy.

💡Desalination

Desalination is the process of removing salt and other minerals from saline water to produce fresh water suitable for drinking and irrigation. The video mentions Saudi Arabia's reliance on desalination plants for fresh water and the energy-intensive nature of these operations, which presents a challenge in the country's transition to renewable energy sources.

💡Foreign Direct Investment (FDI)

Foreign Direct Investment refers to an investment made by a firm or individual from one country into business interests located in another country. The video discusses Saudi Arabia's efforts to attract FDI to support its ambitious projects and the challenges it faces due to factors such as the murder of journalist Jamal Khashoggi and skepticism about the viability of its projects.

💡Net zero

Net zero, in the context of climate change, means balancing the amount of greenhouse gases emitted by a country with the amount removed from the atmosphere, effectively achieving a neutral carbon footprint. The video notes Saudi Arabia's announcement to reach net zero emissions by 2060, which is part of its broader environmental and economic strategy.

💡Giga projects

Giga projects refer to large-scale, ambitious, and often costly infrastructure projects. In the video, 'giga projects' like NEOM, Qiddiya, and the Red Sea Project are highlighted as part of Saudi Arabia's Vision 2030, aiming to create new economic opportunities and attract international attention and investment.

💡Aramco

Aramco, officially the Saudi Arabian Oil Company, is a Saudi Arabian multinational petroleum and natural gas company, which was initially a U.S.-owned enterprise but is now 98% Saudi-owned. The video discusses Aramco's historical significance in Saudi Arabia's oil industry and its current role in funding the country's ambitious Vision 2030 projects.

💡Climate change

Climate change refers to long-term shifts in temperatures and weather patterns, primarily as a result of human activities such as the burning of fossil fuels and deforestation. The video addresses Saudi Arabia's acknowledgment of climate change and its stated commitment to playing a role in addressing the global challenge, despite its ongoing production and export of fossil fuels.

Highlights

The eco-city 'The Line' in Saudi Arabia aims to be completely carbon-neutral and house 9 million people in a 170-kilometer-long strip of skyscrapers.

NEOM is part of Saudi Arabia's Vision 2030, an ambitious plan to move the world's largest oil power away from fossil fuels.

Saudi Arabia plans to expand its green energy production to diversify its economy and reduce dependency on oil.

Aramco, initially a US-owned company, was instrumental in tapping into Saudi Arabia's oil reserves and is now 98% Saudi-owned with a valuation of about $2 trillion.

Vision 2030 is led by Crown Prince Mohammed bin Salman and aims to reach net zero emissions by 2060.

Saudi Arabia's economy was heavily dependent on oil and gas, accounting for 50% of GDP, 70% of government revenue, and 90% of export earnings.

NEOM and other 'giga projects' like Qiddiya and the Red Sea Project are part of the diversification plans, with NEOM expected to cost over $500 billion.

Saudi Arabia aims to get 50% of its energy from renewable sources by 2030, up from the current 99% fossil fuel reliance.

International organizations like the IMF and World Bank have long urged Saudi Arabia to diversify its economy.

Saudi Arabia's renewable energy capacity is currently at 2.8 gigawatts, with 21-24 gigawatts under development.

Energy Minister Prince Abdulaziz bin Salman has targeted 130 gigawatts of renewable energy, more than double the initial goal.

Saudi Arabia has great potential for clean energy due to its arid, mountainous geography, and long coastline.

The country has been courting foreign investors for its renewable energy projects but has faced challenges due to reputational issues.

Desalination plants, crucial for providing fresh drinking water, are energy-intensive and present a challenge for Saudi Arabia's transition to renewable energy.

Despite its green ambitions, Saudi Arabia continues to plan for increased oil and natural gas production and is seeking new export markets.

Saudi Arabia is actively participating in climate change talks and advocating for carbon management as a solution, rather than reducing fossil fuel use.

The technology for large-scale carbon capture and storage is not yet advanced enough and may not be available until 2040.

Saudi Arabia's domestic green energy targets may help develop new technology, but there is no apparent plan to assist developing countries in a similar transition.

Aramco predicts oil demand will increase to 105 million barrels per day by 2025, suggesting that Saudi Arabia will continue to meet global demand for oil.

Saudi Arabia's strategy appears to be to clean up its own energy system while selling oil to other countries, positioning itself for a potentially more powerful and lucrative future.

Transcripts

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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