‘We’re serious about net zero’ says Saudi’s PIF chief

• PIF establishing new hydrogen company
• Fund plans to develop 70 percent of renewable energy targets
• Kingdom to phase out almost all liquids

Saudi Arabia’s Public Investment Fund (PIF) is committed to achieving its goal of developing 70 percent of the kingdom’s renewable energy by the end of the decade, PIF’s governor confirmed today.

Despite it being a record week for Aramco, during which the state-owned oil giant reported an almost 82 percent rise in first-quarter net profits, PIF governor and Aramco chairman Yasir Al-Rumayyan was more interested talking about the energy transition already underway at an ESG-themed conference held in London.  

“Today, the PIF is developing its ESG strategy as part of its long-term plan,” Al-Rumayyan said.

“Saudi has issued a royal decree that the PIF will be responsible for developing 70 percent of the kingdom’s renewable energy in time for Vision 2030. We’ve acquired a big percentage stake in ACWA Power whose main function now is to reach this 70 percent target for the PIF.

“We have also invested in many other companies, for example Lucid Motors, as part of our long-term strategy.”

• Saudi Arabia Vision 2030

US-based Lucid Motors signed agreements on Wednesday with a raft of Saudi governmental institutions to build 155,000 zero-emission electric vehicles in the kingdom. The deals are estimated to provide financing and incentives to Lucid worth up to $3.4 billion in total over the next 15 years. 

“We looked at ESG in relation to Saudi’s Vision 2030… and have already announced the kingdom will reach net zero by 2060,” said Al-Rumayyan, adding that the kingdom would launch a national programme to increase its share of renewable energy to 50 percent by 2030.

The governor said the kingdom will phase out almost all liquids so it can focus on gas and renewable energy. 

“Through the PIF we have launched seven solar and wind projects to power more than 6,000 households so we’re moving – I wouldn’t say full-throttle – but we’re making progress,” he said. “The targets are very ambitious but I think we’re taking the right steps.” 

Al-Rumayyan also referenced how the Saudi stock exchange, the Tadawul, has introduced guidelines to improve the ESG performance of public companies. 

Launched in November last year, the guidelines were developed in line with the UN SSE model guidance and will be continually updated to account for changes in the ESG landscape to ensure they remain relevant. 

PIF has also recently introduced the MENA regional voluntary carbon market which is “very important”, according to Al-Rumayyan. 

“If you look at Aramco and Sabic, they’re doing a lot in the carbon capture space and they have accrued a lot of carbon credits.,” he said. “I think the fact the market is located in Saudi Arabia is itself a statement for the change underway and for the new reality.” 

Al-Rumayyan is confident that the introduction of the market will incentivise companies to act. “We believe that if it hits them on their P&L, they’ll do more to reduce their emissions,” he observed. “If companies aren’t doing anything to improve their emissions then they’ll have to buy some of these carbon credits.” 

The PIF governor also highlighted the sovereign wealth fund’s efforts to advance integrated green finance, noting how it has issued green bonds and invested in existing wholesale green projects.

For example, green finance is being used to finance flagship projects NEOM and Amaala on the Red Sea, with all of their power to be derived from green energy. 

In July 2020, ACWA Power and NEOM, in conjunction with Air Products, signed a $5 billion deal for a world-scale green hydrogen-based ammonia production facility to be powered by renewable energy. 

The 1.2 million tonne per year facility – the largest in the world – will be located in NEOM.  

Al-Rumayyan also said that the PIF is in the process of establishing a new hydrogen company that will act as a mediator between many of the SWF’s initiatives, while also noting that “Aramco is looking to undertake carbon sequestration.” 

Hosted by the Future Investment Initiative (FII) Institute, the “Inclusive ESG in Emerging Markets” regional summit is part of a series of events hosted by the Foundation, which will culminate in the sixth edition of the annual FII Forum in Riyadh in October this year.