As the world’s number one exporter of crude oil, Saudi Arabia has a lot riding on decarbonization. 

Oil exports fund about 75% of Saudi Arabia’s government budget, providing the generous social welfare benefits that maintain public support for the Saudi royal family.  

Depending on the world’s approach to climate action, a future with less oil revenue could destabilize not just the Saudi economy, but the monarchy itself. 

From that perspective, the Saudi pledge in 2021 to reach “net zero” greenhouse gas emissions by 2060 came as a surprise.  

Were the Saudis joining a global climate regime that could undermine its own wellbeing? No. The kingdom has strong economic rationales — and big advantages — in decarbonizing. Still, the Saudi approach is a contradictory one. As it vows to decarbonize at home, Saudi actions suggest the kingdom opposes similar pursuits by the rest of the world. 

While the kingdom has yet to release an official plan to achieve its net zero goals, a serious net zero effort would give the country useful benefits to its reputation on the world stage. And it would help the Saudis shape the way the world decarbonizes, with a view to keeping oil and natural gas in the mix long term. 

The task is big. Saudi is a disproportionately large emitter relative to its population. The kingdom exhaled more than 500 million metric tons of CO2 in 2020, just behind Canada and ahead of Brazil. On a per capita basis, Saudi Arabia emits more CO2 than even the United States — 14 metric tons a year versus 13 in the U.S. — on average incomes just 75% as large. European Union per capita emissions are just a third of the kingdom’s.   

Despite Saudi Arabia’s daunting carbon load, I find there’s a convincing case for cleaning up.  

The net zero goal provides convenient political cover for technocrats who have long sought to overturn subsidies that encourage domestic demand for oil.  

Thanks in part to the subsidies, Saudi oil sells for just $6 per barrel at home, despite fetching $80 elsewhere. That allows Saudi gasoline to sell for $2.30/gallon and diesel for $0.76/gallon. Prices for electricity (which comes from oil and natural gas) start under 5 U.S. cents/kilowatt-hour. That’s a third of the U.S. average cost and just 15% of Britain’s average costs. In peak months, more than a million barrels of oil are burned per day in the kingdom to generate power.  

Raising fuel and electricity prices to world levels would be a big moneymaker in two ways. Saudi Aramco, the state-owned oil and natural gas company, could divert oil from the domestic economy toward exports, as higher prices discourage Saudi demand. And remaining sales at home would be more profitable. 

The desert kingdom has enormous solar energy resources, with copious amounts of vacant land just outside its cities. Such geography is perfect for utility-scale solar. As Saudi cities become powered increasingly by cheap solar, they will reduce emissions and rely less on oil and gas, which can be exported instead.  

As the power grid (the source of 40% of Saudi emissions) is decarbonized, a shift to electric vehicles can help clean up the transport sector (19% of Saudi emissions). EVs are a technology Saudi Arabia appears to embrace at home more than abroad, due to the reductions in global oil demand. Two electric vehicle companies, Lucid and Hyundai, have already pledged to build battery-powered cars in-kingdom.  

Industrial emissions, including from the oil sector, make up the remaining 40% of Saudi emissions. Here, too, the Saudis appear advantaged in two thus far uneconomic decarbonization options: carbon capture and storage (CCS) and hydrogen.  

The case for CCS is particularly strong in Saudi Arabia, although only one small capture plant is currently operating. The kingdom’s petrochemical plants, refineries, power and desalination plants are clustered in three main areas, each of which happen to be located atop excellent geological formations for subterranean storage. These characteristics reduce the cost of capturing and transporting CO2.  

Carbon capture also synergizes with the kingdom’s focus on hydrogen. Making hydrogen from natural gas involves splitting methane molecules into hydrogen and CO2 that can be stored using the same underground infrastructure.  

Most importantly, hydrogen and CCS support the kingdom’s main goal: to retain fossil fuels in the global energy mix. If the Saudis can demonstrate these methods are cost-effective, others may adopt them more readily. The kingdom could even sell carbon storage or offsets to governments with fewer such attributes.  

The credibility of the Saudi net zero commitment is still an open question, however. Saudi Arabia has made climate-friendly promises in the past. Few have been met. As of mid-2023, Saudi Arabia reported just 826 megawatts of wind and solar generating capacity, just over 1% of its latest goal of 58.7 gigawatts of renewables by 2030. 

Saudi Arabia’s low prioritization of renewables matches the leadership’s skepticism about the energy transition overall. Regular statements underscore the view that fossil fuels must remain a key part of the future energy mix and oppose a global transition away from the oil that underpins the Saudi economy.  

And, of course, decarbonizing Saudi Arabia would not include any reduction in oil exports, since combustion would occur outside the kingdom.

The Saudi path toward net zero at home looks simpler than the plan for many other countries. Whether the kingdom follows through remains to be seen.