KAFD

Dialogue
Report
Sustainability,
Climate Change
and the Journey of
Saudi Arabia
 Contents

Sustainability,
Climate
Change and
INTRODUCTION 3

KEY FINDINGS OF THE DIALOGUE 6

the Journey of CASE STUDY 26

Saudi Arabia
CONCLUSION 30

RECOMMENDATIONS 34

REFERENCES 37

11 October 2023
 Sustainability, Climate Change and the Journey of Saudi Arabia

Introduction

The King Abdullah Financial District (KAFD) Dialogues are a private quarterly
dinner series that drive forward global discussions on critical challenges facing
businesses and their leaders today. The mission of the KAFD Dialogues is to
promote frank and candid discussion between international and Saudi business
leaders, creating knowledge and understanding of how to navigate emerging
opportunities and obstacles within the global business landscape.

The fifth KAFD dialogue took place on October 11, 2023, coinciding with Middle
East Climate Week, and focused on: Sustainability, Climate Change and the
Journey of Saudi Arabia. To discuss this topic, KAFD invited Matthew Bateson,
Chief Climate Change and Sustainability Officer, Saudi Aramco; Zoe Knight,
Group Head, Centre of Sustainable Finance and Head of Climate Change
MENAT, HSBC; Dr. Malek Al-Chalabi, Senior Carbon Pricing Policy Advisor, Shell;
Abdulelah Al Sheikh, Country Director, Saudi Arabia, Jacobs; and Sami Amin,
Senior Operations Director, Careem to participate in an off-the-record discussion
moderated by Asia House Chief Executive Michael Lawrence OBE. This dialogue
was attended by CEOs and senior executives from around 70 leading Saudi and
international businesses.

While all discussions at the KAFD Dialogues are kept strictly off-the-record to
promote a highly useful and frank exchange of views, this Dialogue Report
examines the key themes covered in the dialogue and provides focused analysis
intended to enhance knowledge and understanding of the topics for the business
community in Saudi Arabia and at the international level. This report looks in
depth at the context in which the dialogue was held, including current global
trends in sustainability and green finance, as well as recent initiatives by Saudi
Arabia to enhance its environmental sustainability and work towards its climate goals.

3 4
Unveiling
the Climate
Challenge:
Navigating Saudi
Arabia’s Future
Key Findings of
the Dialogue
Keyfindings Keyfindings

Dive into the pressing reality of climate

change in Saudi Arabia

Dive into the pressing reality of climate change in Saudi

Arabia – a tale that goes beyond global warming statistics and
resonates deeply with the Kingdom’s habitat and economic
stability. Picture a Saudi Arabia grappling with intensified
heatwaves, atmospheric pollution, shrinking water resources,
and catastrophic floods. The stakes are high, impacting not only
the daily lives of its residents but also jeopardizing the ambitious
goals outlined in Vision 2030, from enhancing livelihoods to
transforming the nation into a global tourist hotspot.

For decades, Saudi Arabia has been an energy titan, fueling

global economic growth through its oil revenue. This seismic
shift towards a greener fuel underscores the urgent need for
economic diversification, renewable technology advancement,

1
and a radical transformation of the oil and gas sector. Enter

The Impact Carbon Capture Utilization & Storage (CCUS) technologies, The Kingdom is
on a trajectory
Saudi Arabia isn’t merely adapting; it’s taking the lead in steering
the Gulf region towards a sustainable energy future. The Kingdom
the adoption of alternative fuel sources like Hydrogen and
of Climate Ammonia – strategies that not only reduce carbon emissions
to achieve net- is on a trajectory to achieve net-zero by 2060 and secure 50% of
zero by 2060 and
Change but also position Saudi Arabia as a player in the global energy
secure 50% of
its energy from renewables by 2030. The financial commitment is
staggering – over US $186 billion earmarked to green the economy.
on Saudi
transition. The Kingdom stands at the cusp of an unprecedented
its energy from
opportunity, where combating climate change aligns seamlessly To secure this investment, Saudi Arabia is laying the groundwork
renewables by
Arabia: Why with sustainable economic growth. 2030 for a robust domestic sustainable finance market, accompanied

the Global by stringent regulations and financing programs to enhance ESG

reporting among its companies.
Energy
Transition is
important Saudi Arabia Saudi Arabia extends its influence through the Middle East Green
extends its Initiative (MGI). This visionary project aims to slash CO2 emissions
influence by a staggering 670 million tons, plant 50 billion trees across the
through the region, and restore 200 million hectares of degraded land.1 The
Transition from Oil Dependency Carbon Capture and Alternative Fuels
Middle East Kingdom isn’t just adapting to climate change; it’s championing a
Green Initiative
Saudi Arabia, a historical energy titan, Adoption of Carbon Capture Utilization
paradigm shift, beckoning the entire Middle East towards a more
recognizes the urgent need for economic & Storage (CCUS) technologies is a key environmentally sustainable future.
diversification. strategy.

