THE ENERGY INDUSTRY TIMES - APRIL 2018
News Viewpoint 9
Saudi Arabia-UK cooperation will help
wean kingdom off oil dependency
The memorandum of understanding between Saudi Arabia and the UK on low-carbon technologies is very fortuitous.
The leaders of both countries are seeking economic diversification – Theresa May to strengthen a diverse post-Brexit
British economy and Prince Salman to realise his ambitious domestic reform. Vicente Lopez Ibor Mayor
Last month’s visit by Prince Mohammad
bin Salam to the UK was billed as
a huge trade opportunity for both nations,
with the Kingdom’s Foreign
Minister saying the visit could lead to
up to $100 billion worth of bilateral
trade. Energy will almost certainly be
a part of Britain’s trade nexus with
Saudi Arabia.
After all, for the best part of a century,
Britain’s relationship with Saudi
Arabia has predominantly been about
one thing: oil. It is fossil fuel that has
propelled Saudi towards a steep development
curve, regional leadership, and
global indispensability.
But nothing lasts forever – and Saudi’s
ruling class know that. Just like the
UAE, Saudi Arabia’s new young leadership
appreciates that oil dependency
is not a sustainable future path for any
21st century economy.
One report by JP Morgan suggested
that oil could begin drying up as early
as 2030. That is almost certainly a severe
exaggeration – renewables will
not replace entirely fossil fuels any
time soon, not in Saudi Arabia nor anywhere
else.
But the whole world is going to have
to face, in the coming generation, an
energy sector that is clearly less focused
on oil.
Increasing competitiveness and technological
advances in solar energy, not
to mention the high cost of domestic
oil consumption, has made fossil fuel
divestment a very real phenomenon in
the Kingdom.
Changing energy sources will have
significant economic, social and even
political consequences for every citizen
worldwide. But the effects – for
better or for worse – will be felt even
more acutely in Saudi Arabia and
across the Middle East.
If the Kingdom cannot or will not
adjust to the new phase, it could send
the Arab world into a downward spiral
of catastrophic decline and turmoil.
Saudi and its oil is not only essential
to political stability in the Gulf, and the
benefits to global security and intelligence
sharing that go along with that.
Saudi Arabia is also a key economic
driver for poorer countries in the Middle
East and elsewhere. Guest worker
remittances sent home from Saudi are
a lifeline for economies around the
world. And Saudi Arabia’s role in supporting
other Arab countries going
through difficult transitional stages
(such as Egypt, which the Prince visited
en route to London) is essential.
The good news is that the millennial
Crown Prince Mohammad Bin Salman
understands this and wants to make his
State a centre of global solar power.
This is not a PR stunt – they are investing
$50 billion dollars in renewable
energy in the next five years (the same
amount the UK invests). As part of the
Prince’s grand Saudi Vision 2030,
Saudi Arabia aims for renewables to
account for as much as 10 per cent of
all power generation in Saudi Arabia
by 2023 – more than almost anywhere
else in the world.
And at the same time as diversifying
his nation’s energy sources, Prince Salman
is liberalising his economy. Many
of the areas where he will need external
partnerships are domains of British
expertise – technical competencies that
post-Brexit Britain will be free to share
with its friends, whether they are located
in Europe or the Middle East.
British renewable energy companies
have excelled in the scaling of industrial
solar PV and storage solutions. If
they can work with Saudi Arabia to
grow their renewable energy capacities,
they can make a world-changing
impact on global warming and climate
change. And as a bonus, they can support
Britain’s most important friend in
the Arab world and revitalise post-
Brexit Britain’s economy.
Indeed, the intersection between
what Saudi Arabia needs and what the
UK can offer is very fortuitous. The
leaders of both countries are seeking
economic diversification – Theresa
May to strengthen a diverse post-Brexit
British economy and Prince Salman
to realise his ambitious reforms.
It is ironic that some of the countries
that have historically been most excited
about solar power have had the
coldest weather: Germany, the UK,
Denmark. Saudi Arabia’s sun is as
plentiful as its oil – and unlike fossil
fuels, it is not going anywhere.
Vicente Lopez Ibor Mayor is Co-
Founder of Lightsource BP and
Chairman of the Lightsource Foundation.
He is also Chairman of solar
storage company Ampere and is former
Director of Spain’s National Energy
Commission.
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Lopez-Ibor Mayor: Saudi Arabia’s sun is as plentiful as its oil
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