Growing Green

How encouraged are you that a country like Saudi Arabia has committed to a major renewable energy initiative?

This is of global significance and is clearly important for the country and its diversified economy of the future. It is also extremely important globally. The US and Saudi Arabia clearly have economies that are in different stages of evolution; however, we should not lose sight of the fact that both are energy powerhouses. The US is often viewed through the lens of continuing large oil imports, and that is true; we still import between 7 and 8 million barrels of oil per day. The reality is that we are but an enormous oil producer and an enormous gas producer as well as coal, uranium, and renewables. The transformations may look different in both countries but they are absolutely central for how the world will follow in this transformation. What the country is doing is just right in terms of preparing for the future and preparing the human resources that will be required. It is a great global stimulus as well. On the human capital side, I was involved in discussions with KACST and other institutions in Saudi Arabia before it was established. It is hard to imagine any other place with such a degree of progress that has been made in such a short amount of time.

Is Saudi Arabia uniquely positioned to generate a significant portion of its energy from renewables?

It is not a fair characterization to say that advancing renewables in the US has been difficult. Many states have adopted portfolio standards. In addition to the US, federally it is back and forth though we have tax incentives for wind and solar. We need to look at another factor that contributes to a great deal of the discussion, which is the fact that demand is not growing. When demand is not growing and we require the introduction of a certain amount of new generation, we are going directly against incumbent providers. In Saudi Arabia that factor will not be there. Demand is growing here and that is a different environment for introducing new technologies. Second, the government appears united in wanting to pursue this direction. There are many factors, including its commitments to Paris and other goals. Here there is also the feature that it is almost the anti-incumbency. The country would like to displace its current product for the export market. When all is said and done, it is the demand side in a certain sense that is the major difference in the two countries.

Is it possible for Saudi Arabia to be in a position to generate a higher percentage of its overall energy from renewables than any country in the region?

I do not know about the highest percentage. Germany is a different economy that has enormous wind penetration. There is also Spain, Portugal, and Denmark. There are many European countries in particular in that regard. China has aggressive targets as well. Here it is the issue of a major producing country taking this tack of dramatically changing the energy mix. That is not being done in a vacuum. The Kingdom sees this as an opportunity for the issue to build up a different domestic economy. The US and Saudi Arabia are different economies and yet we both have a jobs issue. In Saudi Arabia’s case, it is a question of a growing young demographic that has to be educated and employed. No matter what, hydrocarbon demand growth will be challenged in a low carbon world, and in a world of demand management, of high efficiency vehicles, some electrification of vehicles, high efficiency construction, and others. It fits a dual purpose, including this idea of an economy that looks different in the future because this economy does not look like it will be a sustainable model for many decades.