Sustainability in Saudi Arabia: Recent Energy Efficiency Initiatives
Saudi Arabia’s newest energy efficiency initiatives not only line up with its Vision 2030 goals for a diversified and sustainable economy, but also the UN’s Sustainable Development Goals (SDGs). The Saudi government also understands the necessity of sustainable, efficient planning as it develops cities and infrastructure for its rapidly growing and changing society. In the last decade, the Kingdom has enacted several significant new policies, updated its guidelines for the Saudi Electricity Company (SEC), and established the Saudi Energy Efficiency Center (SEEC) to promote energy efficiency in all sectors.
The Kingdom’s latest initiative in this field is called “Mostadam,” named after the Arabic word for “sustainable” and developed by the Ministry of Housing over the last two years as a new system to rate new housing units according to green construction standards. Mostadam has three separate rating systems for residential, commercial, and community buildings, each of which consists of two elements: one for judging the sustainability of a building’s “design and construction” and the other for “operational and existing” units. Although many recent building projects in Saudi Arabia have elected to follow the international standard of green building certification, Leadership in Energy and Environmental Design (LEED), the Saudi government saw that a new system such as Mostadam was required to make these standards consistent with Saudi Arabia’s existing legislature, environmental conditions, and local customs.
Another major step in the direction of energy efficiency is the SEC’s Smart Metering Project, enacted to improve electrical usage, billing, and monitoring for homes and businesses and help drive the country closer to meeting its Vision 2030 digitalization goals. The project aims to install or upgrade ten million smart meters, free of charge, that will connect to the national telecommunications grid and link with the utility company’s billing system and the customer’s smartphone via an app, allowing customers to monitor their consumption in real time and providing the customer with data to help improve power usage. Once completed, the network of smart meters will help minimize outages and improve network reliability.
The SEEC’s major initiative in this field is the National Energy Efficiency Programme (NEEP), launched in 2012 to offer incentives and make improvements to lower energy demand in industry, buildings, and transportation (which combined represent 90 percent of the Kingdom’s energy consumption). In 2018 the program was extended to cover energy efficiency in power generation, electrical transmission, and desalination. Over 35 policies have been created since the NEEP’s inception, including a new public awareness campaign, stricter building standards, higher efficiency requirements for heating/cooling equipment, new energy efficiency courses and certifications at technical universities, and the establishment of the Center of Excellence in Energy Efficiency at King Fahd University of Petroleum & Minerals. In 2017, the National Energy Services Company (branded as “Tarshid” and owned by the Public Investment Fund) was created to retrofit all public buildings in the Kingdom to comply with the new energy efficiency standards and stimulate the growth of the country’s private energy efficiency market.
The newly inaugurated Artificial Intelligence Center for Energy, the product of a Memorandum of Understanding between the Saudi Ministry of Energy and the Saudi Data and Artificial Intelligence Authority, will harness modern data analytics and innovations in artificial intelligence/machine learning to improve efficiency in the energy and oil/gas sectors. The size of the Saudi energy sector, generating 40 percent of the Kingdom’s GDP and supporting 270,000 jobs, ensures that the AI center’s benefits will be wide-ranging. This cross-sector collaboration has the additional benefit of furthering the Kingdom’s progress towards the digitalization of its economy.
To help finance the country’s drive toward sustainability, including its Smart Metering Project, the SEC issued its first ever Green Sukuk in 2020 worth $1.3 billion, with the sukuk’s terms established in line with the ‘Green Bond Principles’ issued in 2018 by the International Capital Market Association. The new model of sukuk loans is part of Saudi Arabia’s broader framework for transitioning to green financing on par with its regional peers. The country further intends for its green financing model to extend to banks and corporate sector, as those sectors continue to become more conscious of their standing in environment, social, and corporate governance. With the first set of green sukuks, the SEC plans to invest in Combined Cycle Power Plants and other “highly efficient technology,” minimize fugitive emissions using the latest leak detection technology and stricter maintenance schedules, manage carbon emission reduction programs, and invest nearly $2.2 billion between 2022 and 2025 to connect renewable energy projects to the national grid to bring the country’s grid-integrated renewable capacity to a total of 27.6 GW.
Sustainability and energy efficiency were major themes of the Saudi-led G20 and B20 summits in 2020. During the summit, the G20 formally recommitted to the goals of the Paris Agreement and pledged its commitment to specific initiatives, including supporting private and public sector investment in technologies and infrastructure that can improve energy efficiency and security; phasing out inefficient fossil fuel subsidies to reduce the energy sector’s carbon footprint; and supporting carbon recycling/carbon capture technologies in the industrial sector. These commitments all resulted from the official policy recommendations submitted to the G20 by the B20, in which the USSBC and its members contributed to. Thanks to the G20’s widespread acceptance of the B20’s recommendations, sustainability and energy efficiency will remain relevant throughout this decade and beyond, not just in Saudi Arabia, but also globally.
The United Nations (UN) has acknowledged Saudi Arabia’s visible progress in renewable energy investments, energy-efficient electrical network investment, sustainable urban planning, and efforts to preserve biodiversity in land and water. The UN has also recognized that the country’s efforts make progress on both the UN’s 2030 Agenda for Sustainable Development and Saudi Vision 2030, which share timeframes and many ultimate development goals. The Saudi government understands that the importance of sustainability to the country’s development is undeniable. In the end, Saudi Arabia is eager to pursue higher sustainability standards and greater efficiency in energy usage to ensure its remarkable growth can persist and opportunities remain available for future generations.