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Keyfindings Keyfindings

2 Unleashing
Saudi Arabia’s
Oil Revolution:
Saudi Arabia’s oil sector is adapting to the energy transition amid,
growing calls from international policymakers and business
leaders. The Kingdom is studying how to transform its oil industry
so that it can continue to meet the world’s energy demands, but
Reconfiguring the Oil and Gas Industry: The promise
of Hydrogen
But the narrative doesn’t end with
CCUS. Saudi Arabia is carving its
decarbonize seek alternative fuels
to oil and its refined products.9 Most
in a more environmentally sustainable way. Oil remains Saudi
Pioneering Arabia’s largest source of revenue, reaching US $326 billion in
destiny with hydrogen—both blue
and green. To reconfigure its oil
notable is the partnership between
Neom Green Hydrogen Company
the Energy 2022 and contributing to approximately 40% of the Kingdom’s and gas industry, Saudi Arabia has and Saudi Arabia’s Industrial

Transition GDP.2 Investments in CCUS as well as blue hydrogen plants offer

pathways to decarbonize the oil and gas industry.
increased investment and research Development Fund (SIDF) to build
into the development of green and the world’s largest production facility
blue hydrogen as alternative fuels. in Neom. Green hydrogen produced
Blue hydrogen is a low carbon fuel from 4GW of solar and wind power
The Potential of CCUS of traditional plastic production. In monoxide, a valuable chemical created from natural gas. It is used to will be used to manufacture green
addition, Saudi Aramco has also feedstock. They are currently looking produce blue ammonia, a product ammonia, which will be used as a
Saudi Aramco has been at the
created a technology that uses CO2 into various metal combinations in from the combination of ammonia fuel and exported. As a result, 1.2
forefront of CCUS adoption in the
rather than air to cure concrete, with their research.7 synthesis with hydrogen CCUS million tons of green ammonia are
Kingdom. One project sees the
the material absorbing 20% of the 8
technologies. Green hydrogen, on expected to be produced per year
capturing and processing of 45 CCUS development has gained
gas.5 the other hand, is produced by the once the plant starts operating in
million cubic feet of CO2 emissions significant momentum in recent
electrolysis of water using renewable 2026.
at Saudi Aramco’s Hawiyah Gas Saudi Arabian firms, universities, and years, driven by strengthened
energy derived from solar and wind
Plant. The gas can then be piped research institutes are also studying climate targets and subsequently
power. Saudi Arabia has great
into the Uthmaniyah oil reservoir CCUS, and circular carbon economy increased policy support for the
potential to scale up green hydrogen
to sequester CO2 whilst recovering approaches to climate change. technology globally. In 2022, 61
production, due to the country’s
more oil.3 Saudi Aramco has also Saudi industrial chemicals producer, new CCUS facilities were added
vast areas of flat, cheap, and sun-
partnered with American oilfield SABIC for example, is researching to the global project pipeline,
exposed land, although it is currently
company Schlumberger, and how captured CO2 can be used as a bringing the global total number of
more expensive to produce than
German chemical company Linde, feedstock to produce chemicals such CCUS projects to 30 in operation,
blue hydrogen due to the high cost of
to build one of the world’s largest as methanol and urea. In 2019, SABIC 11 under construction, and 153 in
electrolyzers.
CCUS hubs in the Jubail industrial also launched a polycarbonate development. Nevertheless, there
zone.4 Starting in 2027, 9 million that has a 50% lower carbon are doubts about the maturity of the Saudi Arabia is seeking to become
metric tons of CO2 will be collected footprint compared to fossil fuel- technology and how effectively it can the world’s largest hydrogen supplier,
per year, with the aim of capturing based polycarbonate production.6 reduce greenhouse gas emissions, with targets of producing 2.9 million
44 million metric tons by 2035. Saudi Researchers at the King Abdullah with some advocating that CCUS tons per year by 2030 and 4 million
Arabia currently emits around 608 University of Science and Technology should be used to complement rather tons per year by 2035. This will
million metric tons annually. Saudi (KAUST) are also exploring how than replace wider action on carbon assist the Kingdom’s economic
Aramco has pioneered other CCUS metal-organic frameworks can mitigation, or alternatively that it diversification away from oil and
applications. For example, it can use capture CO2 more efficiently than distracts from implementing the assist the resilience of its oil and gas
stored carbon to create plastics with conventional methods, catalyzing decommissioning of the oil and gas industry through the production of
just one-third of the carbon footprint the gas’s transformation into carbon industry entirely. ammonia, as countries looking to

9 10
Keyfindings Keyfindings

3 Beyond Oil and

Gas: How is
Saudi Arabia
Step into the dynamic realm where Saudi Arabia is shedding its
oil-centric identity, embracing a future rooted in environmental
sustainability. Energy efficiency is being increasingly prioritized
with efforts such as the Mostadam Building Rating System
encouraging green buildings, as well as a growing focus on
enhancing its electric vehicle (EV) adoption. The Kingdom is not just adapting;
environmental it’s orchestrating a symphony of strategies spanning carbon

sustainability? neutrality, renewable energy, energy efficiency, and a greener

landscape through afforestation.

