Saudi Arabia could save over $200 billion by shifting to green energy and gas

Saudi Arabia says it has developed a plan to replace liquid fuel with gas and renewable energy sources for domestic use, which could save over $200 billion in the next ten years.

Finance Minister Mohammed Al-Jadaan said Riyadh needs funding to invest in order to modernise its economy as part of the Saudi Vision 2030, a strategic reform programme aimed at diversifying the kingdom's economy.

"One initiative we're about to finalise is the displacement of liquids," Al-Jadaan said.

"Instead of buying fuel from the international markets at $60 and then selling it at $6 for Saudi utilities, or using some of our quota in OPEC to sell at $6, we're going to actually displace at least one million barrels a day of oil equivalent in the next ten years and replace it with gas and renewables," he added.

The plan goes along with the power purchase agreements Saudi Arabia signed with seven new solar projects that would provide electricity more than 600,000 households as part of the Saudi Green Initiative, a large-scale campaign to combat climate change and decrease carbon emissions launched in March.

In order to achieve all 2030 goals, public and private companies will need to invest in the different sectors over the next two decades.

In January, Saudi Arabia's sovereign wealth fund, the Public Investment Fund, agreed to spend at least $40 billion annually in the domestic economy over the next five years. National oil company Aramco pledged in March to inject $1.3 trillion into the local private sector over the next nine years.

"Between now and 2025, and possibly until 2030, fiscal sustainability is a priority for us. We believe that until we achieve all the targets that Vision 2030 has set, we need to maintain fiscal sustainability and control government expenditure," said the finance minister.

"We are maintaining our unemployment target for 2030 but because we are not out of the woods yet it is very difficult to say what the unemployment rate is going to be for 2021… Our aim is to reduce the number so we will end up the year below where we ended up in 2019, pre-Covid, but I can't tell you this is going to happen for certain."

Saudi Arabia is going through an economic crisis due to the global Covid-19 pandemic and low oil prices.

The slump in demand for oil caused a 44.4 percent drop in Aramco's 2020 net profit due to lower crude prices, while unemployment stood at 12.6 percent at the end of 2020.