How Saudi Aramco is powering the global climate crisis

How Saudi Aramco is powering the global climate crisis
Comment: Despite its green pledges, Saudi Arabia is extracting more oil than ever before, writes Courtney Freer.
5 min read
14 Oct, 2019
Drone attacks sparked fires at two Saudi Aramco oil facilities on 14 September [AFP]
Last week The Guardian revealed the names of the 20 fossil fuel companies responsible for one-third of the world's carbon emissions.

One-quarter of these companies are based in the Middle East and three in the GCC: Saudi Aramco, Abu Dhabi National Oil Company, and Kuwait Petroleum Corporation. Saudi Aramco topped the list and is responsible for 4.38 percent of total carbon emissions alone.

Notably, three of the 20 largest are state-owned or state-controlled corporations: Saudi Aramco, Russia's Gazprom came in third, and the National Iranian Oil Company ranked fifth.

The secrecy surrounding national oil companies (NOCs) by their very nature presents a challenge when it comes to ensuring they are taking measures to counter climate change. Indeed, NOCs tend not to report publicly on operations. Meetings are closed, and strategies, especially as related to climate change, often are not disclosed.

It is also potentially politically problematic, as well as difficult from an implementation standpoint, to demand more transparency from companies that are so closely linked to state governments.

When it comes to Saudi Aramco, the worst offender, the news also comes amid reports that the company's board will grant final approval to proceed with its IPO in the coming weeks, and could scare potential investors.

The sale is a cornerstone of Crown Prince Mohammed bin Salman's Vision 2030 plan to diversify the economy away from its reliance on oil. Ironically, then, it is the sale of a portion of the assets of the state's oil giant - which is the world's largest producer and worst offender when it comes to carbon emissions - on which key diversification efforts appear to rely.

The rhetorical commitment to addressing climate change, then, has thus far not translated into major policy shifts

Of course, Saudi Arabia also has plans to launch a massive renewable energy project, with its National Renewable Energy Programme under the Ministry of Energy, Industry, and Mineral Resources charged with leading these initiatives as part of Vision 2030.

As part of this plan,
the kingdom has tripled its renewable energy target and has successfully tendered for major wind and solar energy projects. Undermining the credibility of such efforts, however, is the fact that, over the past decade, the kingdom has also increased production by two million barrels per day.

the UAE, which is responsible for an impressive 70 percent of all renewable capacity in the GCC, also increased oil production by 800,000 barrels per day in the same period.

The rhetorical commitment to addressing climate change, then, has thus far not translated into major policy shifts, and there appears to be more efforts to ramp up oil production than to create renewable energy pathways, making it more difficult for these states to address their carbon emissions problems.

Further, Aramco announced in March its purchase of a 70 percent stake in Saudi Basic Industries Corporation (SABIC), the country's leading petrochemical firm, to invest in downstream petrochemical products.

Indeed, some 80 percent of oil demand is derived from sectors where there are no suitable alternatives, and there are not yet suitable alternatives to plastics and a variety of other petrochemical products, making the deal a way for Aramco to diversify its profits and hedge against sectors where oil is increasingly being replaced.

Read more: Aramco attacks expose Saudi vulnerability and shaky GCC security

Saudi officials have long shown intransigence in the face of climate change effort, a fact that, along with Saudi Aramco's emissions records, calls into question the credibility of claims that the state now wants to change course. 

In fact, at the 1995 Intergovernmental Panel on Climate Change meeting, Saudi delegates are said to have pushed for delays and even having confronted scientists about how accurate their claims about climate change were.

More recently, during 2009 negotiations for a climate accord in Copenhagen, one Saudi oil official claimed that "there is no relationship whatsoever between human activities and climate change," adding that "whatever the international community does to reduce greenhouse gas emissions will have no effect on the climate's natural variability."

Of course, rhetoric from Saudi Arabia has changed markedly since 2009, as has the composition of its leadership. CEO of Saudi Aramco Amin Nasser helped to establish the Oil and Gas Climate Initiative to highlight the oil industry's pledge to reach global net zero emissions in line with the Paris Agreement.

A report from the body released in 2015, however, failed to mention carbon pricing yet insisted that the group was "being proactive" about climate change and shared "a sense of commitment and urgency".

Further, Aramco's website claims that it is "committed to urgent action on climate change," yet one wonders how urgent and whether they are willing to do so when oil production has been increased and when investment into renewable energies remains relatively low.

The gap between rhetoric and actions is perhaps clearest when it comes to lobbying efforts in the US. In fact, The Intercept reported that Saudi Aramco is a major board member of the American Petroleum Institute, an oil lobbying firm that maintains close ties with the Trump administration, and was found to be involved in a state-based effort to obstruct investments into electric vehicles.

Over the past decade, the kingdom has increased production by two million barrels per day

Further, Aramco has, though an American subsidiary, hired the lobbying firm Nickles Group to influence regulatory policy, in particular the renewable fuel standard that requires refineries to blend ethanol or buy credits from other refineries.

The Santiago Climate Change Conference scheduled for December 2019 could provide an opportunity for Saudi Aramco to, at the least, engage with the new information that has been released about its carbon emissions.

Closing the credibility gap between rhetoric and action will be key to the success of Saudi climate change initiatives and arguably of Vision 2030 as well.

Dr Courtney Freer is a senior advisor at Gulf State Analytics and a research officer for the Kuwait Programme at the London School of Economics and Political Science. 

Follow her on Twitter: @CourtneyFreer

Opinions expressed in this article remain those of the author and do not necessarily represent those of The New Arab, its editorial board or staff.