The Kingdom’s Climate Odyssey Renewable Projects

Saudi Arabia, once synonymous with oil wealth, is now at the Saudi Arabia’s commitment to renewables is not mere rhetoric. The National Renewable Energy
forefront of a green revolution. Crown Prince Mohammed Program is driving sustained oil production while embracing clean energy. The Saudi Arabian
bin Salman’s vision is clear – achieve net-zero by 2060. This private utility developer ACWA Power aims to sustainably produce 11.8 GW of electricity by 2025
ambitious goal marks a pivotal shift with the Public Investment through the three solar power plants it owns with the PIF’s subsidiary Badeel. These include Ar
Fund (PIF) joining the movement and aiming for net-zero by Rass 2, Saad 2 and Al Kahfah, which have received a total investment of US $2.37 billion.10 In fact,
2050 through investments in renewables, energy efficiency, and September 2022 witnessed the launch of five projects producing 3.3 GW of renewable energy.
emission-reducing technologies. These include three wind farms in Yanbu, Al-Ghat and Waad Al Shamal, with a total production
capacity of 1.8 GW, as well as two solar plants in Al Hinakiyah and Tabarjal with a capacity of 1.5
In 2021, the Saudi Green Initiative (SGI) emerged as the GW. These projects will provide enough power for 750,000 Saudi households and significantly
nation’s beacon in the fight against climate change. Designed contribute to the Kingdom’s goal of having renewables account for 50% of its energy production
to enhance quality of life, protect the environment, and by 2030.
spearhead the transition to a green economy, the SGI catalyzes
investments in emissions reduction, afforestation, and land and There are also various partnerships between Saudi Arabian and international companies to
sea protection. Not stopping at national borders, the Middle East advance renewable energy production. For example, in January 2023, Chinese clean energy
Green Initiative (MGI), launched in the same year, propels Saudi company Jinko Solar started the construction of its Saad Solar plant that will power 132,000
Arabia’s regional leadership in tackling climate change and homes in the Kingdom.11 Similarly, Saudi Arabian solar and infrastructure holding company, Desert
aligning with global targets. Technologies, partnered with the Indian conglomerate, Essar Group, in September 2022 to develop
renewable energy solutions for Essar’s Green Steel Arabia project in the Kingdom. It positions Saudi
Arabia as a leader in green steel production and renewable energy, underscoring its commitment to
reducing its greenhouse gas emissions. The project is also planning a US $4.5 billion investment for
an integrated steel plant in Ras Al Khair, establishing itself as the region’s first green steel project.12

11 12
Keyfindings Keyfindings

Enhancing Domestic Energy Efficiency The Kingdom is racing toward electric mobility, with Ceer
Saudi Arabia, known for burning oil to power its grid, and Lucid Group leading the charge. Lucid’s first overseas
is rewriting the narrative through aggressive energy production plant in Jeddah promises up to 100,000
efficiency initiatives. Fuel subsidies totaling a staggering electric vehicles (EVs) within a decade, a testament
US $7,000 per person per year are an inefficiency ripe for to PIF’s US $1.8 billion investment. The Electric Vehicle
13 Infrastructure Development Initiative, launched in 2021,
transformation.
aims for 50,000 charging stations by 2025.17 Electromin’s
This is an inefficient way to power the grid, providing the 700 charging sites and Siemens’ partnership are pivotal
Kingdom the opportunity to enhance energy efficiency steps in advancing EV infrastructure technology.
to reduce domestic oil consumption by two million barrels
per day by 2030 through various initiatives. The Kingdom’s Likewise in October 2023, PIF and Saudi Electric
implementation of energy efficiency standards is Company launched an EV infrastructure company
developing, focusing primarily on the building sector that that aims to build 5,000 EV chargers in more than
accounts for 29% of the nation’s energy consumption. For 1,000 locations across the Kingdom.18 These initiatives
example, the Saudi Building Code enacted a regulation demonstrate Saudi Arabia’s progress in enhancing the
in 2019 that makes the insulation of new buildings transportation sector’s energy efficiency and meeting
mandatory. The Saudi Energy Efficiency Centre, which national climate targets.
guides regulations of all governmental, commercial, and
residential buildings set the insulation standards.
Afforestation: Greening the Desert
Saudi Arabia has also adopted its own Building
Against the backdrop of arid landscapes, Saudi Arabia’s tree-planting program, initiated by
Rating System named Mostadam.14 Mostadam was
Crown Prince Mohammed bin Salman, aims to plant ten million trees in the next few decades to
established to align with prevailing legislation, such as
increase the area of Saudi land covered with trees by twelvefold,19 thereby fostering environmental
the internationally recognized LEED certification, whilst
awareness and creating employment opportunities. The Saudi Green and Middle East Green
accommodating for Saudi Arabia’s local climate and
initiatives, launched in 2022, aspire to plant a staggering 50 billion trees, reducing carbon emissions
environmental characteristics. It extends its influence to
by over 10%.20
projects like the King Salman Energy Park, showcasing a
gold certification.

