Saudi Arabia plans to develop its own carbon trading mechanism as part of a move to develop a circular carbon economy (CCE) by the time it hosts next year's G20 summit of the world's biggest economies next year, the kingdom's Energy Minister said.
The world’s biggest oil exporter is looking to achieve standards set under the United Nations' Sustainable Development Goals and is looking to develop a system where carbon emissions are reduced, reused, recycled and removed to be used in other economically-viable ventures to boost the economy, Prince Abdulaziz bin Salman bin Abdulaziz told delegates at the third Future Investment Initiative on Wednesday.
The kingdom will develop a "closed loop system", which will help restore carbon balance and contribute to global economic growth in a sustainable manner, he added.
“Considering our pivotal role [as global energy producer] it is our responsibility to find a solution through innovation and collaboration to create a sustainable framework of growth,” he said.
The prince said Saudi Arabia will soon reveal a system for carbon trading that would be “a fair carbon trading system, learning from the European version, which didn’t work”.
As Saudi Arabia hosts the G20 next year, one of country’s main focuses will be on global energy access and a clean energy system that will be the backbone of the kingdom’s circular carbon economy concept, he noted.
“Carbon is not the enemy …. with the circular carbon economy, carbon will be an opportunity,” he said, adding that the initiative is Saudi Arabia’s “call to action”.
Saudi Arabia currently produces 10 million barrels per day of crude and has around 260 billion barrels of proven oil reserves. It is also among the top-ten gas producers globally with over 900 billion cubic meters of proven gas reserves.
Despite advancements in the renewables and the progress made in reductions in emissions globally, Prince Abdulaziz said the world cannot achieve carbon balance through these two means alone as much of the world’s energy is consumed in sectors that are hard to decarbonise — heat, industrial processes and transportation.
However, the concept of re-use has been proven, he said, and the kingdom, which traditionally flared associated gases in oil production, has been capturing them and using them in a variety of ways that have created jobs, fuelled the kingdom’s power plants and contributed to the country’s GDP growth.
Saudi Arabia, Opec’s biggest oil producer and the largest Arab economy, will reduce local energy consumption demand by as much as 2 million barrels of oil equivalent by 2030, Prince Abdulaziz said.
“I find this to be a progressive concept, very bold and the industry will appreciate such a proactive step being taken by a major oil-producing nation,” said Dr Sultan Al Jaber, UAE Minister of State and group chief executive of Abu Dhabi National Oil Company. “Today they [Saudi Arabia] extended an open invitation through this new initiative to collaborate and co-operate with the kingdom to address this global challenge.”
Developing such a concept, he said, is not a luxury, but a necessity.
“We must embrace the fact that our industry is being disrupted and instead of resisting it, we should embrace it and come up with real, true solutions centred around customers and true partnership models,” Dr Al Jaber added.
The US Secretary of Energy Rick Perry agreed, saying the world is going through transitional times and as “we move to circular carbon economy, as we remove carbon [from the system], natural gas can be a major part of that transition”. The state of Texas, where the secretary has served as governor, has managed to reduce emissions through the use of liquefied natural gas, he noted.