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Crude Economics
Saudi Arabia Touts Green Ambitions

We’re less than three weeks away from the start of the Paris climate summit and the national climate pledges are still trickling in. Unsurprisingly it’s the world’s petrostates who are bringing up the rear, but Saudi Arabia just sent in its Intended Nationally Determined Contribution (INDC)—UN jargon for national-level climate commitments. The AP reports:

The pledge…was mainly focused on efforts to diversify the Saudi economy and study the impact on it by international policies to fight climate change. Saudi Arabia gets about 80-90 percent of its revenue from oil exports.

The submission said diversification efforts could help Saudi Arabia avoid 130 million tons of carbon dioxide emissions annually by 2030, but didn’t give a detailed explanation of how to achieve that.

Oil revenues keep the regime afloat and the country relevant on the global stage, but like any major oil producer Saudi Arabia is keenly aware of its heavy reliance on a finite resource. Though the specific timeline of “peak oil” seems constantly to be in flux, the Saudis understand the importance of diversifying their economy away from the sale of a single hydrocarbon. That kind of broadening wouldn’t just be useful in times of scarcity, but also in times of overabundance, as we’re now seeing with the global oversupply of crude and the resultant crash in prices. Riyadh would love a more diverse and dynamic economy to help weather the bearish oil market.

That’s the context in which we need to place this latest pledge. This isn’t some green victory, nor is it a sign that the world’s petrostates will suddenly turn over a green leaf. Like China, Saudi Arabia sees a chance to package important future economic goals as eco-friendly.

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