Similarly, boasting the Kingdom’s first LEED ND Stage Saudi Arabia’s environmental odyssey is a tapestry of ambition, collaboration, and innovation.
2 Platinum certification for the entire district, KAFD’s Beyond oil and gas, the Kingdom is carving a sustainable path, inviting the world to witness its
buildings are connected via smart building management transformative journey toward a greener, cleaner future.
solutions such as fire alarm, energy control and data
collection systems.15 More recently, KAFD has partnered
with Google to help residents and visitors navigate the
district more efficiently with complementing initiatives
to employ shuttle buses and smart scooters to reduce
carbon emissions.16

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Keyfindings Keyfindings

4 Funding the
Kingdom’s
Energy
Transition: The
importance of
green finance

Green finance refers to the financing of investments, projects, and bond in September of 2022 that was eight times oversubscribed, and a
initiatives that have positive environmental benefits. It aims to second one in February 2023 which raised US $5.5 billion and was more than
support the transition to a more sustainable, low-carbon economy six times oversubscribed. It is the world’s first sovereign wealth fund to do so,
by directing capital towards environmentally sustainable ventures and the proceeds will be used to finance green investments. Saudi companies
such as renewable energy, energy efficiency, and pollution are yet to issue sustainable bonds, although the PIF has made an important
reduction projects. The scale of green finance required for countries stepping stone.
to transition to net-zero is considerable. The Glasgow Financial
Saudi lenders such as Saudi National Bank (SNB) and Riyad Bank have also
Alliance for Net Zero (GFANZ) estimates that between US $100-150
contributed to finance sustainable projects across the Kingdom. SNB was
trillion is needed to prevent a 1.5 degree rise in global temperatures,
the first bank in the Kingdom to create its Sustainable Finance Framework
highlighting the scale of the challenge.
in November 2021 that permits it to issue green and social bonds or loans.
Saudi Arabia is exploring green finance mechanisms as a means Riyad Bank followed suit in February 2022. These banks, alongside SAB,
of funding its energy transition. The emerging sector can help the Alinma Bank, and Banque Saudi Fransi, have also provided approximately
Kingdom achieve its aims of diversifying its sources of revenue under US $3.5 billion to finance NEOM’s green hydrogen plant.21 Such initiatives
Saudi Vision 2030, whilst mitigating its sustained oil production demonstrate that Saudi banks are increasing their commitment to green
and export to achieve its net-zero targets. PIF established its green financing initiatives, yet they are still in their early development.
finance framework in early 2022, selling a debut US $3 billion green

15 16
Keyfindings Keyfindings

5 Saudi Arabia’s
potential to
develop a
In June 2023, the RVCMC’s second auction took place in Nairobi and sold more than 2.2 million
tons of carbon credits, the largest ever voluntary carbon credit auction.23 Saudi Arabian and
international firms took part in the auction, with Saudi Aramco, the Saudi Electricity Company,
and ENOWA purchasing the highest number of carbon credits.24 In October this year, during

Carbon Market
the UN’s MENA Climate week in Riyadh – the same week as the KAFD Dialogue - Saudi Arabia
initiated its Greenhouse Gas Crediting and Offsetting Mechanism (GCOM). It is a domestic market
mechanism that aims to help the Kingdom achieve its climate goals and help companies reduce
their emissions by purchasing Saudi carbon credits.25

At a global level, carbon markets continue to develop. The EU’s Emissions Trading System
established in 2005 is the largest carbon market in the world and covers 45% of the region’s
greenhouse gas emissions. More recently, the Carbon Border Adjustment Mechanism (CBAM)
entered its transitional phase on October 1, 2023. Its purpose is to equalize carbon prices
between domestic products and imports, ensuring that the EU’s environmental strategies are not
undermined by businesses moving to nations with weaker environmental guidelines or substituting
EU products with those that have higher carbon footprints. This signifies an industrial shift towards
more sustainable and cleaner production; however, EU businesses have expressed concern over
the mechanism’s impact on global supply chains as it may increase trading, manufacturing, and
administrative costs. Non-EU producers will also find it more expensive to export to the EU, making
them less competitive in the EU market.

