Saudi Arabia

The Kingdom of Saudi Arabia lacks a credible national green economy strategy, a fact which is hardly surprising given the countrys dependance on oil exports as the main driver of the economy (accounting for more than 40% of GDP). The Kingdoms Vision 2030 Strategy, the guiding document for the development over the next decade, scantly mentions climate change and the Climate Action Tracker ranks the countrys latest NDC submission as highly insufficient and on track for a Paris-incompatible 2-3 degrees of warming.

More recently, the government pledged to reach net zero carbon emissions by 2060, adopting the circular carbon economy approach detailed in a commissioned Circular Carbon Economy Guide produced by the Petroleum Studies and Research Centre. No official government plan or strategy for reaching this goal has been released, and while the announcement comes with a pledge to invest USD$180 billion in these efforts, finance is also being committed to the expansion and continued exploration of oil and gas.

Despite a recent loosening of the Saudi government`s draconian guardianship system which severely limits the legal rights of women in the country, inclusion of women and religious minorities in policymaking roles and corporate governance remain woefully inadequate. Saudi Arabia only granted women the right to vote in 2011 - with women able to become Shura Council members from 2015 onwards. The Arab Spring pro-reform movement heightened awareness of the need for gender-equality, but reforms are few, piecemeal and incremental. The Kingdoms first Voluntary National Review (2018) on progress of the SDGs in the country touts some improvements in gender inclusiveness including the launch of the National Observatory of Women's Participation in Development - a think tank that seeks to monitor Saudi women's participation in development at local and international levels. In addition, the country has taken some initial steps to foster inclusion of women in public governance positions, issuing a Royal Order that reserves 20% of the Shura Council's seats for women. However, the role of women according to the governments vision is primarily in the context of the family and remains subservient to men. In the framework of its Vision 2030, the government recently established the Family Council, which aims to promote and advance family stature and role of family in society advancement, along with maintaining a strong and cohesive family. Chaired by the Minister of Labor and Social Affairs, the Family Council has a board made up of 16 members, half of which are women - in this particular case.

No evidence of a national comprehensive strategy to support businesses implement the SDGs. The Kingdom's first Voluntary National Review published in 2018 mentions the establishmnet of a National Transformation Program (NTP) to help businesses incorporate sustainable developent concepts in their management practices, but offers few specific details and lacks clear linkages with the SDGs.

The Saudi government, however, offers several specific tools and resources aimed at businesses seeking to incorporate some dimensions of sustainability in their management practices. For instance, the King Abdullah City for Atomic and Renewable Energy enables public access to updated historical and geographical information and updated weather features, solar and wind energy sources for different regions in Saudi Arabia through an online Renewable Resources Atlas. The Ministry of Environment, Water and Agriculture provide an e-service for farmers to request organic products certification, as well as support from the ministry in the transition from brown to organic production.

No development of wealth accounting. The World Bank is providing limited technical assistance on Natural Capital Accounting (NCA) to the Kingdom as part of its advisory services support to the General Authority for Meteorology and Environmental Protection (GAMEP). Support so far has extended to a workshop introducing the concept of NCA, and training to help build the technical capacity of GAMEP staff. However, the development of natural capital accounts is not underway.

Saudi Arabia has not developed an integrated green finance strategy or plan at the national level, but there is a growing interest in integrating green finance within existing wealth funds. The Sovereign Wealth Fund of the Kingdom of Saudi Arabia, one of the largest in the world, established a Green Finance Framework with ESG criteria aspiring to support sustainability in its investment decisions. Yet the Kingdom remains a laggard in relation to its Arab peers (Algeria, Tunisia, Egypt, Morocco and Jordan) since it has not established any dedicated special fund to facilitate green investment or raise public awareness. However, the banks themselves have begun to take matters into their own hands, with the Union of Arab Banks calling for a new regulatory framework to encourage the Arab financial sector to actively contribute to financing sustainable development projects, and pledging to introduce several green products and shift its portfolio towards green banking. In Dec 2021, Saudi Arabias energy minister announced plans to invest 380 billion riyals (USD$100 billion) in renewable energy projects, though further details are outstanding.

The Saudi Arabian Ministry of Finance is developing a comprehensive review of the General Budget to support state officials to elaborate work plans and strategies to accelerate the achievement of a sustainable development pathway. However, there is no evidence that the review will consider the adoption of sustainability criteria when assessing fiscal or monetary policy, and the government appears set on maintaining its highly distortionary subsidies on fuel. The Green Central Banking Scorecard finds that the Saudi Central Bank has not adopted any green policies or initiatives to date, ranking it bottom among the G20 countries assessed.

