Saudi Arabia - Sustainability claims and greenwashing
What are the top three developments in Saudi Arabia concerning green claims and the associated risk of greenwashing?
Despite being the world’s largest oil exporter, Saudi Arabia has pledged to cut its carbon emissions to net-zero by 2060.
Prior to the COP26 climate conference, the Crown Prince Mohammed bin Salman vowed that Saudi Arabia would plant 450 million trees by 2030, thereby reducing 200 million tonnes of carbon emissions and attempting to turn the landlocked city of Riyadh into a more sustainable capital.
Greenwashing guidance
There are no specific rules or guides on “green marketing” in Saudi Arabia. However, offline and digital advertising is regulated by the Ministry of Media and the General Commission for Audio-visual Media (“GCAM”), respectively.
Although there are no specific regulations on green claims or greenwashing, under the Print and Publication Law, advertisements that would mislead print marketing consumers are prohibited. Similarly, misleading and false advertising is also prohibited under the Audiovisual Media Law. This also applies to digital marketing.
The upshot of the advertising restrictions is that businesses in Saudi Arabia must carefully consider all aspects of their advertisements when making green claims. It is essential that any green marketing claims are substantiated with evidence to avoid falling into the category of misleading or false information regarding green practices.
We have identified the top three developments concerning green claims in the Kingdom of Saudi Arabia
1. Allegations of greenwashing at a governmental level
Saudi Arabia has announced various measures to deal with the intensifying climate crisis, but fossil fuels appear to remain important for propelling Saudi Arabia’s economy.
Despite Saudi Arabia’s net-zero ambitions, Saudi Aramco, the world’s largest oil producer - who purportedly produce one out of every ten barrels produced globally, announced it planned to raise crude production from 12 million barrels a day to 13 million barrels by 2027.
Saudi Arabia has justified the moves of reducing its own carbon emissions while still taking oil out of the ground and selling it worldwide as part of a plan to create a “circular carbon economy”. This means continuing to extract carbon-filled fuel out of the earth while employing new technologies to capture, store or sell its emissions.
Researchers argue that Saudi Arabia’s carbon capture solution is just one of many needed for tackling the climate change crisis, and that carbon capture alone is not enough. Critics of Saudi Arabia’s green plans also claim that an economy based on the extraction and combustion of fossil fuels cannot be “circular” in any meaningful way based on the current technology available.
Saudi Arabia’s goal to reach net-zero by 2060 despite plans to increase oil production is ambiguous, with few concrete plans or accountability mechanisms in place to achieve the sustainability targets. However, Saudi leaders promised to invest $2.5bn towards these goals at the COP27 UN Climate Change Conference, suggesting that the Kingdom is committed to its sustainability targets regardless of its protective stance on fossil fuels.
Warnings issued in a 2021 report by the United Nations’ International Panel on Climate Change highlight that the only way to rapidly decarbonise to avert catastrophic consequences of global warming is to ban new fossil fuel developments and invest heavily in renewable energy and sustainable public infrastructure projects.
On the one hand, critics may argue that Saudi Arabia’s ambitious net-zero and sustainability claims amount to greenwashing due to the simultaneous planned increase in oil production. Furthermore, Saudi Arabia has fallen 25.8 gigawatts short of its 2023 renewables target, and has only been adding an average of 0.1 gigawatts of renewable capacity per annum over the last decade. This comes after OPEC, the intergovernmental petroleum organisation of which Saudi Arabia is a member, decided to reduce their member countries’ oil production by 2 million barrels per day until the end of 2023.
On the other hand, Saudi Aramco is investing heavily in renewables as well as green and blue hydrogen. Saudi Aramco has set a target of 12 gigawatts of solar and wind capacity by 2035 and aims to produce 11 million tonnes of blue ammonia by 2030 as part of its net-zero drive. Furthermore, Saudi Arabia is already implementing huge renewable energy projects such as the $906 million Sudair solar PV. The Sudair solar project, which is expected to start producing power later this year, is poised to become one of the largest solar PV plants in the world and the largest of its kind in Saudi Arabia with an installed capacity of around 1,500MW.