Carbon markets are a forum in which countries and companies As decarbonization gains increased importance on national agendas, carbon markets may
can purchase and sell carbon emission allowances. They operate develop by expanding into new regions and widen their sector coverage to transportation and
based on cap-and-trade systems, and entities that emit less than agriculture, rather than solely power. Higher carbon prices can incentivize decarbonization, and
their allotted quota can sell their excess allowances to entities that markets can integrate more nature-based solutions into their functionality. For example, an area
exceed theirs. They are useful for decarbonization efforts because for future development of Saudi Arabia’s Carbon Market may be by linking it with the Kingdom’s
at scale they can prevent an overall increase in greenhouse gas afforestation initiatives under Saudi Vision 2030 and the Saudi Green Initiative. This could allow
emissions and economically incentivize companies to reduce their for the creation of carbon credits that can be purchased by companies to offset their carbon
emissions. emissions, maintaining Saudi Arabia’s economic growth. This would particularly help oil and gas
companies sustain their production and exports.
Saudi Arabia is exploring the potential applications of carbon
markets in its efforts to achieve sustainable economic growth.
In 2022, the PIF and Saudi Stock Exchange Tadawul established
the Regional Voluntary Carbon Market Company (RVCMC) in
Riyadh to create carbon offsets and credits in the MENA region.22
It plans to become one of the world’s largest carbon markets by
2030 to help businesses and industries in the region achieve their
transition to net-zero and support a low-carbon global economy.

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Keyfindings Keyfindings

6
In the realm of corporate transparency, Environmental, Social, and Publicly listed companies are now obligated to publish comprehensive non-financial ESG reports,
The status of Governance (ESG) reporting has emerged as a beacon, shedding fostering a culture of transparency and accountability.

ESG reporting light on a company’s commitment to sustainable practices. This

In a bold stride toward progress, the CMA introduced the Corporate Governance Code in 2023,
in the Kingdom
disclosure not only serves investors and customers but also fuels the
setting robust standards for board directors, disclosure requirements, and shareholder rights. This
global drive toward decarbonization. Saudi Arabia, recognizing
multifaceted approach not only attracts foreign investment but also safeguards the interests of
the pivotal role of ESG reporting, is championing this cause with
investors, creating a resilient financial ecosystem.
strategic initiatives and regulatory mandates.

In the landscape of ESG reporting, Saudi Arabia outshines its GCC counterparts, spearheading
The Tadawul, Saudi Arabia’s stock exchange, took a groundbreaking
initiatives that echo its commitment to sustainability. As the Kingdom’s capital markets witness
step in 2021 by unveiling mandatory sustainability disclosure
exponential growth—18 companies listed in 2022 with an additional 24 expected by the end of
guidelines for listed companies. This move aimed to propel ESG
2023—the impetus for enhanced sustainability reporting intensifies, fueled by mandatory ESG
reporting within the domestic market, urging companies to elevate
reporting requirements. Despite these strides, challenges persist, particularly in the absence of
their non-financial performance. Aligned with the United Nations
standardized regional and international ESG frameworks. To bridge this gap, PwC’s 2023 Middle
Sustainable Stock Exchanges model, these guidelines act as a
East ESG Report highlights the need for global collaboration. With COP28 in Dubai this November,
catalyst for heightened ESG awareness.
a platform for business and political leaders to forge standardized ESG reporting frameworks may
The Kingdom’s Capital Market Authority (CMA) complemented emerge, dismantling barriers and propelling the Kingdom and the world toward a sustainable
this effort by implementing corporate governance regulations, future.
addressing critical ESG issues such as conflicts of interest, board
responsibilities, internal audits, and social responsibility initiatives.

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Keyfindings Keyfindings

7
As Saudi Arabia charts its course toward a decarbonized economy, maintaining the relevance of hydrocarbons in the global energy landscape while mitigating their
What can its diverse businesses are compelled to amplify their commitment to environmental impact.

Saudi and sustainability, essential for securing talent, customers, and financial
However, amidst these clear pathways to net-zero, challenges loom large. The lack of standardized
global
backing. The journey to net-zero not only aligns with Saudi Arabia’s
international ESG reporting, limited technology for carbon emissions measurement, and the
ambitions but also promises substantial benefits on a global
businesses do scale, positioning early adopters at the forefront of a competitive
scarcity of affordable green finance create obstacles in the global energy transition. Governments’
data localization policies impede the seamless cross-border exchange of crucial emission data.
to transition to advantage.
Despite their immense potential, many of these technologies remain in developmental stages,

net-zero? Swift transitions to net-zero can yield financial backing and garner underscoring the need for collaborative efforts to propel them into mainstream adoption. As Saudi
a larger share of the environmentally-conscious consumer base. businesses navigate this complex landscape, the imperative is not just transition but leadership in
Beyond immediate advantages, long-term cost savings beckon as crafting a sustainable future.
companies sidestep potential carbon taxes and penalties, ensuring
resilience in the face of evolving regulatory landscapes and
securing a spot in sustainable supply chains. Net-zero commitments
also cultivate positive investor relations, especially resonating with
environmentally conscious shareholders.

