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Extracted from http://www.oliverwyman.com/content/dam/oliver-wyman/global/en/2016/june/2016_Energy_Trilemma.pdf
for another two centuries, but they are distributed unevenly across the globe and
offer limited support for carbon reduction. New renewable energies could be
exploited in many countries, but they are intermittent in their production and are
still too expensive. Nuclear energy can help meet a number of priorities, from
sustainability of supply through to a lower-carbon energy mix, but international
governance on the safety of nuclear energy needs to be improved. Nevertheless,
there is one global issue on which an international accord could be reached within
reasonable efforts, and where its sense of urgency commands us to act now. This
issue is global governance, beginning with the clear need to re-examine global
nuclear safety post-Fukushima, and global safety regimes within deepwater oil
exploration and unconventional gas recovery.
In the case of shale gas and recently discovered hydrate methane, in particular,
significant attention and unchallenged myths have created public mistrust. There
is a real opportunity for an international political body like the G20 to promote a
consensual solution to global nuclear safety. This body could demonstrate that
true international governance, where emerging economies play their full part,
could be successful. Nuclear power is still expanding worldwide, so there is a real
urgency for us to act now, and act together. Indeed, global nuclear safety is a
major challenge for both countries that exploit nuclear energy and the ones that
refuse to adopt it. That is why, I, as Chairman of the World Energy Council, call
for a global wake-up. If we are to secure our future and its required energy
supply, we have to make sure all our energy technologies and organisations are
safe.
To achieve these objectives, I suggest the creation of a ‘G20’ group on energy.
This group should consist of an international and independent group of experts,
acting as an authoritative international body for all energies, representing OECD
and non-OECD countries to contribute quickly to the enhancement of safety
around the world.Finding consensual solutions and creating a global accord on
energy governance is easier said than done, however. From 13 to 17 October
2013, global energy leaders will gather in Daegu, South Korea, for the 22nd
World Energy Congress. There, we will have a rare opportunity to make
meaningful and long-lasting headway in addressing some of our most pressing
energy challenges, enabling the discussions that will be held at the G20 to be
taken forward in reality.I believe that the World Energy Council can be a catalyst
in the world’s attempt to build dialogue, share vision and reach consensus to
achieve a sustainable future.”
Hence, it is inevitable that these three components are interwoven and complete one
another and all are of equal importance; however, it seems that environmental
sustainability is gaining more momentum compared to the other two factors.
For example, Saudi Arabia is known as an oil rich country however Saudi Arabia’s
effort in achieving a sustainable environment and its intention to go green within the next
coming years can be noted. The (PME) declared a decree giving all companies to meet
new water, air, and noise pollution standards within five years. All projects must meet
and fit into Saudi’s plan for international development and must meet international
benchmarks standards, all part of the (PME’s) plan to safeguard Saudi’s health and
natural resources. Citi research tracks $2.5tn in in construction projects that are underway
in the Middle East, with Saudi Arabia and the United Arab Emirates accounting for 60%
of the work. Most is real estate community development ($450m), followed by oil and
gas ($194m) and infrastructure, such as railways ($174m). (D G McCullough, 2014)
Abdul Aziz Al-Jasser states in a news release that Companies refusing to comply
with Saudi Arabia's new standards within five years will see their projects shut down and
suspended for three months, PME general manager. The new regulations are wide-
reaching, addressing soil and land preservation, noise pollution from operating
machinery, hazardous and radioactive waste that enters Saudi Arabia's coastal waters and
other harmful pollutants.