The Saudi Arabia Monetary Authority through its Macroprudential Regulatory Framework monitors the countrys banking system and periodically conducts stress tests to measure its ability to withstand macroeconomic shocks. Tests are conducted on a a quarterly basis, but focus on financial risk and domestic banks are required to undertake capital and liquidity adequacy exercises. Climate-related indicators are not incorporated into the analysis a major shortcoming given the countrys financial dependency on a highly volatile oil market.

The Kingdom does not have a national carbon tax in place, lagging behind other Arab countries such as Egypt, Jordan, Morocco, Sudan and Tunisia which have already indicated to the World Bank that they plan to adopt carbon pricing in the near future. However, the Saudi government has recently announced plans to implement a voluntary exchange platform for carbon offsets and credits in the Middle East and North Africa region through its Public Investment Fund capitalising on carbon capture as a further investment opportunity, without placing any requirements on businesses to reduce their emissions.

At present, the Kingdom of Saudi Arabia lacks an integrated sectoral strategy, policy or guiding document to coordinate sustainability and climate related policies across its economy. The government has indicated an intention to green a limited number of sectors, though commitments are weak and insufficient to address the pressing challenges related to climate change. For instance, the Kingdoms Vision 2030 strategy document calls for significant investment in the renewable energy sector through the establishment of the National Renewable Energy Program (albeit with an objective of 50% electricity generated by renewables and 50% by natural gas) and the government has set up a national energy efficiency program to conserve and raise energy efficiency across the buildings, industry and transport sectors. Elsewhere, the 2017 National Environment Strategy sets out policies to enhance the sustainability of land, air quality and waste management, but targets are issue-based rather than sector-based so its unclear how individual economic sectors should address them. In general, the implementation of environmental policies is hindered by a lack of clarity/specificity of the regulations themselves alongside issues of multiple coordination bodies which has led to diminishing clarity and overlap of responsibilities.

The Kingdom of Saudi Arabia`s Vision 2030 strategy calls for implementation of a number of initiatives to support and scale up small and medium-sized enterprises (SMEs), which account for a disproportionately low percentage (~20%) of national economic output when compared with advanced economies (~70%). However, the strategy proposes traditional capacity building and financing initiatives to support SMEs, and these lack green and social components.

The Small and Medium Enterprises General Authority (Monsha'at) was established in 2016 with the aim of regulating, supporting, developing and sponsoring the SME sector - but it does not encourage the development of greener business models. In partnership with the London Stock Exchange Group, Monsha'at launched the Tomouh Elite program, promoting the development of fast-growing Saudi small businesses, and established a support center for startups.

Though not specifically targeted at small businesses, Saudi Arabia’s recently launched Mutajadeda program offers grants and low cost loans to companies interested in the development of environmentally friendly projects and investing in renewable energy.

There is currently no planning in place from the government of the Kingdom of Saudi Arabia to implement carbon budgeting on the national level. As detailed in its latest NDC, Saudi Arabias climate commitments reflect minimal to no action and are inconsistent with the Paris Agreement, setting a course for at least 2 to 3 degrees of warming.

Within the 2019 Vision 2030 strategy and National Renewable Energy Plan, the Saudi government announced a renewable energy target aiming to achieve 27.3 GW by 2023 and 57.8 GW by 2030. More recently, in Saudia Arabias latest NDC, states it aims to produce around 50% of the countrys electricity from renewable sources and 50% from natural gas by 2030. While the Climate Action Tracker estimates this could decrease emissions by roughly 100 MtCO2e in addition to current policies, they also note it supports substantial gas investment which goes against a Paris-compatible pathway.

Despite adopting weak renewable energy targets since 2013, progress in implementation has been minimal to non-existent with only about 0.4GW of renewable energy capacity installed as of 2020 (generating 0.1% of total electricity). Capitalising on the investment opportunity of renewables, the government recently announced its intention to spend USD$100 billion by 2030 on renewables though, again, details and a plan for proposed spending remain outstanding.

There is no evidence that the Kingdom of Saudi Arabia has a strategy or plan at the national level to promote jobs in green sectors or facilitate the greening of traditional jobs. Notably, both the Vision 2030 strategy and first Voluntary National Review to the UN High-Level Political Forum on the SDGs make no mention of environmental, green or sustainable jobs.