For both Saudi and global businesses, embracing net-zero

necessitates proactive initiatives. Adaptable to evolving ESG
reporting standards, companies ensure accurate communication
of ESG information, empowering them to formulate informed
investment strategies in alignment with prospective investors.
This adaptability also aids in identifying and rectifying poor ESG
performers within intricate supply chains.

Technological integration stands as the cornerstone for this

transition, encompassing investments in new infrastructure and
energy-efficient equipment. Initiatives span from the utilization
of renewable energy to power facilities to the implementation
of digitalization for heightened operational efficiency. Additive
manufacturing emerges as a transformative force, streamlining
supply chains and curbing carbon emissions related to the
transportation of essential components. The amalgamation of
IoT-driven energy monitoring and AI facilitates real-time data
analysis, ensuring ESG adherence and prompt decision-making on
carbon credit purchases. Automation dovetails with AI, expediting
the execution of eco-friendly decisions across production and
transportation. In the oil sector, the imperative lies in adopting
Carbon Capture, Utilization, and Storage (CCUS) technologies,

21 22
Keyfindings Keyfindings

8 The Future of
Saudi Arabia’s
Environmental
Saudi Arabia’s ambitious climate targets demand an expansion of
its environmental sustainability strategy. Despite various initiatives
in the planning and initiation phases, such as developing a carbon
market, scaling up green finance, and enhancing domestic energy
COP28 and Saudi
Arabia’s rote
In the reconfiguration of its oil and gas sector, Saudi Arabia aims to
showcase that CCUS, hydrogen, green finance, and afforestation
can offset the environmental impacts of continuous oil production.
This strategic move aligns the Kingdom with global trends toward
efficiency, the Kingdom now faces the crucial task of implementing achieving net-zero while safeguarding the significance of its oil
Sustainability these policy changes to meet its climate goals. While keen on sector. Recognizing the oil sector’s crucial role in international
Strategy sustaining oil production and exports to avoid stranded assets, Saudi energy security and its dominance in Saudi Arabia’s international
Arabia plans to collaborate with international companies to procure trade, the Kingdom advocates for a strategic revamp of the
alternative hydrogen fuels and integrate CCUS technologies in industry rather than a complete overhaul, presenting it as the most
oil production processes, particularly in sectors heavily reliant on pragmatic choice.
hydrocarbon-based fuels.
As COP28 approaches, Saudi Arabia plans to leverage its expertise
and position as one of the world’s largest oil producers. The goal is
to assert that achieving net-zero is possible while maintaining oil
production and export levels. This position was well demonstrated
during the gathering of three energy ministers from Saudi Arabia,
the UAE, and Iraq on October 8 in Riyadh during Middle East Climate
Week, where they expressed that COP28 will be more inclusive of
the oil and gas industry and promote discussion regarding its role
in decarbonization initiatives.26 Saudi Arabia will also likely use
COP28 to offer solutions to other energy producers who face similar
challenges in diversifying away from oil.

Implementation Challenge Collaboration for Sustainable

Energy Transition

23 24
CASE STUDY
Case Study Case Study

KAFD’s commitment to sustainable solutions and combating climate change. Recently, the district
signed an agreement with the Japanese conglomerate, Sumitomo, to implement their eco-friendly
coating solutions in KAFD, which will reduce the cooling load and costs of air conditioning, reduce
the surface temperature and reflect infrared radiation, as well as mitigate the heat island effect.

KAFD: A commitment Today, KAFD’s buildings are notably 10% to 15% more energy-efficient than conventional structures.