Saudi Arabia has been one of the largest fossil fuel subsidisers in the world, with
subsidies amounting to over US$62bn according to International Energy Agency
estimates in 2014. Of that, 75% is for oil. 2In December 2015, Saudi Arabia announced
the first round of its energy reforms, which includes raising the price of gasoline. The
reforms are significant, given that the country’s stability has historically rested on its
welfare state. Compared to 2015, the subsidy reductions are expected to cut costs by
12%. Prices are being increased by 60% for petrol, approximately 66% for gas and
around 130% for ethane. 3Given the relatively modest rise in prices (in January 2016, the
cost of high grade gasoline was US$0.90/gallon compared to US$0.60/gallon in 2015),
the fuel prices have not been met with public outcry. 4 Including future reductions, the
subsidy reform in gasoline, electricity, and water is expected to generate US$30bn a year
by 2020. The subsidy cuts are part of a broader five-year plan to create a more efficient
economy and rein in a deficit that reached 15% of the country’s GDP this year. 5
2
Barany, A and Grigonyte, D (2015), “Measuring Fossil Fuel Subsidies” ECFIN Economic Brief, Issue 40, March 2015
3
Mills, R (2016), “The energy subsidies dam has finally broken in the Middle East”, The National (8 May, 2016)
4
Reed, M (2016) “Saudi Arabia reins in runaway energy subsidies”, The Fuse (11 January, 2016)
5
Kerr, S. (2015), “Saudis face fluel price jump under new austerity plan”, Financial Times (30 December, 2014)
How is public sentiment evolving
People’s views and opinions are not fixed, it can change or develop over time.
These views can change because of poorly informed reactions too more considered
conclusion. This process evolves through seven distinct stages, according to Daniel
Yankelovich, author, public opinion analyst and co-founder of Public Agenda. According
to Daniel these stages are:
Negative shocks affecting households, industries and the economy is a whole can
be induced from increasing energy prices. Increase in energy prices can give rise to
inflation, and reduction in the welfare of household by directly raising the price of
electricity, petroleum products and water, and indirectly by increasing the price of other
goods and services that use energy an intermediate input. Higher energy prices also
reduces profits because it increases input costs for industries. SABIC for instance said
that as a result of the fuel and electricity price hikes its annual cost would increase by
more than 5%; Saudi Arabia Fertilizers Company’s (SAFCO) production costs would
increase by 8%; Yanbu National Petrochemical Company’s (YANSAB) costs would
increase by 6.5%; while Saudi Cement Company announced that its production costs
would rise by SAR68m ($18.1m). These companies added that they would increase the
efficiency of their plants and cut other costs to offset the input price shock. For example
in Saudi Arabia the government has decided a five year reform that include a wide
spectrum of fuels like diesel and natural gas and water alike. According to secondary data
from APICORP it is noted that the price of natural gas has seen some of the highest
increases; for methane it was raised from $0.75/mmbtu to $1.25/mmbtu, while the ethane
price was raised from $0.75/mmbtu to $1.75/mmbtu. The bearing of this price increase
will be mainly suffered by the power sector and industry. The government also increased
the price of higher-grade unleaded petrol to SAR0.90/litre ($0.24) from SAR0.60/litre
and for lower-grade petrol to SAR0.75/litre from SAR0.45/litre. Likewise, the impact of
the increase in gasoline prices will be mostly be felt by households, because of their
dependence on personal transport and limited public alternatives such as metros or
subways. Diesel, mainly consumed by the power sector and industry, was raised to $14/b
while diesel for commercial transport was raised to $19/b. Households with low levels of
consumption (less than 4000kwh) were shielded from the increases in electricity prices,
but for consumption levels between 4000kwh and 6000kwh, prices were raised from
SAR0.12/kwh to SAR0.20/kwh and for consumption levels above 6000kwh, prices were
unified and set at SAR0.30/kwh. 6
6
Read more at http://www.apicorp-
arabia.com/Research/EnergyReseach/2016/APICORP%20Energy%20Research%20-
%20V01-N04-Jan-2016.pdf
The impact or worsening air pollution
Air pollution is urban areas is getting worse. A new report from (WHO) suggests
that Beijing and India are actually not ranked properly in terms of pollution as what is
expected. However, the actual city with the world’s worst pollution is probably in Iran.
With reference to the WHO’s PM2.5 data, Zabol, Iran comes out first. Zabol is followed
by Gwalior and Allahabad, both Indian cities, while surprisingly Riyadh, Saudi Arabia’s
capital and largest city comes in fourth. Due to the development of Riyadh and its aim to
strive for a much more developed country pollution has become an issue as can be seen
according to its ranking on the WHO’s PM2.5 data. Moreover, Al Jubail an industrial city
in Saudi ranks fifth.