Consequently, the key point to consider is whether KSA’s claims regarding future renewable energies and sustainability show a genuine intention, or whether it is greenwashing as the country continues to produce high quantities of oil.
2. NEOM: Saudi Arabia’s planned eco-city divides opinion
Neom is a $500 billion giga-project currently being built by Saudi Arabia and is planned to be a car-free, carbon-free city built in a straight line over 100 miles long in the desert. Neom claims to be a blueprint for the future in which humanity progresses without compromising the health of the planet, as part of Saudi Arabia's Vision 2030.
Neom has also announced plans for the world's largest coral reef restoration project as well as "the world's most food self-sufficient city" through vertical farming and greenhouses. Other internal projects include ‘Sindalah’, which will be Neom’s first state of the art luxury island destination, and ‘Oxagon’, which will be Neom’s floating city and the largest floating structure in the world.
Despite the ambitious sustainability claims of Neom, critics accuse Saudi Arabia of greenwashing due to the fact that oil production continues to rise in the country, despite climate experts concluding that, global oil production needs to be reduced by 5% every year until 2030 to meet Net Zero by 2050. The Saudi Energy Minister has reportedly said that Saudi Arabia would not stop pumping oil, and was quoted as saying: "We are still going to be the last man standing, and every molecule of hydrocarbon will come out."
Another concern is that Neom is partly relying upon unproven technologies to tackle climate change, which could represent a form of climate delay (i.e. agreeing that climate change is a problem but finding reasons to do nothing to solve it), and so the use of unproven “green” technologies may also result in a form of greenwashing. An example of this is Neom’s attempt to solve Saudi Arabia’s reliance on desalination for water consumption, which has historically been problematic due to its need for fossil fuel power and the toxic by-product it produces. Neom’s solution is to power desalination plants with renewable energy and reuse the toxic by-product as industrial raw material, however this technology is entirely unproven and has never been successfully achieved before.
Furthermore, despite Saudi Arabia’s apparent commitment to sustainability and net-zero targets, during the COP26 negotiations the Kingdom was reportedly intervening quite intensively to highlight uncertainties, costs, and natural impacts in order to downplay the urgency of the climate change problem.
Saudi Arabia’s ambivalent stance on climate change suggests that projects such as Neom may display elements of greenwashing rather than tackling climate change head-on by, for example, reducing oil production.
3. Sustainable consumption is gaining momentum in Saudi Arabia
A study by Oracle shows as many as 98% of consumers in Saudi Arabia believe sustainability and social factors are more important than ever. The survey set out that 71% of people in the Kingdom would cancel their relationship with a brand that does not take sustainability and social initiatives seriously. Furthermore, 93% of respondents would pay a premium for their products and services if organisations can clearly demonstrate environmental and social progress.
This sustainable consumption can be demonstrated through the shift towards electric vehicles, with an apparent increased demand among the Saudi population in a move away from traditional combustion engines. As with energy efficient buildings in the UAE, the motive behind doing so may be questioned as perhaps economic due to rising petrol prices.
KSA’s support for an increase in sustainable consumption and an increased demand for electric vehicles will put pressure on creating enhanced electric vehicle supply equipment (“EVSE” or “EV Charging Stations”). The Saudi government appears to be committing to EVSE, with a significant increase in the number of EVSE regulations that have been passed recently and a parallel rise in electric vehicle and EVSE incentives, such as the intention that 30% of all vehicles in Riyadh will run on electricity by 2030. Furthermore, the Ministry of Municipal and Rural Affairs’ (“MOMRA”) announced plans to allocate 5% of parking spaces for electric vehicles and install EV Charging Stations in all car parks.
By way of example of this recent regulation, in August 2022 the Ministry of Energy announced that it had completed “all legislative, regulatory and technical aspects to regulate the electric vehicle charging activity market”. For example, MOMRA have announced the technical requirements for EVSEs, and the Water and Electricity Regulation Authority has published the regulatory framework which contains compliance requirements for EVSEs, including in relation to licencing, EVSE owners, EVSE operators, and installation.
