International Journal of Business and Economic Development Vol.

3 Number 3 November 2015

Saudi Arabian Green Economy Infrastructure: Barriers, Strategies &

Opportunity – An Analysis
Nisreen Ismail Albanawi
King Abdulaziz University, Jeddah
Keywords
Saudi Arabia; green initiatives; environment; desalination; sustainability; economy; economic
impact; investment opportunity
Abstract
Saudi Arabia is finally catching up with the rest of the developed world in terms of environmental
awareness. In the past, while much of the rest of the world spent its time pondering issues such as global
warming, water, air, and soil pollution, over-exploitation of resources, and a myriad of other
environmental concerns, the Saudi people and government seemed to be primarily focused on expanding
their capital in a globalized economy. However, in 2015, for the first time, this trend began to show
legitimate change. This new emphasis on environmental concerns has caused some interest and uproar,
specifically in the economic sector. The research, therefore, concentrated on the barriers, strategies, and
opportunities that might impede or encourage Saudi Arabia in its quest to develop a greener and more
sustainable economic infrastructure. After carefully considering the available literature, data, and reliable
statistics, the report concluded that, while change will be difficult and, possibly slow, Saudi Arabia should
expect to see greener projects and initiatives transpiring in their homeland over the course of the next
several years.
1. Introduction
In the past, little attention and low budget has been dedicated by the Saudi government
to address environmental concerns. While much of the rest of the world has spent its time
pondering issues such as global warming, water, air, and soil pollution, over-exploitation of
resources, and a myriad of other environmental concerns. Many developed economies have
managed to turn environmental challenges into profitable businesses rather than problems that
constitute a burden and high cost for the economy (Taher & Al-Hajjar, 2014). Through
collaborations between public and private sectors, companies in those economies have been able
to make environmental issues a core part of their business strategy. The Saudi people and
government seemed to be primarily focused on expanding their capital in a globalized economy
(Ali & Al-Aali, 2012). However, in 2015, for the first time, this trend began to show legitimate
change. The 2015 budget, written by Saudi officials, consisted of an expenditure section
specifically allocated for environmental issues, to include water supply, sewage issues, and
other environmental concerns particularly relevant to Saudi Arabia (Saudi Arabia Sustainable
Energy, 2015). Finally, two decades later than some nations, Saudi Arabia was entering into the
ongoing dialogue regarding the need to protect the environment. Probably, Saudi Arabia is
looking ahead to create opportunities with dedicated strategies to handle the environmental
issues.
This new emphasis on environmental concerns has caused some interest and uproar,
specifically in the economic sector. With any change, there is always room for new products,
services, and technologies to become in demand and useful. This paper, therefore, will focus on
the barriers, strategies, and opportunities that might impede or encourage Saudi Arabia in its
quest to develop a greener and more sustainable economic infrastructure.

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 International Journal of Business and Economic Development Vol. 3 Number 3 November 2015

2. Methodology
This research will consist of carefully analyzing the literature available regarding certain
major environmental concerns that Saudi Arabia is currently facing. Peer-reviewed, scholarly
journal articles, expert testimony, statistics, and other raw data from government and reliable
sources will be scrutinized to help determine the major concerns present. Then, the obstacles
that could stand in the way to fixing these aforementioned problems and transitioning Saudi
Arabia into a greener, healthier nation will be highlighted. Afterwards, strategies will be
explored that could help to facilitate the necessary transitions. Next, opportunities in green
infrastructure for public and private companies and investors will be highlighted, and evaluated
for feasibility. Based on these findings, a final analysis will be carried out to assess the likelihood
of Saudi Arabia making the necessary changes to protect their natural resources.
3. Saudi Arabia’s Major Environmental Concerns
The Kingdom depends heavily on oil revenues for government budget; it is the largest
exporter of oil, as it owns 25 % of the world’s oil reserves, and has an approach of balancing
between production and consumption of resources in addition to looking to balance economic
growth and environmental challenges (Taher & Al-Hajjar, 2014).
Highly aggregated indices have been developed to quantify social and environmental
aspects of sustainable growth. Such indices aim to reflect all the different dimensions of
sustainability in a single measurement (ESCWA, 2013). For example, the Environmental
Sustainability Index evaluated national environmental performance in terms of 21 indicators
covering natural resource endowments, pollution levels, environmental management efforts,
contributions to protection of the global commons and the capacity of a society to improve its
environmental performance over time. A high score on the Environmental Sustainability Index
or the Environmental Performance Index signifies high achievement. Table 2 provides a sample
of those rankings, which clearly indicates that Saudi Arabia (49.97) ranked third amongst the
Arab world, after United Emirates (50.91) and Egypt (55.18), in the year 2010.
Table 1: Ranking of Selected Arab Countries on Environmental Indices.

Source: http://epi.yale.edu
By the year 2014, the statistics of Environmental Performance Index, (figure 1), showed
improvement in the country rankings, reflected Saudi Arabia as the second highest (35), behind
United Emirates (25), amongst the Arab Nations.

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 International Journal of Business and Economic Development Vol. 3 Number 3 November 2015

Figure 1: The overview of the Saudi Arabia performance in 2014.