Saudi is well knows that it is the world’s largest producer and exporter of
petroleum, It is also the largest oil producer and holds one-fifth of the world’s oil reserves.
Over the past few decades, Saudi Arabia’s oil industry has grown, causing both negative
and positive impacts. Examples include immense profit levels and demand, and has a large
negative input which caused environmental pollution along its 2,175-mile coastline.
Causes of this pollution can be noted from, oil, power, desalination and other industrial
activities near the coast have led to sewage outflows, and oil and chemical plumes. The
country has also struggled with other problems, including, high levels of vehicle exhausts,
which is calculated to be 50 percent of hydrocarbon pollution in the air. The dry desert
climate, humidity and windstorms have led to widespread outbreaks of respiratory diseases.
Automobiles have caused large increase in the levels of pollution.
7
http://www.emro.who.int/about-who/rc61/impact-air-pollution.html
impact of changes in the industrial landscape
For the kingdom of Saudi Arabia industrial landscape has had positive impressions of the
country more than negative. Eventhough, industrial development is recent in the
kingdows it has proven a steady development. This development has been achieved
because of the government support and its role in achieving strategic and economic goals
of the country. The Saudi Industrial Development Fund maintained its high level of
commitment to the support of local industry in all spheres of industrial activities. SIDF's
loans approvals in the fiscal year 2015G amounted to (155) Loans, having an equivalent
value of SR (11.4) billion, with increase (6.9%) in loans number and (94%) in its amount.
As well as SIDF continued its develop role to enhance the industrial investment in less-
developed regions and urban. The share value of loans for these areas is around (66%)
and (54%) from total of loans number in 2015M. the efforts exerted by the government
for the support of industrial development covered several basic spheres including
implementation of required infrastructure, construction of Jubail and Yanbu industrial
cities, construction of industrial cities in various regions of the Kingdom, establishment
of Saudi Industrial Development Fund (SIDF), and continued provision of other
industrial support and incentives. The response and cooperation of the private sector with
the governmental plans and efforts have an effective impact on actualization of the
industrial development's achievements.8
The following is some of the industrial progress indicators
1- Progress in Number of Factories, Total Finances and Number of Employees
2- Progress in Industrial Production:
3- Progress in Industrial Exports:
According to (SIFD) the following might be some challenges that Saudi industries might
face:
8
http://www.sidf.gov.sa/en/IndustryinSaudiArabia/Pages/IndustrialDevelopmentinSaudiA
rabia.aspx
How does local sentiment square with the Paris agreement?
The Paris Agreement builds upon the Convention and – for the first time – brings
all nations into a common cause to undertake ambitious efforts to combat climate change
and adapt to its effects, with enhanced support to assist developing countries to do so. As
such, it charts a new course in the global climate effort.
The Paris Agreement’s central aim is to strengthen the global response to the threat of
climate change by keeping a global temperature rise this century well below 2 degrees
Celsius above pre-industrial levels and to pursue efforts to limit the temperature increase
even further to 1.5 degrees Celsius. Additionally, the agreement aims to strengthen the
ability of countries tdeal with the impacts of climate change. To reach these ambitious
goals, appropriate financial flows, a new technology framework and an enhanced
capacity building framework will be put in place, thus supporting action by developing
countries and the most vulnerable countries, in line with their own national objectives.
The Agreement also provides for enhanced transparency of action and support through a
more robust transparency framework.9
Saudi Arabia vows to adhere to the Paris agreement thus it has pledged to install
more solar panels and other renewable energy systems, as long as its economy keeps
growing, (Worral Eric , 2016) . Moreover ( ALshammari Yousef 2015), states that Saudi
Arabia believes that the reduction of greenhouse gas emissions must be achieved without
undermining the economic growth, or negatively affecting the social development, or
destabilizing the global energy market. In addition, the proposed mechanisms to reduce
emissions through the imposition of taxes or "carbon pricing" will undermine the
principle of justice and equity. Likely, The new convention must extend beyond 2020 and
be motivational, voluntary and binding on the national levels, and particularly for
developing countries.
