Saudi Arabia wants to become global renewable energy powerhouse

Despite being the world's second biggest producer of oil, the burning of which is one of the top drivers of greenhouse gas-fuelled climate change, the kingdom of Saudi Arabia wants to turn into a major player in clean, renewable energy generation.

Oil, a fossil energy source that is non-renewable, is quickly turning into a liability, a curse rather than a blessing, for top producers. Apart from being a relatively dirty energy source, it is currently in oversupply due to the shale oil energy, but also dwindling demand on account of both global economic slowdown and the growth of renewables led by solar and wind energy.

It is not surprise then that top producers of oil are scrambling to adapt to remain in business, as their core asset is at risk of becoming obsolete in the coming decades.

On Tuesday, CEO of Saudi's oil giant Aramco said his company will be seeking to play a key role in the kingdom's ambitious plan to become one of the world's top clean energy producers.

"The oil and gas industry is committed to climate change pledges in parallel with meeting growing demand for energy," he told an energy conference in Riyadh.

Earlier, Khaled al-Faleh, the oil minister, said his country was making major investments in renewables. "We have set ambitious goals as part of Vision 2030 to develop these resources, including the production of 9.5 MW from renewables, most notably from solar and wind," he said at the time.

However, signalling that the kingdom is still some distance away from giving up on oil, Faleh said this would go hand in hand with investment in hydrocarbons and petrochemicals.

Saudi Arabia continues to have big plans for Aramco, which will undergo an IPO sometime in 2018. Around 5 percent of its shares will be offered to private investors, worth $100 billion by some estimates. Saudi Arabia is also betting on an oil price recovery in early 2017.



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Some analysts believe the move, however, could further signal Saudi Arabia's plans to ween itself off oil. If climate change targets are to be met, much of its oil reserves could end up being left in the ground, rather than extracted, sold and burned.

Saudi Aramco's renewable ambitions are also part of a bigger picture. On Wednesday, sources said top oil companies alongside Aramco and including energy giant Shell are moving to establish an investment fund to develop carbon mitigation technologies as well as renewable energy sources.

A public announcement is expected to come on Friday by CEOs of seven major oil and gas companies, including BP and Total in London, according to the sources quoted by an exclusive Reuters report on Wednesday.

The sector faces mounting pressure to take an active role in the fight against global warming, and Friday's event will coincide with the formal entry into force of the 2015 Paris Agreement to phase out man-made greenhouse gases in the second half of the century.

The group is part of the Oil and Gas Climate Initiative (OGCI), which was created with the backing of the United Nations in 2014 and includes 11 companies representing 20 percent of global oil and gas production.

The drive to limit global warming to 1.5 degrees Celsius by the end of the century poses a threat to oil and gas companies, said Reuters, as transport and power sectors gradually shift towards renewable sources of energy such as solar and wind.

Delegates from signatory nations will meet in the Moroccan city of Marrakesh on Nov. 7-18 to start turning their many promises into action and draw up a "rule book" for the sometimes fuzzily worded Paris Agreement on climate change, reached last December.