Saudi Arabia’s energy sector is set to transition into a more sustainable and balanced industry, driven by the rapid rebalancing of the country’s economy and the strengthening of its pace of growth, according to MUFG. Powered by the Kingdom’s Vision 2030, Saudi Arabia will continue to deliver on its stated structural reform, which will have a strong pivot toward sustainable energy based on its Energy Strategy 2050, in which the country pledged a net-zero economy by 2060.
Hiroaki Fujisawa, head of MUFG’s Riyadh branch, said: “Saudi Arabia’s net-zero pledge is central to its efforts for an orderly transition through energy market stability. The Kingdom’s comprehensive transformation strategy has a strong focus on carbon neutrality and ESG, which are aligned with MUFG’s own purpose of ‘Committed to empowering a brighter future.’ Today, we see increased demand from our clients in Saudi Arabia for green finance, which is set to shape the Saudi energy sector. In addition to our own ‘green’ commitments, we aim to extend an even broader range of financing to customers covering innovations and initiatives that promote carbon neutrality.”
Ehsan Khoman, head of MUFG’s EMEA Emerging Markets Research team, said: “We expect investment to gain pace as the Kingdom steps up delivery on its capital spending program in line with Vision 2030 objectives, with ESG management anchoring transformational plans. At 7.8 percent, the growth rate we now anticipate for 2022 will be the fastest pace of expansion in more than a decade and will run at more than double the rate of 3.3 percent recorded in 2021, when the economy bounced back from its pandemic-driven contraction.”
The Kingdom’s commitment to embracing energy transformation is rising, as is the pace of this transition. With plans to become the world’s largest exporter of hydrogen by 2030, the country is building the world’s largest hydrogen plant, powered exclusively by 4 GW of solar and wind energy for a $5 billion investment. The Saudi Green Initiative is another project that is expected to reduce carbon emissions by more than 270 million tons per annum; NEOM will feature integrated renewable energy systems that rely 100 percent on renewable energy sources; and “The Line” project, a mega-development which brings to life a city with a length of 170 km, will have a zero automobile community that preserves 95 percent of the natural environment and will be completely powered by clean energy.
Another strategic project in the Eastern Province of Saudi Arabia that MUFG is involved in, and which will be commissioned in 2024, Jubail 3B, comprises a reverse osmosis independent water plant with a capacity of 570,000 m3/d, and includes solar energy units to reduce the electricity consumption from the grid.
“We are committed to supporting growth in Saudi Arabia, especially in the energy transition and green financing. We are steadfast about equipping stakeholders with bold, innovative financing solutions that will help them deal effectively with drastic shifts in economic, social, and lifestyle norms. MUFG provides strong support not only for renewable energy but also for the implementation of innovative technologies such as hydrogen/next-generation energy. The Saudi government has drawn its roadmap to the future, and MUFG is well equipped to assist clients in the Kingdom in addressing their financing requirements to achieve their goals safely, securely, and consistently.
Our deep insights, strong presence, and long-term partnerships in Saudi Arabia and the region, where we have had a footprint that goes back to more than 100 years, give us additional advantage,” added Fujisawa.