Tipping points
According to CAT ( climate action tracker), it states that “On 3 November 2016, Saudi
Arabia ratified the Paris Agreement. Saudi Arabia’s envisioned emissions pathway
towards 2030 is highly unclear, since it has not yet revealed the baseline corresponding to
its Nationally Determined Contribution (NDC) target. According to its NDC Saudi
Arabia seeks to reduce its annual emissions by up to 130 MtCO2e in 2030 through
measures that have co-benefits in pursuing economic diversification from oil, while
contributing to greenhouse gas abatement and adaptation to climate change. Achievement
of this goal is not conditional on international financial support, but is contingent on the
continuation of economic growth, and “a robust contribution from oil export revenues to
the national economy.” Saudi Arabia may choose to adjust its NDC between 2016 and
2020 if the Paris agreement creates an “abnormal burden” on its economy.
Saudi Arabia has not published the baseline from which its abatement target is deducted,
9
http://unfccc.int/paris_agreement/items/9485.php
but specifies that a “dynamic baseline will be developed on a basis of a combination of
two scenarios,” which are scenarios based on whether more oil is consumed locally, or is
exported. There is therefore considerable uncertainty around Saudi Arabia’s targeted
emissions level. We estimate a likely range for Saudi Arabia’s BAU based on adjusted
reference projections and extrapolation of the historical trend (for more information see
post-2020 contribution section). Based on this baseline range, the NDC results in
emissions levels of 840–1042 MtCO2e excl. LULUCF by 2030, a 70–110% increase
above 2010 levels, or a 350–450% increase above 1990 levels.
Based on this target, we rate Saudi Arabia “inadequate.” This rating means that Saudi
Arabia’s commitment is not in line with interpretations of a “fair” approach in line with
holding warming below 2°C, let alone with the Paris Agreement’s stronger 1.5°C limit. If
most countries followed Saudi Arabia’s approach, global warming would exceed 3–4°C.
The proposed abatement of 130 MtCO2e/year is still far from what could be deemed a
fair contribution by Saudi Arabia to limiting global warming to 2°C. To meet its
minimum fair contribution, Saudi Arabia would need to at least triple its proposed
abatement and overall ambition.
Saudi Arabia’s target is highly inconsistent with the fact that Saudi Arabia is very
sensitive to climate change. Average warming for 2040 in Saudi Arabia is projected to be
higher than the global average and, in a 3–4°C world, three quarters of the country will
suffer from excessive aridity by the end of the century (Presidency of Meteorlogy and
Environment, 2011). Equally alarming is the fact that previously important planned
policies aiming at diversifying the energy mix and to achieve 54 GW of renewable and
17 GW of nuclear energy by 2032, have recently—following an initial delay of eight
years—been downscaled. In the “Vision 2030” the renewable power plans are lowered to
9.5 GW in 2023 and nuclear power is no longer mentioned. Based on our calculations,
this would lead to additional emissions of 74–135 MtCO2 in 2030 compared to the
scenario with a renewable energy target of 54 GW and a nuclear energy target of 17 GW
by 2032. In February 2017, in a step towards meeting its scaled-down renewable energy
target, Saudi Arabia launched its renewable energy tender programme, the National
Renewable Energy Plan.” 10
These assumptions will put Saudi Arabia in questioning for the paris agreement.
For example Reem Al Mealla says “The Arab civil society is pressurizing the Arab
countries to take a stronger collective position at the COP21 talks but it is difficult,
especially for the oil producing states. Saudi Arabia is being very uncooperative and
opaque at the moment. They have hired a PR team to handle all their communication and
we are finding it very difficult to reach out to them,”. She also feels that Arab countries
with fossil fuel-based economies must re-direct a portion of their oil revenues into the
establishment of an Arab Climate Fund.11
10
http://climateactiontracker.org/countries/saudiarabia.html
11
http://indianexpress.com/article/blogs/heres-why-saudi-arabia-is-highly-unpopular-at-
paris-climate-conference/
How are companies managing climate policy risk
In a survey conducted in 2008 in 128 countries by the Gallup Poll, 49% of the
surveyed individuals in Saudi Arabia were aware of climate change and 40% perceived it
as a threat to their country, while 39% believed that it was caused by human activities
(Gallup, 2009).
