Energy Minister Addresses Future Investment Initiative 2019

Saudi Press Agency

Wednesday 1441/3/2 - 2019/10/30

Riyadh, October 30, 2019, SPA -- Prince Abdulaziz bin Salman bin Abdulaziz, Minister of Energy, delivered today the following speech at the Future Investment Initiative 2019 being hosted by the Public Investment Fund in Riyadh:

"Circular Carbon Economy for Sustainable Growth"

Your Royal Highnesses, your Excellencies, Ladies and Gentlemen:

Let me begin by welcoming you all to Saudi Arabia, and express how much we appreciate you attending the Future Investment Initiative. We look forward to discussing the transformational journey taking place in the Kingdom and to share ideas on sustainability of economic growth. I believe this has positive implications for the whole world.

It is a pleasure to share the stage with such esteemed speakers and friends of Saudi Arabia.

Ladies and gentlemen,

Today, we are faced with a challenge of targeting growth and development in a sustainable way. Over the past 100 years, reliable and affordable energy – mostly in the form of hydrocarbons – contributed to lifting billions out of poverty.

- But how sustainable is the current economic model?

-Can it achieve what we aspire to?

-And at what cost?

-The question remains, how do we continue to grow and develop in a sustainable way?

Saudi Arabia is one of the global energy leaders and produces over 10 million barrels per day and has around 267 billion barrels of reserves. It is one of the top 10 gas producers with over 9,000 billion cubic meters of proven gas reserves

Considering our pivotal role, it is our responsibility to find solutions through innovation and collaboration to create a sustainable framework for growth. A holistic and pragmatic approach is needed to achieve more sustainability in the economic system. To this end, the Kingdom of Saudi Arabia offers the concept of a Circular Carbon Economy.

The Circular Carbon Economy is a framework where emissions of carbon from all sectors, and all types of greenhouse gases, are addressed through the 4Rs : reduce, reuse, recycle and remove. Such a closed-loop system, much like what happens in nature, will help restore the balance of the carbon cycle

It offers a new way of addressing the challenges of sustainable development that implicitly values all options and encourages all efforts to mitigate carbon accumulation in the atmosphere while also facilitating global economic growth.

Adoption of this holistic model is vital because, as important as renewables are, and as much progress as they have made in recent years, most analyses suggests the world cannot achieve a balance between sources and sinks through renewables and reduction alone. Much of the world's energy is consumed in sectors that are hard to decarbonize, such as heat, industrial processes and transport. So achieving a carbon balance will inevitably include fossil fuels, however their carbon emissions must be managed.

This concept is proven and not new for Saudi Arabia. Historically the Kingdom used to flare associated gases coming from oil production, such as methane. But in 1980, we embarked on a major initiative to recover those associated gases and use them to produce a variety of chemicals. This has enabled the petrochemical industry in Saudi Arabia to create thousands of jobs, industrial cities and to contribute to GDP growth . It also fueled our power plants and desalination facilities. We estimate that more than 2.8 gigatons of CO2 equivalent have been removed from the atmosphere since then. Therefore, this has enabled a future economic circularity of greenhouse gases that will create value for carbon while meeting global sustainability goals.

Ladies and gentlemen,

For us, transformation begins from within. The Kingdom is putting its resources behind the Circular Carbon Economy by investing heavily in new energy and efficiency solutions for the world. In fact, Saudi Arabia is reforming its entire energy ecosystem. This includes the development of several programs such as Power System Integration which will work on restructuring the sector to make it more efficient through several initiatives such as displacement of crude and other liquids in utilities and utilization of smart meters; the diversification of the Kingdom's energy mix, establishment of critical institutions; and increased focus on research and development and technology deployment.

We have also been focused on improving energy efficiency in industry, buildings and transportation, which make up 94% of the Kingdom's energy use. Impressive results have been achieved

Since the establishment of the Saudi Energy Efficiency Program, the Kingdom has reduced energy intensity by 8%

During a similar period, energy intensity in the petrochemicals sector was reduced by nearly 3% and in the steel industry by almost 2%.

The average fuel economy of passenger vehicles improved by 11%, while the efficiency of air conditioning units improved by 57%.

The Government decided to lead by example by launching a National Energy Service Company, which is currently overseeing the retrofit of thousands of its buildings as well as over one million street lights through working with private Energy Services Companies.

Since the establishment of the Super Energy Service Company back in 2017, the number of Energy Services Companies grew tenfold from four businesses to more than forty companies providing energy efficiency solutions.

The energy efficiency program has recently been expanded to include the supply side of electricity and water desalination in addition to feedstock use in industrial processes.

The Kingdom has taken bold steps in energy price reforms; starting in 2016 by changing the prices for all key energy products. We have developed a price reform plan that will rationalize consumption while ensuring the sustainability of economic growth.

We believe that these efforts combined will reduce Saudi Arabia's local demand by as much as 2 million barrels per day of oil equivalent by 2030 compared to previous projections.

The Kingdom currently operates the largest carbon capture and utilization plant in the world, turning half a million tons of CO2 annually into products such as fertilizers and methanol. We also operate one of the regions most advanced CO2 enhanced oil recovery plants that captures and stores 800,000 tons of carbon dioxide annually. Furthermore, we have a plan to deploy additional carbon capture, utilization and storage infrastructure Kingdom-wide.

We believe that nature based solutions will play an important role in removing carbon as part of the Circular Carbon Economy. Recognizing this, we are taking actions to achieve these goals, including expanding our mangrove forests and plantations, seagrass meadows and coral reefs in both the Red Sea and Arabian Gulf.

The Circular Carbon Economy is a concept that is embedded in the natural order of the world; with the 4 R's, it becomes less challenging to achieve growth and development while realizing sustainability.

We recognize that the achievement of the Circular Carbon Economy is a grand challenge - but this challenge will ultimately create unprecedented opportunities. No single country or private sector entity can do it alone.

As Saudi Arabia hosts the G20 next year, one of our main focuses will be on energy access and development as well as on sustainable and integrated cleaner energy systems. This will provide a backbone for delivering a Circular Carbon Economy and will lead to achieving the global development and climate goals.

As I like to say, life is based on carbon so obviously carbon is not the enemy. With the Circular Carbon Economy, carbon will be the opportunity.

This is our call to action and we look forward to your collaboration and investment in all sectors that support the Circular Carbon Economy as well as our Vision 2030 goals.

I thank you for your attention and I look forward to an engaging panel discussion.

--SPA
14:19 LOCAL TIME 11:19 GMT
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