to the environment and The district is also exploring water recycling opportunities and integrating water-efficient products
and fittings that are set to reduce building water demand per capita by 20% and achieve 20-30%
sustainability greater water efficiency in KAFD buildings compared to conventional structures. According to the
UN-Habitat, as urbanization and population growth continue, it is expected that municipal solid
Urban growth puts cities under immense pressure
waste generation will double by 2025. In that context, KAFD introduced an automated waste
– socially, economically, and environmentally,
management system, a clean and environmentally friendly waste management system that uses
immensely contributing to urban sprawl, high energy
air to efficiently remove waste from buildings in the district.
consumption, increased water usage, infrastructure
bottlenecks, congestion, and resource-intensive
This essentially extends to KAFD’s mobility strategy, which prioritizes convenience and
lifestyles. With nearly 80% of the world’s population
environmental impact. Over 40 sky bridges and a monorail will connect the entire district, ensuring
projected to live in urban areas by 2050, cities are
that everything is within a 10-minute walk in a climate-controlled environment. From electric
becoming major contributors to global energy
scooters to a ridesharing mobility solution, KAFD city navigation solutions are cleaner, smarter, and
consumption and greenhouse gas emissions, often
more sustainable than traditional transportation.
accounting for 60-80% of energy use and 70% of
human-induced emissions. As a result, KAFD is the largest mixed-use business district globally to receive the prestigious
Leadership in Energy and Environmental Design (LEED) ND Stage 2 Platinum certification from the
Sustainability – it’s in everything KAFD does. The
U.S. Green Building Council, underlining KAFD’s dedication to environmentally friendly practices.
district takes Saudi Arabia’s challenging climate into
account, starting with the master plan’s initial design. Moreover, over 40 buildings in the district have achieved Silver and Gold LEED certifications,
KAFD’s central Wadi, designed to resemble the desert emphasizing KAFD’s relentless green efforts. All buildings incorporate advanced insulation and
valleys of the region, is a pedestrian zone connecting glazing techniques that optimize temperature control .
all areas of the district. Notably, it’s constructed 5.5
meters below street level, ensuring that the Wadi’s At the same time, KAFD is actively contributing to Saudi Arabia’s green initiatives by planting

temperature remains consistently 8-10 degrees lower numerous trees, shrubs, and ground-cover plants, creating lush green spaces. In 2022 alone, around

than the central Riyadh temperature. At a more passive 400 palm trees have been planted, 3,476 canopy trees, over 130,000 shrubs, and more than 220,000

level, the masterplan arranges buildings around an ground-cover plants. KAFD’s parks are adorned with over 4,000 sqm of lawns, aligning with Saudi

urban wadi, channeling winds and creating moments Arabia’s ambitious reforestation plans and broader environmental goals.

of shade and climate comfort within landscape

pockets and microclimates.

This is supplemented by continuous innovation in

city operations and maintenance that’s evident
in buildings designed with large, shaded areas,
courtyards, or using energy-efficient cooling systems
as well as the use of eco-friendly coating solutions to
help minimize heat flow. KAFD is exploring the use of
Solar Heat Reflective coatings on building surfaces and
roads enabling a lower-carbon lifestyle and reflecting

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CONCLUSION
CONCLUSION CONCLUSION

ECONOMIC DIVERSIFICATION IS HYDROGEN AS A KEY PLAYER RENEWABLE ENERGY PROJECTS

IMPERATIVE

With the decline in oil revenues expected due to global Recognizing the potential of hydrogen as an alternative The Kingdom’s investments in various renewable
decarbonization efforts, this report highlights the crucial fuel, this report explores Saudi Arabia’s efforts to projects, including solar and wind farms, demonstrate
role of economic diversification. Saudi Arabia needs become a major hydrogen supplier. Investments in a commitment to balancing sustained oil production.
to invest in renewable technologies, such as Carbon green and blue hydrogen production, particularly the Collaborations with international companies further
Capture Utilization & Storage (CCUS), and reconfigure Neom Green Hydrogen Company’s partnership for a position Saudi Arabia as a leader in green steel production
its oil and gas sector to contribute to the global energy massive green ammonia production facility, signify a and renewable energy.
transition. commitment to sustainable economic growth.

LEADERSHIP IN CLIMAT INITIATIVES AFFORESTATION FOR ENERGY EFFICIENCY INITIATIVES

ENVIRONMENTAL PRESERVATION

Saudi Arabia is positioned as a leader in climate-related Saudi Arabia’s afforestation efforts, including the This report applauds Saudi Arabia’s efforts to enhance
efforts within the Gulf region. Ambitious targets, such as ambitious goal of planting 50 billion trees, are energy efficiency, citing initiatives such as the Mostadam
becoming net-zero by 2060 and achieving 50% domestic acknowledged for their potential to sequester carbon, Building Rating System and the promotion of electric
energy supply through renewables by 2030, demonstrate combat desertification, and enhance biodiversity. vehicles. In addition, the strategic location of the Lucid
the Kingdom’s commitment. Initiatives like the Middle Group’s overseas production plant in Jeddah highlights
East Green Initiative (MGI) further emphasize Saudi the Kingdom’s efforts to contribute to international
Arabia’s role in steering the region towards environmental decarbonization.
sustainability.

CCUS MOMENTUM AND INNOVATION CARBON MARKETS AND ESG CHALLENGES AND OPPORTUNITIES
REPORTING

Why the This report highlights the momentum in CCUS Similarly, the exploration of carbon markets, While acknowledging the challenges such as the

Global Energy
development, showcasing Saudi Aramco’s leadership exemplified by the creation of The Regional Voluntary absence of international ESG reporting standardization
in implementing CCUS technologies. Innovative Carbon Market Company, and the Kingdom’s efforts and technological limitations, this report encourages
applications, such as using stored carbon for plastic in ESG reporting indicate Saudi Arabia’s proactive businesses to seize the opportunities presented by the

Transition is production, demonstrate the potential of CCUS in

reducing carbon emissions associated with the oil and
stance in aligning with global standards for sustainable
practices.
global energy transition. Early adoption, innovation,
and adherence to evolving guidelines can provide
gas industry. a competitive advantage and ensure long-term

Important sustainability.

