There are few discussions centering on geopolitics that can be had without including Saudi Arabia. As one of the largest oil producers on the planet, behind only the United States, Saudi Arabia holds a special place in the discussion surrounding green energy. As Saudi Arabia goes, so do other major countries around the world. When the government of Saudi Arabia announced a massive $28 billion funding initiative for renewable energy, the resulting shockwave could be felt throughout the rest of the world. Now, a year later, Middle East experts like Amir Handjani are taking a closer look at the details of this funding initiative.
Details surrounding Saudi Arabia’s renewable funding initiative first broke toward the end of September of 2019. The funding initiative for renewable energy was introduced by the Saudi Industrial Development Fund which aims to hand out more than 105 billion-riyal to accepted applicants to the program. When translated to USD, the 105 billion royals are equitable to roughly $28 billion. Individual loans can range as high as 1.2 billion riyals depending on the individual ownership of the businesses that apply. The renewable energy initiative will also offer equitable financing to businesses in other sectors that want to transition to renewable energy sources. Ibrahim Almojel is the CEO behind the funding initiative and he had this to say, “For renewables to be adopted in the Kingdom, we need to support it.”
Throughout Saudi Arabia’s long history, the country has traditionally associated its wealth with access to crude oil. As one of the two top oil producers in the world, Saudi Arabia’s decision to pivot toward green and renewable energy could have a domino-like effect throughout the rest of the planet. Despite the international impact that this fund will have, the goal of the initiative is to transform Saudi Arabia at its roots. Ahmed AlGwaiz is the VP of Risk Management at the Saudi Industrial Development Fund and he stated, “We treat all clients, as long as they’re in Saudi Arabia, the same.”
While news of the Saudi Arabian ‘green renewal focus‘ has garnered major headlines around the world, it isn’t exactly a new development. The fund was initially established in the mid-70s but it wasn’t until Crown Prince Mohammed bin Salman that the initiative started to gain more energy. Crown Prince Mohammed bin Salman had wanted to engineer renewed focus toward ‘life after oil’ and this funding initiative seeks to perform as an integral step forward. In fact, thanks to the Crown Prince, the funding initiative saw its capital increased by a stunning 60% in 2019.
Saudi Arabia has always been beholden to fossil fuels thanks to its massive oil reserves. Saudi Arabia’s massive GDP is comprised of many exports which include oil, plastics, organic chemicals, and shipping industry supplies. With that being said, mineral fuels, including oil, make up more than 78.6% of all their total exports, equating to nearly USD 231.6 billion in 2018 alone. Saudi Arabia is currently experiencing a policy shift and its corresponding evolution, and economists around the world are eagerly waiting to see how it all plays out.
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