However, Saudi Arabias green jobs market is developing indirectly, through the state-owned oil giant Aramcos sustainable initiatives within the energy industry. As the countrys largest employer, its Flare Minimization and Thermal Cogeneration programmes provide energy efficiency gains and some greener employment opportunities. Similarly, Aramcos Carbon Capture and Storage programme and Upstream Development Centre is providing training, skills development and employment opportunities in new storage technology. There are also some green initiatives, such as Neom Future Sustainable City, the Red Sea Project, and Amaala resort which have the potential to create green jobs though its not an explicit component or aim of these projects.

Plans for improvements in Saudi Arabias social safety net are detailed in its Vision 2030 strategy. Yet, the initiatives and programs to aid the poor, particularly foreign-born workers, lag behind global best practices in this area. For example, non-Saudis have restricted ownership rights, and plans have only recently been announced (in the latest Voluntary National Review) to permit foreigners to own real estate in certain areas in the country. In general, practically no effort has been made to incorporate sustainability dimensions into social safety net programs.

There is a single initiative, the Citizens Account Programme, which provides cash payments for those most in need to help cover energy and water use costs. The programme was adopted as part of a pricing reform, raising the cost of energy in an attempt to incentivise a reduction in wasteful consumption, while increasing government revenue from industry. However, its uncertain as to whether the programme will have a net positive environmental benefit in terms of an overall reduction in energy use and emissions.

The Kingdom of Saudi Arabia generally lacks participatory or democratic mechanisms in its governance structures and the participation of women and religious minorities is severely restricted in the public policy sphere. However, recent, limited efforts to expand the participation of women in governmental structures are included in the countrys Vision 2030 strategy. Also the Kingdoms first voluntary national review of progress on implementation of the SDGs included some minor forms of participatory review. In addition, the government has marginally increased efforts to allow the private sector to input in to policymaking process for instance, by launching a "survey platform" to collect data or elicit suggestions for amendments to regulations and legislation from the private sector.

The Kingdom of Saudi Arabias social safety net, though generous in some respects (for example, the provision of fuel and food subsidies), often fails to cover the most vulnerable groups in the country, particularly foreign-born informal workers and unemployed women and youth. Despite recent plans to modernise the countrys social safety net programs, discussed in the Vision 2030 strategy document, there is no evidence of any innovative social protection schemes under development.

Saudi Arabia has a National Environment Strategy in place, though it does not set detailed, clear targets and its links to the SDGs are tenuous at best. The strategys own assessment of the current state of environmental protection in Saudi Arabia considers it to be weak and notes the lack of regulation and limited financial resources. While the strategy focuses on gains in institutional capacity, education, innovation and meteorology, there are a few initiatives related to wildlife conservation and vegetation cover that could have a direct, positive impact on the environment. They include an aim to combat desertification by rehabilitating around 60,000 hectares of unvegetated land, including within existing national parks, and planting around 12 million trees. The strategy mentions one initiative targeting the protection of the marine and coastal zone, which aims to improve environmental management practices by introducing an integrated system that monitors the use of coastal and marine areas and ensures environmental compliance.

The World Bank is providing limited technical assistance on Natural Capital Accounting (NCA) to the Kingdom as part of its advisory services support to the General Authority for Meteorology and Environmental Protection (GAMEP). Support so far has extended to a workshop introducing the concept of NCA, and training to help build the technical capacity of GAMEP staff. Despite a willingness to engage in discussions as part of international technical assistance, no initial steps towards developing natural capital accounts have been taken.

Although the World Bank has been providing technical assistance and capacity building regarding natural capital accounting for staff at the General Authority for Meteorology and Environmental Protection, there are no plans to establish a committee or any form of advisory body.

There has been some, very limited discussions of environmental fiscal reform for damaging subsidies. The Kingdom of Saudi Arabia has maintained a system of generous subsidies for fuel use for households and enterprises, distorting the internal energy market and incentivising one of the highest per capita energy usage rates in the world. In 2018, following a drop in oil prices, the government adopted an energy reform policy, raising the cost of gas and oil while maintaining a subsidy for the poorest households via its Citizens Accounts Programme.

While not tied to any reforms, the government has set aside some funding for nature conservation and tree-planting. In March 2021, Saudi Arabia launched a nature-based solution prorgamme, the Saudi Arabia Green Initiative, which aims to cut carbon emissions by 60% by 2030, plant 10 million trees and safeguard 30 percent of land and sea. The initiative will also partner with other Arab states on a Middle East Green Initiative to plant a further 40 billion trees the worlds largest reforestation programme and adopt clean fuel cooking solutions, benefitting more than 750 million people acros the Middle East. The total investment in these two initiatives is approximately 39 billion Saudi riyals (USD10.4 billion) and the Kingdom has said it intends to contribute to financing approximately 15% of it.