Saudi Arabia: Climate Change and Energy Politics
How the oil superpower is holding back climate progress
Saudi Arabia has long stood at the centre of global energy geopolitics. For 80 years or so it has been the global fulcrum of an oil-based energy system. The Saudi’s recently lost their position as top oil producer to the USA, but the Kingdom remains the biggest exporter, as most US oil is used domestically. Saudi oil has the distinct advantage of being extremely cheap to produce and the Kingdom can rapidly cut or expand production via Aramco the national energy company, giving Riyadh the unique power to influence international energy markets almost instantly.
Saudi influence extends beyond its borders, thanks to its position as de-facto leader of OPEC (the oil producers’ cartel) and the Gulf Co-operation Council (GCC) club of neighbouring states (whose members hold half of global oil reserves) means its interests are tied up with oil and gas to an unparalleled degree.
The Net-Zero Threat
Saudi Arabia’s future is now under threat. The 2015 Paris Agreement commits countries (at least in theory) to a net-zero carbon economy. Future energy use scenarios all point to a structural decline in oil demand as countries switch to renewables.
Clean energy costs have fallen rapidly over the last decade and renewable energy is enjoying record flows of finance overtaking fossil fuels. For now, oil demand remains high, but its decline is in sight. Saudi Arabia so long dependent on oil exports is looking to the future with a two-pronged strategy.
Denial in the Sand
Saudi officials have delayed climate talks by blocking measures or declarations that would reduce the role of oil and gas, or emphases the need for encouraging renewable energy. International conferences usually rely on consensus between nations, that means that it is easy for one country to block any progress. The G20 talks in July 2023 in Goa ended without agreement between the nations on reducing fossil fuels with Saudi influence believed to be behind the failure. Naturally the purpose behind these tactics are to sustain oil use for as long as possible – and by many measures the country has been successful.
Another strategy for delaying climate progress is hyping technology like Carbon Capture and Storage (CCS). CCS promises to take carbon out of the atmosphere and store it underground rending it harmless. So far CCS initiatives have failed to remove carbon from the atmosphere at any scale. In many ways CCS is the holy grail of decarbonisation which could solve climate change. Right now there is a risk that the promise of CCS could give oil producer the green light to keep pumping oil indefinitely.
Green Initiative
Ironically Saudi Arabia and its neighbouring states are well placed to transition towards clean energy. Saudi deserts are ideal for solar energy, vast spaces, sunshine, plus ample capital would allow the country to make a rapid transition to renewables.
Surprising for some Saudi has formally committed to a net-zero economy by 2060. The Saudi Green Initiative has been launched and there has been investment in solar projects, tree planting and various efforts to decarbonise in order to achieve net-zero goals. Although many believe these efforts are greenwash and exist solely to improve the image of the Kingdom which is so intertwined with oil. While image is most certainly part of this strategy, many in the country realise that it needs to diversify its economy away from fossil fuels and reduce its heavy domestic use of oil which is both inefficient and costly.
Neom - City of the Future?
Perhaps most eye-catching part of the Green Initiative is a fantastical, futuristic, and sustainable city called Neom being built in the South-West corner of the country. Neom has been billed as the:
“Blueprint for tomorrow in which humanity progresses without compromise to the health of the planet”.
The city has a reputed cost of US$500 billion and is certainly ambitious, but whether it becomes a sign of Saudi’s shift towards to the future or an expensive white elephant remains to be seen.
Saudi Arabia and the wider Middle East are highly vulnerable to climate change. Higher global food prices, deadly heatwaves and sea-level rise could make life tough for the Saudis. Lack of arable land ensure a high food import bill (80 percent of food is imported) while heatwaves will push people into airconditioned building as outside temperatures become increasingly unbearable.
For now climate risks are viewed as a problem for the future and doubtless many believe that the country’s huge wealth can buy their way out of any problems. But eventually the unforgiving nature of climate risks means that Saudi Arabia will be hit hard by climate chaos just like its neighbours.
Where next for Saudi Arabia?
Riyadh sees a world of shifting alliances where middle ranking powers like Saudi Arabia can pick and choose alliances with different powers. Saudi Arabia recently cooperated with China to achieve a détente with nemesis Iran. The Saudis have become a major oil exporter to India. Relations with Russia have warmed as both sides share an interest in keeping oil prices high and downplaying climate change.
Relations with the US have declined from the close relationships of previous decades, but the nation’s military still relies on the US for arms supplies. There is no easy replacement for these weapons and the Saudis need a technological edge its armoury given their position in a conflict-ridden part of the world.
Saudi and the Middle Powers
Saudi Arabia along with other middle powers like Türkiye; Indonesia and Brazil increasingly take an “a la carte” approach to international relations building alliances on different topics and evolving interests rather than sticking rigidly to one superpower.
The Saudi’s will doubtless align with Russia, the Gulf States and other climate laggards that see an advantage in extending the oil age. This diplomatic block of petro-states will try to influence and persuade others to stick with oil and put a spanner in the works of events like the annual Conference of Parties (COP) which is supposed to drive action on climate change. At the same time the Saudi’s are going to be enjoying some of the cheapest solar energy on the planet as renewable investments start to take off at home.