There’s no quick fix on energy. At PIF, we’re just getting on with it

Creative Commons

What’s taking so long? The consensus is that the renewable energy revolution is surprisingly slow in coming, at a time when people expect quick solutions.

The major energy transitions that have taken place since the 17^th century – from wood to coal to hydrocarbons – have taken on average 50 to 75 years.

It may seem counterintuitive in this fast-paced era, but it takes time for change to take hold sustainably, factoring in every stage from production to distribution, infrastructure, technology and regulations, along with the social shifts that bring widespread penetration. 

Given the maturing of renewables technology and the strides towards a low-carbon economy – not to mention the sheer velocity of change – you might think we’re on the brink of a significant transformation. 

But where we are makes sense if we see the global energy transition not as one linear progression but multiple paths running at different speeds, varying by national priorities and other factors, on the way to viability. 

• UK and Saudi Arabia plant seed for closer ties on green finance
• New PIF company to hold world’s largest-ever carbon credit auction
• Korea’s Hyundai plans new assembly plant in Saudi Arabia

Electric vehicles (EVs) are a good example of these sometimes unpredictable dynamics. 

Although they are a future mobility icon, a prototype electric vehicle was introduced in 1832, pre-dating the internal combustion engine by several decades.  

By the late 19th century, EVs had become prized for their quieter, cleaner ride and easier operation, before being set back in the early 20th century by better roads (which required a longer range), cheaper petrol and the mass-produced Ford Model-T, which was about 60 percent cheaper than an electric car. 

In 2021, the market share for EVs was about 9 percent – a quarter of the 37 percent recorded in the early 1900s. However, sales of light-duty electric or hybrid cars are expected to rise significantly in the coming years thanks to government policies and incentives, as well as cheaper batteries.

• 

• 

Saudi Arabia’s path to renewables

The world is coming full circle in other ways, as the sun, water and wind – resources that met the world’s needs for centuries – are scaled for greater capacity, efficiency, reliability and affordability. 

It may be surprising that Saudi Arabia, a nation built on oil and gas, is determined to be a green leader, but our focus on renewables make sense.

Vision 2030, the nation’s blueprint for economic reform, hinges on diversifying from fossil fuels into strategic sectors and future industries that can create prosperity for generations. This is essential when more than half of Saudi’s citizens are under the age of 25. 

With electricity consumption on track to rise three-fold, utilities and renewables are a priority sector for PIF, the sovereign wealth fund that serves as an engine driving Saudi Arabia’s diversification.

There are factors justifying our high targets. 

The kingdom typically has 12 hours of solar irradiation and low levels of cloud cover each day, so it is a natural for solar. PIF has launched the Sudair Solar Power Project as part of the fund’s commitment to develop 70 percent of the nation’s renewable energy target by the decade’s end. One of the world’s largest solar plants at 1.5 gigawatts, Sudair can power 185,000 homes and offset up to 2.6 million tons of emissions per year. 

PIF is also adopting low-carbon hydrogen. The fund’s Neom giga-project, powered 100 percent by renewable energy, is in northwest Saudi Arabia, where ample wind and solar resources can support the generation and export of renewable energy and meet global climate targets. 

In a joint venture, Neom, Air Products and ACWA Power recently launched the Neom Green Hydrogen project to build the world’s largest green hydrogen plant. 

It will further produce 1.2 million tonnes of green ammonia each year as a fuel source for electricity, establishing Saudi Arabia as a hub for green hydrogen technology and production, and the world’s top hydrogen exporter. 

Neom has also established a hydrogen innovation and development centre, to devise solutions and business models in areas such as green fuel production, utilisation, transportation and commercialisation. 

PIF’s holistic focus also includes partnering with leading Saudi businesses to develop the region’s first market for carbon offsets and credits, supporting a technologically advanced EV company and other investment aligned with climate action.

And, yes, oil and gas factor into the plan as technology continues to lighten their footprint and enhance their performance.

These efforts align with the work of Saudi Arabia’s ministries of energy and industry and mineral resources. 

Population growth and sustainability

The world’s population is expected to reach almost 10 billion by 2050. This growth adds urgency to the sustainable energy transition, given that energy is needed to power economies and multiply jobs. 

Realistically, we may not all navigate energy’s complexities at the same pace, but we can all commit to aiding the transition. 

Adoptive technology can bring smaller-based renewables to maturity, resolving issues such as intermittencies. It can speed the circular carbon economy through innovation that captures and reuses carbon in useful products. After all, every viable energy source will be needed in the future mix.

Efficiency gains must be prioritised along with energy growth. 

Global investors can be invited to apply environment, social and governance criteria to help ensure investments benefit humanity. Green financing tied to environmental metrics can attract that essential investment. Partnerships are another important avenue, as the green transition must be a united effort. 

The global population that does not have access to electricity is now below 1 billion people, but there is much further to go. Otherwise, the climate-change fight will fail because of uneven access to the benefits that only energy can deliver. 

As Saudi Arabia commits to net zero by 2060, PIF is excited to contribute to an ample, reliable, affordable and diverse supply; results-oriented environmental action; and a better quality of life for people in Saudi Arabia and across the world.  

While paths and speeds for getting to green may vary, the point is to ensure we all end up there together. 

Mohammed Albalaihed is head of energy and utilities at PIF, based in Riyadh