The impact of climate change is expected to affect all aspects of life in the KSA,
including water resources, health, food and agricultural production, fisheries,
biodiversity, forest and rangelands, etc. The measures taken by the Government and by
many constituents of the Saudi society, including the private sector, science and
technology institutions and to a lesser extent the civil society are many. Although more
emphasis is placed on energy, water and agriculture, other sectors of concern are also
considered. (El M. Darfaoui and A. Al Assiri n.d ).
KSA is a country under severe water scarcity (98 m3/inhabitant per year). Total water
withdrawal in the KSA in 2006 was near 23.7 BCM, of which 98% is ground water of
which 57% is non-renewable. Agriculture consumes approximately 88% of the total
water withdrawals (FAO, 2008).( As a consequence of global warming the Kingdom’s
renewable water resources (both surface and underground), are expected to decrease
significantly. The KSA Government has taken various measures to ensure the
sustainability of water resources, including assessments of water resources availability,
construction of 302 dams with a total capacity of 1,354 million cubic meters, (MOA,
2009), building 30 desalination plants to supply about 50% of the domestic water
supplies in the Kingdom, drafting of water conservation regulations, promotion of
wastewater collection, treatment and re-use, and designing and eventual implementation
of water saving policies in agriculture.. The major goals assigned to the KSA’s 9th
development plan (2010-2015) in terms of water policy are the following (MWE, 2010):
The agriculture sector is known to be the most vulnerable to climate change but also
to participate in GHE by producing methane and NO2, through livestock rumination,
decomposition manure and biomass burning, but can have a major role in mitigation by
storing Carbone in the soil, and vegetation cover. Climate change is expected to impact
heavily on agriculture and food production in the KSA, especially through reducing water
availability, but also through direct effects on crop yields. The KSA is seeking to achieve
food security by implementing its newly prepared water and environment friendly
Agriculture Strategy (2010-2030) and meeting the food deficit from the global market,
while reducing market risks through building strategic reserves and developing social
security network programs for low income inhabitants (MOA, 2010) he Agriculture
Strategy (AS) also includes promoting Saudi agricultural investments in collaboration
with countries with a high agricultural potential. This policy primarily aims at producing
food, but also aims at saving 8.5 billion cubic meters of irrigation water by 2030. The key
targets are to:
− Stop alfalfa and other high water consuming fodder crop productions except
where they utilize treated wastewater. Also promote the development of feed industries
using agricultural waste products
− Double fish production and raise individual share to 18.5 kg in 2030 in addition
to improving quality to reach international standards
− Control costs erosion by increasing protected coral reefs and mangrove areas.
http://www.g20portal.com/energy-trilemma-the-framework-for-a-more-sustainable-
energy-future/
https://www.theguardian.com/sustainable-business/saudi-arabia-green-construction-oil-
sustainability-environment
http://gulfresearchmeeting.net/workshop/65_65_Workshop%207%20-
%20Sustainable%20Development%20Challenges%20in%20the%20GCC.pdf
https://www.publicagenda.org/pages/seven-stages-public-opinion
http://www.apicorp-
arabia.com/Research/EnergyReseach/2016/APICORP%20Energy%20Research%20-
%20V01-N04-Jan-2016.pdf
https://www.washingtonpost.com/news/worldviews/wp/2016/05/13/the-most-polluted-
city-in-the-world-isnt-beijing-or-delhi/?utm_term=.59b4da10bc78
http://www.emro.who.int/about-who/rc61/impact-air-pollution.html
http://www.sidf.gov.sa/en/IndustryinSaudiArabia/Pages/IndustrialDevelopmentinSaudiAr
abia.aspx
http://unfccc.int/paris_agreement/items/9485.php
http://www.wec-france.org/DocumentsPDF/Evenements/4-Forum-Europeen-
Energie/Alshammari.pdf
http://climateactiontracker.org/about.html
www.gallup.com/poll/124652/awareness-climate-change-threat-vary- region.aspx
http://www.fao.org/forestry/29157-0d03d7abbb7f341972e8c6ebd2b25a181.pdf