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Saudi Arabia embraces green growth

Najib Saab, 27 May 2019.

While the notion of green economy was met with resistance a few years ago, it is now a vibrant item on the Saudi agenda. Some members of the "old guard" considered embracing green economy principles as a Trojan horse to disguise certain climate change commitments, which they considered a threat to the oil economy. The national plan for economic transformation, Vision 2030, adopted by Saudi Arabia in 2017, has changed it all: Anchored in diversification, it includes all the elements necessary for a sustainable economy, based on harnessing the returns of natural resources and products, not depleting the capital.

The endorsement for green economy this time came from a leading research center specialized in oil, which represents an unprecedented shift in the outlook. The support traditionally came from economy and planning circles.

"Green Growth Pathways for Saudi Arabia" was the subject of a workshop recently hosted by the King Abdullah Petroleum Studies and Research Center in Riyadh. Foreign experts were present, but most of the participants were young Saudis, ranging from ministry officials, to heads of companies and university professors, with average age of below 40. The enthusiasm of officials from ministries and companies responsible for energy, oil and industry sectors was not less than that of those coming from the academia and planning. After all, the center hosting the event is primarily concerned with petroleum studies, and its officials demonstrated a profound understanding that research into green growth is necessary for producers to continue to benefit from oil, in the best possible way and for as long as possible. Young oil industry leaders stressed the need to invest present oil income to build a strong knowledge and technology base, and diversify the economy, including investing in renewable energy.

The world is changing, and we all have to change with it. When capitals such as Amsterdam, Paris and London announce that they will close their streets to fuel-powered cars in no more than 20 years, to protect people from air pollution, oil-producing countries must take that seriously. It is certain that this phenomenon could spread throughout the world much before 2050 and that it will increase with the increasing pace of measures to reduce carbon emissions that cause climate change.

The change will not happen overnight, and thus oil will remain a major component of the energy mix for decades to come, not only for cars, but also for aircrafts and giant ships, which need more time to develop new alternative engines, running on hydrogen, for example, and substantially increasing efficiency. Furthermore, oil will always have significant uses outside the energy sector, to produce boundless useful materials, from textiles to fertilizers. There could not have been a place to discuss such challenges better than a center specialized in petroleum studies, in a leading oil-producing country.

Vision 2030 highlights the need to diversify the economy so it doesn't stay dependent on commodities with low-added-value, which are vulnerable to global market volatility. It also stipulates measures to make the diversification process a success, mainly developing local manpower, encouraging innovation in a knowledge-based society, and securing efficient use of natural resources.

The meeting in Riyadh was not aimed at convincing the officials of the importance of adopting green growth principles. These have already been championed in Vision 2030, and the kingdom has presented an ambitious list of specific national commitments to implement the sustainable development goals and to comply with the Paris Agreement to reduce carbon emissions. In addition to diversifying the energy mix by introducing renewable energies at large scale, Saudi Arabia has begun serious measures to rationalize consumption. The national efficiency program kicked off few years ago, followed by phasing out subsidy on electricity, fuel and water prices. The figures presented at the meeting showed that energy consumption had fallen by 16 percent since the introduction of the efficiency program and new pricing policies. Saudi Arabia had set compulsory consumption and emission norms for car engines as well as efficiency of household appliances. During the past year, some car and appliances shipments have been returned to their sources for lack of conformity. The launching of the metro soon in Riyadh will be a quantum leap toward a more efficient urban transport system that eases traffic and reduces emissions from private cars.

In the domain of improved water management and conservation of the remaining strategic groundwater reserves, measures have been adopted to reduce water-intensive agriculture, such as wheat and fodder. Active measures such as the rehabilitation of depleted groundwater reserves are recommended, by pumping treated brackish water into wells. Every single drop of wastewater must be treated for multiple reuse.

While the work on adopting the sustainable development goals (SDGs) was in progress at the international level, Saudi Arabia was not merely a spectator, but played a key role in putting the eradication of energy poverty on the global agenda. Suleiman al-Herbish, a Saudi who headed OPEC Fund for International Development for 15 years, was the first to champion the right of all people to access modern and safe energy sources. The green growth meeting in Riyadh agreed that technological developments in recent years have made it possible to deliver energy to all, from clean sources and methods, whether renewable or conventional. Accepting pollution, under the guise of helping the poor, is no longer acceptable, nor needed.

Green economy directs investments towards the sustainable management of natural resources, in order to increase their economic returns, create jobs and deliver benefits to all, while preserving the environment and ensuring the continuity of natural resources regeneration. Green growth requires necessary transformations in the Arab region, mainly in four areas, energy, economy, resource management and demography. Energy transformation, ensuring that energy is produced cleanly and used efficiently, while also reducing its negative impact on health and climate problems, locally and globally. This is done in concurrence with appropriate economic transformation which produces sustainable growth that benefits all. There also has to be a shift in the perception of resources, by depending on the "income" of nature and the cessation of the depletion of the natural "capital." Finally, the demographic transition, leading to population stability, and relying on local trained workforce in the labor market.

The Arab region should strengthen its scientific and technological capacity and enhance the knowledge capabilities of its population, to effectively compete in the global economy and to avoid unrest. Today, the region faces one of two economic options: the traditional "brown" economy which generates short-term growth in GDP, while reducing the social and environmental equity assets, versus the "green" economy which provides long-term sustainable growth, based on stimulating economic development, in parallel with improving social and environmental conditions.

Investing in a green economy provides a balanced growth, alongside proper conditions for social and environmental stability and sustainability, without jeopardizing economic prosperity. The Riyadh meeting indicates that Saudi Arabia has the intention, the plan and the ability to move in this direction. When the G-20 meets in Riyadh in November 2020, Saudi Arabia will have a lot to offer, beyond just hosting a meeting of the world big economic powers.

A version of this article appeared in the print edition of The Daily Star on May 28, 2019, on page 6.


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