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Willow Curry
Professor Todd Eisenstadt
Honors 200
28 October 2014
Saudi Arabia: Sunlight on the Horizon
In the debate over climate change, one fact, though still contested by a number of
skeptics, is generally agreed upon: the burning of fossil fuels is the primary contributor to the
phenomenon. Based on that assertion, it could be argued that Saudi Arabia, as the world’s largest
exporter of fossil fuels, bears one of the world’s greatest responsibilities in combatting the
effects of climate change. However, Saudi Arabia has remained resistant to claims such as these,
and the country continues to develop its natural petroleum resources for both domestic use and
international export, with only the feeblest efforts at mitigation. Because of Saudi Arabia’s
authoritarian, monarchical system of government, which prevents any influence from non-state
actors, as well as their economic and infrastructural dependence on oil, Saudi Arabia’s position
on climate change firmly maintains the development and use of fossil fuels. Despite this
intransigence, however, the country is pragmatic about the inevitable global transition away from
a carbon-based economy, and has plans to be at the forefront of renewable energy production in
the coming decades.
In this paper, I will first outline the current environmental policy measures (and lack
thereof) that have been enacted by the Saudi Arabian government. This will be followed by an
analysis of the factors behind their minimal policy, including government structure and lack of
citizen participation, and economic overdependence on oil. I will explain why, despite these
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deeply entrenched underlying causes, Saudi Arabia will eventually be forced to re-evaluate their
fossil-fuel dependence, and I will discuss the Saudis’ steps toward meeting the future with
promising plans for energy diversification, which could prove to be both an economic and
environmental boon. The final section of the paper will deal with predictions for Saudi Arabia
when the world’s demand for oil begins to decrease, and will discuss possibilities for Saudi
Arabian economic growth beyond oil and gas exports as well as prospects for democratic
reforms that would create more avenues for green issues to gain prominence.
With fossil fuels providing the majority of Saudi Arabia’s wealth and the basis of their
infrastructure, it would be easy to imagine them taking no interest in environmental problems at
all, but this is not the case. Environmental protection has been on Saudi Arabia’s policy agenda
ever since the unveiling of the first Development Plan in the 1970’s (Taher & Hajjar, 2014). The
problem lies not in the presence of environmental regulation, but in the focus and strength of said
regulation. In the Ninth Development plan, which spans from 2010 to 2014, considerable
attention is given to various environmental concerns, but the focus is solely on Saudi Arabia’s
environment. No mention is made of global climate change or mitigation of CO2 emissions
(Taher & Hajjar). On the contrary; one of the main goals outlined in the plan involves
“maintaining petroleum resources and rationalization of its consumption”—in other words,
preserving the country’s existing petroleum resources so that more will be available for export.
Though the importance of environmental protection was informally acknowledged in
several decades of Saudi development plans, it was only formally incorporated into the Saudi
Arabian constitution, the Basic Law of Governance, in 1992. Nearly another decade passed
before the General Environmental Law (GEL) was created in 2001, providing the nation’s first
and only legal framework for the implementation of environmental regulations (Taher &Hajjar).
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Along with it was created the Presidency of Meteorology and Environment, or PME, to act as the
law’s regulatory enforcement agency. However, the GEL bears the same lack of focus on climate
change and mitigation efforts as the development plans. The PME’s discouragingly small
number of achievements, therefore, involve issues of natural habitat protection, hazardous waste,
and air pollution, rather than the more serious and encompassing issue of combatting climate
change. In addition to the skewed focus of the GEL itself, the PME is not given nearly enough
power to actually implement many of the provisions of the GEL, which undermines its authority
and prevents effective environmental policy (Taher & Hajjar). The structural weaknesses within
Saudi Arabia’s only mechanism for environmental protection indicates that it has not truly
prioritized the mitigation of climate change.
One reason for this lack of responsiveness to such a pressing global crisis lies within the
structure of the Saudi Arabian government. As an absolute monarchy, Saudi Arabia is in a
unique position on the world stage regarding government accountability and citizen
participation: there is little to none of either. Saudi Arabia operates under the aforementioned
Basic Law of Governance, a charter that delineates the two fundamental principles guiding the
state—Islam, and the monarchy. The Basic Law stipulates that “all power to appoint and dismiss
judges, make treaties, appoint government officials, and dictate the national budget lies with the
king. The king is also…the prime minister as well as the chief executive (Lippman, 2012).” The
only entry point provided to subjects by the Basic Law of Governance is the traditional,
centuries-old majlis system (often referred to as “desert democracy” [Abdulaziz, 2005]), in
which individuals are allowed to petition the King or Crown Prince to grant their requests, either
through letters or in a formal audience (Lippman). However, even this is under tight government
control—in December of 2003, a group of petitioners who called for a constitutional monarchy
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(despite warnings by the government that such demands would not be tolerated) was thrown into
prison, the condition of their release being a promise never to be involved in such petitions again
(Glosmeyer, 2005). The concentration of power within the hands of the royal family creates a
system in which outside actors, including environmentally minded citizens and green NGOs,
hold no authority in the making or the enforcement of laws. All debate over policy comes from
within the competing factions of the royal family (Glossmeyer), and because emissions reduction
and fossil fuel regulations are at odds with the continuance of the country’s stream of oil revenue
(and, by extension, the growth of the Al-Saud family’s wealth), climate change mitigation is not
an interest that is expressed within the legislative process.
