Meeting Saudi Arabia’s
Carbon Mitigation Goals:
Some Preliminary Findings
Douglas Cooke
Program Director

Introducing KAPSARC
 The King Abdullah Petroleum Studies &Research Center (KAPSARC) is anindependent, non-profit research institution
located in Riyadh, Saudi Arabia

 Its mission is to advance energy economics

insight and to catalyze effective energy
policy dialogue

 Research focuses on energy policy,

economics, technology and environmental
issues Currently over 60 researchers, expanding toover 100 in 20172

The Strategic Policy Challenge• Paris Accord took a decentralised approach to drive global collective action• But the sum of nationally determined contributions to date is insufficient tomeet currently agreed global goals• A more practical policy approach is needed to help close the gap3

Practical Climate Change Policies
Research Project
 KAPSARC and IEEJ are undertaking a joint research project to examine morepractical approaches to climate change policy Key elements of the project include:• Developing efficient global pathways that incorporate mitigation andadaptation• Examining nationally optimal approaches that reflect local starting points
and how they might be influenced by stakeholder interests

4

Project Methodology
Step 1• Calculate efficient global pathways for meeting agreed
global emission outcomes/targets

Step 2• Establish “emissions envelopes” at the country (or regional)
level

Step 3• Identify and evaluate potential country-specific policies andassess impacts

Step 4• Explore how stakeholder interests may influence the choiceof polices and their implementation at a country-level

5

KAPSARC’s Saudi Arabian Carbon Mitigation
Research Project Objective• To identify economically optimal policies and pathways to meet Saudi

Arabia’s NDC and assess their impacts; and• Explore how internal stakeholder interests may influence the choice ofpolicies and their implementation

 Study methodology• Quantitatively assess least cost pathways for Saudi Arabia to achieve its
NDC under the Paris Accord

 Policy options• Carbon pricing• Capital subsidies• Industrial input fuel price deregulation
6

Analytical Framework Analysis uses the KAPSARC Energy
Model of Saudi Arabia (KEM) Partial-equilibrium model for six
integrated industrial sectors
 KEM seeks to minimizes costs
associated with meeting demand
from these sectors
 Analysis focuses on the power andwater sectors (includinginteraction of other sectors)

KEM sectors
PowerWater

Upstream

Petrochemicals

Refining

Cement

GHG Emissions

7

Saudi Arabian Energy Sector Overview
 Primary energy supply: 213.51 Mtoe
 Oil production: 552.9 Mtoe
 Petroleum exports: 429.65 Mtoe
 Final energy consumption: 141.69 Mtoe
• Electricity: 290.66 TWh• Electricity sector operation anddevelopment is greatly influenced
by the water sector (desalination)
 Population: ~ 31 million (2015)
 Carbon emissions: 506.59 MT CO2e
Source: IEA 2016

8

Saudi Arabia Drives Regional Energy &Carbon Emissions GrowthSources: IEA and Enerdata

9Saudi Arabia’s Carbon Mitigation Goals
 Nationally Determined Contribution targetof 130 million metric tons of CO2 equivalentby 2030

 Greenhouse gas reductions viewed as

Carbon Emissions by Sector (2015)
100%

Waste

90%

Agriculture
Other

80%

Transport

co-benefits of economic diversification
activities

70% Mitigation measures include:• energy efficiency• renewable energy• carbon capture & utilization/storage• increased use of natural gas• methane recovery

50%

60%

40%
30%

Manufacturing
Industry

Power & Water

20%
10%0%
10

Carbon Pricing: Carbon Emissions
CO2 emissions (million tons per annum)

450
400
350
300
250
200
150
100
500
2016

2018
Reference

2020
NDC

2022

2024

2026

2028

$5/ton$25/ton$35/ton$50/ton2030

11

Carbon Pricing: Electricity Production
2030

800

Electricity production (TWh)

700
600

2020

500
400

2015

300
200
1000

Steam turbine

Gas turbine

CCGT

PVCSP

Onshore wind

Desalination
12

Carbon Pricing: Capital Investment

Cumulative investment (billion USD)250200

150

100

500Reference
Steam turbine$5/tonGas turbine

CCGT$25/tonGas turbine retrofit$35/ton
PVCSP$50/tonOnshore wind13

Carbon Pricing: Fuel Mix

Fuel consumption (quad BTU)

7

2030
2030

6

2020

542015
2015

2020

32
10

HFO

DieselMethane

Crude oil14

Capital Subsidies: Carbon Emissions
CO2 emissions (million tons per annum)

450
400
350
300
250
200
150
100
5002016

2018

2020

2022
Reference

2024
NDC

2026

2028

2030

10%
15

Capital Subsidies: Electricity Production
2030

800

Electricity production (TWh)

700
600

2020

500
400

2015

3002001000Reference
SteamReference
Gas turbine

CCGT

10%PV

CSP

Reference
Onshore wind

10%Cogeneration
16

Capital Subsidies: Capital Investment

Cumulative investment (billion USD)

300

250

200150100500Reference
Steam turbine

Gas turbine

10%CCGTGas turbine retrofit

PVCSP

Onshore wind17

Capital Subsidies: Fuel Mix
72030

Fuel consumption (trillion BTU)

65420202015

3210

Reference

Reference
HFO

10%DieselMethaneReference

10%

Crude oil18

Industrial Input Fuel Price Reform:
Carbon Emissions
CO2 emissions (million tons per annum)

450
400
350
300
250
2001501005002016

2018
Reference

2020

2022
NDC

2024

Immediate2026
5 year2028

2030

8 year19

Industrial Input Fuel Price Reform:
Electricity Production

2030

800

Electricity production (TWh)

700
600
500
400

2020
2015

300
200
1000

Reference Reference Immediate
Steam turbine

Gas turbine

5 yearCCGT

8 yearPV

Reference Immediate
CSP

Wind

5 year

8 yearDesalination
20

Industrial Input Fuel Price Reform:
Capital Investment
Cumulative investment (billion USD)

400
350
300
250
200
150
100

500

Reference
Steam turbine

Gas turbine

Immediate
CCGT

5 year

Gas turbine retrofit

8 year
PVCSP

Onshore wind21

Industrial Input Fuel Price Reform:
Fuel Mix
72030

Fuel consumption (quad BTU)

65420202015

3210

Reference Reference Immediate

5 year

8 year

HFODieselMethane

Reference Immediate

5 year

8 yearCrude oil22

Some Preliminary Comparative Results

Cumulative investment (billion USD)

400
350
300
250
200
150
100500

Reference
Steam turbine

Gas turbine

Carbon price
CCGT

Fuel price reform

Gas turbine retrofit

PV

Capital Subsidy
CSP

Onshore wind23

Anticipated 2017 Milestones
Publications: Potential practical carbon policy
options & pathways for Saudi Arabia
 Potential practical carbon policy
options & pathways for Japan Optimal global emission pathways
including mitigation & adaptation
Research: Incorporate bargaining &macroeconomic analysis
 Expand study framework to examine
China, India and the Gulf
Cooperation Council states24Meeting Saudi Arabia’s
Carbon Mitigation Goals:
Some Preliminary Findings
Douglas Cooke
Program Director