GREEN FINANCE AS A CATALYST ROLE IN COP28

The KAFD Dialogue underscored
the critical and urgent need for
Saudi Arabia to address the impact This report emphasizes the importance of green As COP28 approaches, this report anticipates Saudi
finance in funding Saudi Arabia’s energy transition. Arabia leveraging its expertise in oil production to
of climate change on its habitat and
The oversubscription of PIF’s green bonds demonstrates advocate for a strategic reconfiguration of the oil and
economic stability. the global interest and confidence in the Kingdom’s gas industry. The Kingdom aims to demonstrate that net-
commitment to sustainable investments. zero can be achieved while maintaining oil production
and will likely offer solutions to other energy producers
facing similar challenges. This report concludes with
optimism about Saudi Arabia’s potential to play a
pivotal role in shaping the global energy landscape.

31 32
RECOMMENDATIONS
RECOMMENDATIONS RECOMMENDATIONS

PROMOTE HYDROGEN PRODUCTION ENHANCE ENERGY EFFICIENCY ACCELERATE ELECTRIC VEHICLE (EV)
ADOPTION

Further research and investment in both green and Implement and enforce energy efficiency standards, Invest in EV infrastructure and promote the adoption of
blue hydrogen production can contribute to the energy particularly in the building sector. Continue initiatives electric vehicles to reduce dependence on fossil fuels in
transition. Green hydrogen, produced through electrolysis like the Mostadam Building Rating System to the transportation sector. Continue partnerships with
with renewable energy, should be explored given Saudi encourage green construction and sustainable international companies to advance EV technology.
Arabia’s vast areas of flat, sun-exposed land. practices.

ENCOURAGE SUSTAINABLE FINANCE EXPLORE GREEN FINANCE DEVELOP A CARBON MARKET

MECHANISMS

Strengthen regulations and financing programs to Continue exploring and expanding green finance Actively participate in the development of a regional
develop a robust domestic sustainable finance market. mechanisms to fund sustainable projects. Companies, and global carbon market. Saudi Arabia can leverage its
Saudi Arabian companies should actively engage in ESG especially in the energy sector, should consider issuing carbon market initiatives, such as the Regional Voluntary
reporting to attract green investments. sustainable bonds to attract green investments. Carbon Market Company, to support businesses in
transitioning to net-zero.

INVEST IN RENEWABLE SUPPORT CIRCULAR CARBON PROMOTE STANDARDIZED ESG ENGAGE IN COP28 DISCUSSIONS
TECHNOLOGIES ECONOMY INITIATIVES REPORTING

Given the potential decline in oil revenues, Saudi Continue research and development in circular carbon Advocate for standardized ESG reporting at global Use the opportunity of COP28 to showcase Saudi
Arabia should accelerate investments in renewable economy approaches, such as SABIC’s efforts to use forums like COP28 to provide clarity and consistency Arabia’s commitment to net-zero while maintaining its
energy sources, such as solar and wind power, to in assessing corporate sustainability performance. oil production. Advocate for inclusive discussions that
captured CO2 as a feedstock for chemical production,
diversify its energy mix and meet its target of 50% recognize the role of the oil and gas industry in the global
contributing to a more sustainable industrial sector.
domestic energy supply from renewables by 2030. energy transition.

PRIORITIZE CARBON CAPTURE AFFORESTATION AND BIODIVERSITY COLLABORATE WITH INTERNATIONAL BY IMPLEMENTING THESE
UTILIZATION & STORAGE (CCUS) CONSERVATION PARTNERS RECOMMENDATIONS, SAUDI
ARABIA CAN NAVIGATE THE
CHALLENGES POSED BY CLIMATE
Continue and expand efforts in the development and Strengthen efforts in afforestation to combat Collaborate with international companies, research
implementation of CCUS technologies, as they play a desertification, enhance biodiversity, and sequester institutions, and governments to share knowledge, CHANGE, CONTRIBUTE TO THE
crucial role in reducing carbon emissions from the oil carbon. Collaborate with international partners to technology, and best practices in achieving GLOBAL ENERGY TRANSITION, AND
and gas industry. support large-scale afforestation initiatives. climate goals. Foster partnerships that support the ALIGN WITH THE GOALS OF VISION
development and implementation of sustainable 2030 FOR SUSTAINABLE ECONOMIC
solutions.
GROWTH AND ENVIRONMENTAL
PROTECTION.

35 36
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