One might think that in such an authoritarian, oppressive political environment, Saudi
citizens would be mobilizing en masse, as has happened in many of the nearby Islamic states.
However, besides a few opposition groups composed mainly of the elite intelligentsia
(Abdulaziz) (with the notable exception of radical Islamist groups), Saudis are largely content
with the monarchy, and believe that any changes should be made within the monarchical system
(Lippman). This is because of the de facto contract between the state and its people, whereby
“the Al-Saud support a generous ‘welfare state’ in return for political quiescence (Abdulaziz).”
The “generous welfare state” is funded, of course, by Saudi Arabia’s extensive oil wealth. And
therein lies the primary obstacle standing between Saudi Arabia and effective climate change
policy—the economy and the success of the state as a whole are reliant on the presence of
petroleum revenues. As the world’s largest exporter of petroleum (source 5, p. 28), oil and gas
account for 40% of the country’s GDP, 70% of state revenues, and up to 95% of total export
earnings (Cordesman, 2003). Fossil fuels have been the engine behind Saudi Arabia’s
development, and are responsible for the vast array of services provided to its citizens for no
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income taxes—imported food, schools and universities, hospitals, and mosques; not to mention
cheap, subsidized energy (Lippman). This over-reliance is exacerbated by their economy’s lack
of diversification—the abundance of and relative ease of access to such a valuable commodity
has de-incentivized a major push for growth in the country’s other sectors. More than 55% of
capital investment in Saudi Arabia goes to oil and petrochemicals, and while non-petroleum
industries have maintained a positive growth rate in the past two decades, no sector even
approaches undergirding the bulk of the economy as much as oil and gas (“Saudi Arabia
Economic Report,” 2014). Saudi Arabia’s vested interest in the continuance of oil revenues
provides an explanation for its obstinate refusal to cut back their development and export of
fossil fuels, a view that is reflected in statements such as that of the country’s oil minister
Ibrahim Al-Naimi: “The most pragmatic strategy for the better protection of the environment is
to concentrate on a cleaner and more efficient use of fossil fuels on which we will continue to
depend (emphasis mine) (“The business case for climate change,” n.d.),” or that of Prince Turki
Al-Faisal: “Any future, no matter how wishful, will include a mix of renewable and nonrenewable fuels (as cited in Lippman, p. 41).”
It is becoming increasingly clear, however, that no matter how much Saudi Arabia relies
on its precious natural resource, fossil fuel dependence will soon become unsustainable. This
lack of sustainability has three central causes: the predicted fall in global demand for oil within
the coming decades, the country’s heavy domestic use of fossil fuels, and the decreasing pool of
easily accessible oil and gas in Saudi Arabian reserves. The first issue presents the most serious
threat to the long term viability of the Saudi economy. Though the rise of renewable energy is
only expected to decrease the contribution of nonrenewable fuels from the current level of 82%
to 75% by 2035 (World Energy Outlook 2013), this still represents a massive cut in Saudi
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Arabia’s revenues. In fact, a report by the United States National Intelligence Agency followed a
prediction of a technological breakthrough that would provide an alternative to oil and natural
gas by 2025 with an ominous statement: “…whether the breakthrough occurs within the 2025
timeframe or later, the geopolitical implications of a shift away from oil and natural gas will be
immense. Saudi Arabia will absorb the biggest shock (as cited from Lippman, p. 38).” Along
with this worry about the decline of international demand for oil within the coming century,
Saudi Arabia also faces the issue of the rapidly increasing domestic use of its oil. In 2011, the
Jadwa Investment Group in Riyadh found that “Domestic consumption of oil…will reach 6.5
million barrels per day in 2030, exceeding oil export volumes (as cited from Lippman, p.42).”
This would make the country a net importer of oil, rather than its current status as the greatest
exporter. This proliferation in domestic consumption is due in large part to extensive government
subsidies for fossil-fuel intense industries (such as water desalination and power generation) and
for energy use by citizens and business. The low cost of oil and gas encourages unnecessary and
wasteful use of energy (Taher & Hajjar), which leaves fewer petroleum resources available for
export and amounts to a huge loss of potential revenues. Finally, beneath these two factors lies
another potential challenge: the actual ability of Saudi Arabia to continue its production.
Availability is not an issue—Saudi Aramco, the nationalized corporation responsible for the
extraction, refinement, and sale of the country’s petroleum, estimates that almost 700 billion
barrels oil have yet to be extracted. However, oil present does not equal oil produced, and as the
oil becomes more difficult to extract, rising costs of production may make oil unaffordable on
the international market (Lippman). Former Saudi Aramco executive Sadad Al-Husseini said in
an interview, “When we talk about the 700 billion barrels of oil in place in Saudi Arabia, the first
100 billion were obviously the best, the easiest to produce. As you get deeper into that pool and
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try to produce more of those resources, it has to be affordable. You’re going to need the right
costs at the right price (as cited from Lippman, p. 51).” Taken together, these three threats to the
availability and demand for Saudi Arabia’s oil necessitate a future that is not nearly as dependent
on fossil fuels.
