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Saudi Arabia Says It's Ditching Fossil Fuels — Kinda

The Saudi oil minister says the Kingdom might phase out its use of fossil fuels by mid-century and become a global leader in renewable energy production.
Photo by Haider Al-Assadee/EPA

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Saudi Arabia seems to see the writing on the wall when it comes to climate change, but experts think the Kingdom's oil exports are too profitable for it to ever abandon the fossil fuel industry entirely.

In comments to a recent gathering of business and political leaders in Paris, Saudi Arabia's oil minister, Ali al-Naimi, suggested that his nation would phase out domestic consumption of fossil fuels by the middle of the century. He also declared that Saudi Arabia would become a major producer of wind and energy power in the near future.


"In Saudi Arabia, we recognize that eventually, one of these days, we are not going to need fossil fuels. I don't know when, in 2040, 2050, or thereafter," al-Naimi said. Because of this phase out, he continued, the Kingdom planned to become a "global power in solar and wind energy" that relied on renewable sources for its energy needs.

About a quarter of the 10 million barrels Saudi Arabia produces everyday are used within the country, and the number is growing. A 2012 study by Citigroup suggested if domestic demand stays constant, it could be a net importer of oil by 2030. The minister's comments might be an expression of the Kingdom's hope to reduce and eventually eliminate domestic oil consumption.

By contrast, al-Naimi has stated in the past that oil production for exports would continue to track global demand for fossil fuels, even if it meant more production. At the Paris conference, al-Naimi also said it would make "no economic sense" to leave the bulk of fossil fuels in the ground, a strategy advocated by scientists to avoid potentially catastrophic changes to the climate.

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Just last month, Saudi Arabia clocked its biggest increase in daily oil production within the last three decades.

Edgar van der Meer, a senior analyst at NRG Expert, suggested that Saudi Arabia wanted to increase its domestic use of renewable fuels because oil consumed internally represents lost revenue that could be generated from exports.


"Any domestic consumption is an opportunity cost for Saudi Arabia which is why the focus will shift to domestic consumption of alternate and renewable energy, to protect the revenue stream of oil exports to other countries," he told VICE News.

Simon Henderson, director of the Gulf and Energy Policy Program at the Washington Institute, also took issue with al-Naimi's claim the Kingdom would one day not need fossil fuels.

"The kingdom has more than 63 years' worth of reserves at current production rates. In reality, the figure is probably more than 100, like the figures for Iran and Iraq," he told VICE News. "Also the costs of production are low. So, contrary to what he appeared to be saying, Saudi Arabia is going to remain an oil-based economy for a long, long time."

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As for the nation's capacity to become a renewable powerhouse, that remains a "pipedream," says Jim Krane, an energy researcher at Rice University's Baker Institute.

"I don't think [plans for renewable] go farther than the statements you occasionally hear out of the Kingdom," he said. "It has virtually no capacity in renewable energy that's already up and running."

The oil minister's comments regarding the nation's renewable energy capacity were not the Kingdom's first. In 2012, Prince Turki al-Faisal al-Saud, a member of the Saudi royal family, told attendees at the Global Economic Symposium in Brazil that "oil is more precious for us underground than as a fuel source," and that he hoped for his country to replace fossil fuels with renewable sources in his lifetime.

Two months later, Saudi Arabia announced that it was seeking $109 billion in investment for a solar energy revolution, which was to begin in late 2013. But this past January, it formally announced that it was delaying its ambitious solar vision for the next 8 years.

Follow Aaron Cantu on Twitter: @aaronmiguel_