At the 28th Conference of the Parties (COP28), the world’s attention is strongly focused on a collective goal we set for ourselves by 2050 – to limit the increase in global average temperatures to no more than 1.5 degrees Celsius above pre-industrial levels.
The Innovation Gap
However, there are gaps in the 30-year strategies that are important to identify, define, and work towards solving. One such gap is the amount of investment needed to create a net-zero economy, estimated by most estimates to be around $100 trillion between 2020 and 2050. Under current conditions, this would translate to a rapid increase in annual investment in decarbonization by $3 trillion to around $5 trillion – or 2.5% of global GDP. This is a significant gap, but global investors are quickly waking up to capitalize on the financial opportunity before them.
A Clear National Vision
Saudi Arabia’s Vision 2030 is a bold new step for the kingdom, its society, economy, and people. Decarbonization plays a key role in that strategy. Saudi Arabia has set an ambitious goal to expand its renewable energy capacity to support 50% of the country’s energy consumption needs by 2030. Since 2019, three solar and wind farms have been commissioned, with six more under construction, totaling a capacity of 10 gigawatts. In addition, giga-projects in Saudi Arabia like NEOM are investing heavily in innovating renewable energy technologies and deploying them on an unprecedented scale. ENOWA, the energy and water company in NEOM, will provide 100% renewable energy to the NEOM community on the northwestern coast of Saudi Arabia to power its regions and residents, in addition to providing desalinated water and producing green hydrogen for export.
A Vibrant Investment Environment
At every level, the investment landscapes in Saudi Arabia support the development of innovative companies focused on environmental, social, and corporate governance that harness science and technology to achieve real impacts on decarbonization pathways – both at the regional and global levels. The Public Investment Fund of Saudi Arabia finances giga-projects that are innovating a groundbreaking approach to leveraging renewable technologies at scale, supported by partnerships with some of the world’s most innovative energy and utility companies. It has also made significant investments to support ACWA Power in expanding its renewable energy capacity.
In 2022, Aramco announced its $1.5 billion Sustainability Fund to find and invest in local and global businesses to support a steady and inclusive energy transition. Aramco’s national champions initiatives – Lab7, Wa’ed, and Taleed – aim to support Saudi companies from pre-seed stage to unicorn level. The core focus of these initiatives is to support companies that promote circular economy principles targeted at reducing the carbon footprint in the manufacturing sector and enhancing clean energy technology.
Wa’ed Ventures has supported innovative sustainability-focused companies such as Red Sea Farms, which employs technologies that significantly reduce carbon and water footprints in the food sector. By harnessing saline seawater and implementing unique humidity control methods while leveraging solar energy, they are able to cultivate unthinkable products in harsh terrains.
Venture capital firms like Raed, SEEDRA, and Hala are strategically positioning themselves in the green energy space, funding local and global sustainable initiatives. For example, NOMADD Desert Solar Solutions, a Saudi-Singaporean startup, has radically changed solar panel cleaning technology, significantly reducing water consumption – essential aspects that will make solar energy viable in desert landscapes.
Youth
Innovation
The Kingdom of Saudi Arabia has another important resource: a large and tech-savvy youth population. Over 60% of the Saudi population is under the age of thirty and is increasingly focusing on fields in science, technology, engineering, and mathematics, taking advantage of the distinguished global universities in the Kingdom. The available investment environment means that important resources will be accessible to those who can demonstrate their ability to achieve large-scale decarbonization pathways, whether domestically or abroad.
Ultimately, as the world races towards net-zero, the question that remains is: how can we leverage powerhouses like Saudi Arabia to close the innovation gap? The Kingdom is already capitalizing on its vast energy resources, national vision, investment environment, and talented youth.
What is needed now is a greater focus on showcasing impact on the global stage, supporting knowledge exchange and collaboration between innovators in the Kingdom and global leaders in decarbonization, and ensuring that the right people can meet at the right time to stimulate game-changing innovation. As the world races towards net-zero, the question that remains is: can we harness powerhouses like Saudi Arabia to bridge the innovation gap?
• Roberto Crocchi is the Director of Transformation Office at the Public Investment Fund and a member of the advisory board for Carboners. Note: The views expressed in this section are those of the author and do not necessarily reflect the views of Arab News.
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