Saudi Arabian officials are not naïve, and though they would like to push such a scenario
as far into the future as possible, they recognize the need to look toward new energy avenues and
economic diversification. However, the Saudis do not see this as a concession—in fact, they
intend to hold a stake in the future of energy as a continued world energy leader. In this vein, oil
minister Al-Naimi’s statement at a 2009 conference in Geneva—“Saudi Arabia aims to be a
leader in renewable energy production—specifically as the world’s largest exporter of clean
electric energy produced by our abundant sunlight”—signifies the dawn of a new era on Saudi
Arabia’s energy horizon. Saudi Arabia is nearly as blessed with solar capability as it is with
petroleum—the country’s wide desert expanses allow for one of the world’s highest levels of
solar irridation (“China, Saudi Arabia to cooperate,” 2014). The government is eager to
capitalize on this resource endowment and has launched a number of ambitious plans and
initiatives, the most important being the 2010 Royal Decree on the King Abdullah City for
Atomic and Renewable energies, a research center “with a mandate to contribute to Saudi
Arabia’s sustainable development by meeting the Kingdom’s future electricity demand (Taher &
Hajjar).” The KACARE has taken vigorous strides towards this goal since its inception—as
recently as August of 2014, the center signed an agreement with the Chinese National Nuclear
Corporation “to cooperate on the development of renewable and nuclear energy (“China, India to
cooperate,”).” In addition, the country has made plans to source 41,000 megawatts of
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photovoltaic energy capacity by 2032 (“China, India,”) and to generate solar energy equivalent
in energy content to its exported oil by 2019 (“The business case for climate change,” n.d.).
The switch to renewables in Saudi Arabia’s energy mix just might prove to be the
soundest decision the country could make, with benefits for the economy and the environment.
In the short run, powering domestic energy use with sustainable green energy will maximize the
country’s oil export potential, reversing the trend towards net import and reclaiming substantial
income that would otherwise have been forfeited. Any renewable energy production beyond
what is needed domestically can be exported for even more potential profits, increasing the
global supply of renewables and possibly reducing prices. In the long run, diversifying the Saudi
Arabian economy with green energy will provide the Saudis a much needed buffer in the
inevitable events of decreasing global demand for oil and increasing costs of production. In the
end, it seems, reducing greenhouse gas emissions in Saudi Arabia will actually increase
economic growth. This optimistic assertion is corroborated by an empirical study, conducted by
noted Saudi Arabian economists and government officials Nahed Taher and Bandar Hajjar, and
based on the Australian Dynamic Integrated Model of Climate and the Economy. The study
yielded the following results:
“With…ambitious cuts in environmental pollution, the Kingdom could see a
sustainable increase in GDP, which could reach around SAR 1.54 trillion in the next two
decades corresponding to a 5 % cut in environmental pollution. In contrast, under a
limited or less ambitious emissions reduction plan, the build-up of environmental
pollution would slow down the growth rate of GDP…Under the pessimistic scenario,
which corresponds to limited emissions reduction policy of half a percentage point, real
GDP will expand only sluggishly to reach SAR 1.2 trillion by 2030. Thus, the deeper the
cut in emissions, the larger the GDP and vice versa (Taher & Hajjar).”
The transition away from a fossil-fuel based economy could yield an even bigger victory
for climate change policy in the form of increased political participation. As stated earlier, the
country’s prodigious oil wealth forms the basis for the government’s informal contract with its
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citizens. The decline of this source of income in the coming century, especially given the
country’s rapidly growing population, will most certainly mean a decline in the amount of
services and benefits the state is able to provide. Citizens will be forced to become comfortable
with fewer perks, but it is likely that “accepting lower socioeconomic expectations may prompt
demands for political development and greater political involvement, reversing the undeclared
social contract (Abdulaziz).” The government has slowly but surely instituted small reforms over
the past two decades in an attempt to control the size and speed of change. The shift in the
dynamic between state and citizen following the loss of oil revenue may prompt the royals to
issue more reforms in the future for the same reason, including elections to certain government
positions and even an independent legislature (Glosmeyer). Even partial reforms such as these
would grant non-state actors much more access to the legislative process, a change that would
give green interest groups a much-needed platform for advocating and implementing progressive
environmental policy.
The prospect for any policy with the direct intention of controlling CO2 emissions and
mitigating climate change is nonexistent in the current political and economic circumstances.
The country’s absolute monarchy is firmly entrenched with little incentive to reform, and the
economic consequences for decreasing oil exports are highly undesirable. In the coming decades,
however, there is hope. The inevitability of a low carbon future could make Saudi Arabia a
powerhouse of renewable energy production, and thereby lower the country’s greenhouse gas
emissions. In addition, the shrinkage of the welfare state due to decreased oil revenues could
increase citizen demands for political reforms that would give non-state actors such as green
NGO’s a stake in policy. All things considered, it is not unreasonable to look toward a future in
Saudi Arabia in which climate change mitigation and economic success go hand in hand.