The Ministry of Finance in Saudi Arabia recently announced the issuance of a Green Financing Framework as part of the Kingdom’s endeavour to achieve its sustainable development goals and climate commitments.
The framework report notes that physical, economic and social factors are the main determinants of the vulnerability of a country to climate change, with the Kingdom “significantly at risk” in all three aspects.
Indeed, it notes that Saudi Arabia, being an arid country with a harsh climate and sensitive ecosystems, is particularly affected by climate change.
In fact, approximately 76 per cent of the Kingdom is non-arable, while water scarcity has significant impacts on the agricultural and industrial sectors.
In addition to this, the report notes that with oil production, processing and export among the main economic activities in the Kingdom, dependence on limited resources threatens its ability to maintain a high level of growth consistent with increased social and economic development in the long term, underlining the need for economic diversification.
According to the published framework report, the Kingdom has undertaken a comprehensive set of measures to achieve its climate ambitions, including the CCE Framework, endorsed by the G20 leaders and aimed at preventing emissions by leveraging “all technologies.”
Reducing carbon emissions in the Kingdom
The framework report highlights several measures aimed at mitigating carbon emissions in the Kingdom, including enhancing energy efficiency. Facilitating this is the Energy Efficiency Program run by the Saudi Energy Efficiency Centre, targeting the three main sectors that represent 90 per cent of the national energy demand: industry, buildings, and land transportation.
The program details various initiatives, including:
- Improving heavy-duty transportation efficiency,
- Economising energy in residential use and
- Improving the thermal efficiency of power generation, transmission and distribution,
The report also noted the Kingdom’s adoption of its diversified energy model and its goal to increase renewable energy to around 50 per cent of the energy mix by 2030.
Research will be conducted to develop Carbon Capture, Utilisation and Storage (CCUS) technologies, it was shared, while the Kingdom is also working to develop a National Hydrogen Strategy.
Climate change adaptation measures
The Kingdom’s Green Financing Framework report, released last month, also shares its strategy to bolster climate resilience and support climate adaptation.
Efforts to support the Kingdom’s mission in this regard include the Integrated Coastal Zone Management Planning (ICZM), Early Warning Systems (EWS), Integrated Water Management Planning and Infrastructure and Cities Designs.
Meanwhile, on afforestation, to remove CO2 through nature-based solutions, the Kingdom’s framework report spotlighted its plan to plant ten billion trees domestically (through the Saudi Green Initiative) and 40 billion additional trees across the Middle East (through the Middle East Green Initiative).
The framework also outlined the Kingdom of Saudi Arabia’s efforts to protect the marine and ocean environment, and reduce sources of marine pollution.
Further, it noted the implementation of coastal management strategies to reduce coastal erosion, increase the sinks for blue carbon, maintain related ecosystems, and address the threats that climate change poses to marine livelihoods.
Measures to combat desertification
The KSA framework report also explores the region’s desertification challenge, which is accelerating due to climate change, and notes the measures the Kingdom is taking to strengthen desertification management.
These measures include:
- Promoting the stabilisation of sand movements around cities and roads
- Increasing sinks’ capacity by using green belts as barriers,
- Developing and enhancing arid and semi-arid rural areas through various natural resource conservation activities, and
- Biodiversity and ecosystem-based adaptation efforts.
At the same time, the Kingdom also aims to raise the percentage of protected areas to over 20 per cent by 2030 and to more than 30 per cent of its total land area over the coming decades, which represents about 600,000 square kilometres.
More broadly, aligned with Vision 2030, the Kingdom aims to reach net zero emissions by 2060 and, as per its updated NDCs, aims to reduce, avoid and remove GHG emissions by 278 million tons of CO2eq annually by 2030.
The Kingdom is also a member of the Global Methane Initiative, the Mission Innovation, the Clean Energy Ministerial, and the Net Zero Producers Forum.
What is the Kingdom’s Vision 2030?
Launched in 2016, the Kingdom of Saudi Arabia’s Vision 2030 charts the path toward economic diversification, and is based on three pillars – Vibrant Society, Thriving Economy, and Ambitious Nation, designed complementary to the UN Sustainable Development Goals (SDG).
Through this agenda, the Kingdom has committed to direct investment in the tools necessary to diversify the economy, such as skills development, small and medium enterprises, and equal opportunities in employment.
It also commits to developing a “sizable” renewable energy market.
On the interrelated nature of both Vision 2030 and SDGs, the framework shares that KSA strives for community well-being and an increase in life expectancy to 80 years. Alongside this, it shared its goal to support innovations and education, and increase women’s participation in the workforce, while increasing foreign direct investment by 30 per cent, and increasing green investments by 40 per cent.
The Kingdom also aims to increase the assets of the Public Investment Fund (PIF) to more than SAR 7T.
Green financing in the Kingdom
The framework report emphasises the importance of financial flows to combat climate change and outlines that under the Green Financing Framework, the Ministry of Finance will coordinate investments from the public and private sectors, with the Minister of Finance chairing the Sustainable Financing Committee.
This committee, which will meet at least twice a year, will oversee the implementation of the Green Financing Framework, the validation of the final Eligible Projects list, and the validation of the allocation and impact reporting. The Projects and Monitoring Committee will also report to the Sustainable Financing Committee.
Meanwhile, the National Debt Management Center (NDMC), will be responsible for the marketing of projects to fixed-income investors.
The framework organises projects across eight categories:
- Environmentally sustainable management of living natural resources and land use;
- Energy efficiency;
- Renewable energy;
- Clean transportation;
- Pollution prevention and control;
- Sustainable water and wastewater management;
- Climate change adaptation, and
- Terrestrial and aquatic biodiversity.
By Hadeer Elhadary, Lead Journalist, ESG Mena – Arabic