Source: http://epi.yale.edu
3.1. Water and Sewage Issues
It is a well-known fact that the Arabian Gulf’s hyper-arid climate creates major problems
for potable water which, in turn, results in many, related problems such as the disposal of waste
via a sewage system (Kajenthira, Siddiqi, & Anadon, 2012). Most Gulf and Middle Eastern
nations, to include Saudi Arabia, lack sufficient water sources for its people and agricultural
needs (Barau & Al Hosani, 2015). Importantly, Saudi Arabia is the third-largest per capital water
user in the entire world (Kajenthira, Siddiqi, & Anadon, 2012). Therefore, Saudi Arabia, as well
as its neighbors, have major problems obtaining the high quantities of water necessary to serve
the basic needs of its people and industries. More often than not, the country tends to rely,
heavily, on seawater desalination and the abstraction of underground water. Unfortunately,
both of these options are not eco-friendly and are not renewable (Barau & Al Hosani, 2015).
The water desalination process is a very extensive and environmentally damaging
process that turns salt water into potable water. Desalination is an energy-intense procedure that
raises domestic as well as global environmental concerns (Sadrzadeh & Mohammadi, 2008).
Over the course of the past several decades, the Saudi government has expressed a desire to
rethink its water options. Moreover, the current water desalination process requires so much
energy that Saudi Arabia has to use all its natural gas reserves to support it (Figure 2). This has
resulted in the government and its industries having to develop more expensive and
environmentally damaging high-sulfur energy sources, thereby augmenting the problem even
more (Kajenthira, Siddiqi, & Anadon, 2012).
Figure 2: Saudi domestic demand for oil, primary energy (oil plus natural gas), and electricity
(1976-2011).

Source: Electricity sales: Saudi Arabian Monetary Agency (SAMA, 2012), oil and primary energy
consumption: BP Statistical Review (2013)
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 International Journal of Business and Economic Development Vol. 3 Number 3 November 2015

3.2. Clean Energy

Ironically, despite the fact that Saudi Arabia is amongst the leading petroleum producing
nations in world, it still has plans to transition its own energy supply to sustainable and
renewable resources. Currently, it use of petroleum-based energy products has caused major
problems. Not only does these energy sources pollute the air, they also wreak havoc on the
limited water supply and degrade the quality of the soil (Rahman, Rehman & Abdul-Majeed,
2012). Moreover, initial studies have indicated that the process of extracting the oil is just as
damaging, if not more so, to the Saudi and global environment than the burning of fossil fuels.
This has caused great concerns, to include an increase in health-related issues (Wise, 2015).
3.3. Greener Construction
In recent years, the Saudi government, as well as private investors, have created a mass
amount of new infrastructure and building complexes in the Kingdom. For the most part, little
to no attention was given to sustainable building practices. Rather, buildings, roadways, and
other development was simply done as quickly and cost-effectively as possible (Medallah, 2015).
This has begun to cause some environmental problems for the state, making greener options
seem more enticing. Increased costs of energy, building materials, higher regulatory standards
and greater consumer interest are driving the expansion of the green building market in many
countries, although the trend in the Arab region is not yet widespread. New housing and even
new cities are being developed in the United Arab Emirates and Saudi Arabia (ESCWA, 2013).
The chief sustainability officer of UTC Building & Industrial Systems recently reported “Saudi
Arabia has already shown strong interest in strengthening its green building presence”, (Al
Bawaba, 2014). Undoubtedly, this is due, in part, to the consequences already experienced by
Saudis, such as an increase in health-related ailment to include asthma (Medallah, 2015).
In sum, Saudi Arabia has many environmental issues that need to be addressed. These
include, but are not limited to, water shortages that lead to sewage issues, a strong reliance on
non-renewable, petroleum-based dirty energy, and unsustainable construction. The next section
will carefully explore some of the major obstacles that stand in the way of creating greener
infrastructure in Saudi Arabia.
4. Obstacles
Unfortunately, there are always obstacles that prohibit positive change. Cost is a major
obstacle that stands in the way of Saudi Arabia developing sustainable, green infrastructure. Dr.
Kok, a professor of economics at Maastricht University in the Netherlands, has studied the
economic implications of green energy in Saudi Arabia for several years. His findings suggest
that higher rent rates are associated with energy-efficient buildings, making Saudis less likely to
choose these types of infrastructure for their homes and businesses. Petroleum-based energy
options are so plentiful and inexpensive that it makes it incredibly hard for renewable energy
sources to compete. Most of the time, they cost significantly more money and, therefore, lack a
competitive advantage (Al Bawaba, 2014). Moreover, there is an overarching thought amongst
many Saudis that the nation should use its own natural petroleum resources and not invest in
other forms of energy. Such thought is hard to break because oil has been such a strong part of
the Saudi economy for decades. It is excruciatingly difficult to convince people to invest in
renewable energy whenever non-renewable energy resources are so plentiful (Taher & Al-
Hajjar, 2014).
Additionally, there are not a lot of options for obtaining potable water. Options, other
than desalination of seawater, are costly and extremely difficult to carry out (Figure 3).
Importantly, technology is still in its infancy regarding other, more environmentally friendly

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methods of obtaining water in areas such as Saudi Arabia. For the most part, new technologies
are still being developed to help meet this need in a cost-effective, greener way (Barau & Al
Hosani, 2015). Right now, most experts agree that Saudi Arabia has to spend a large bulk of its
resources investing in new methods of obtaining potable water, as well as put stricter limits on
water consumption. Unfortunately, the petroleum industry is the number one user of water in
the nation, making it extremely difficult to monitor water usage (Barau & Al Hosani, 2015).
Figure 3: Demand for desalinated water in Saudi Arabia.

Source: Ministry of Water and Electricity (2012).

5. Strategies
One strategy being employed to encourage Saudi businesses, government agencies, and
individual people to support and develop greener infrastructure is through education. For
instance, one environmental group started the Distinguished Sustainability Lecture Series. This
program helps to keep the public and investors abreast to sustainability issues in Saudi Arabia
as well as throughout the world (Al Bawaba, 2014). It also makes people aware of problems
inherent with current operating procedures, such as desalination processes and petroleum /
natural gas extraction (Al Bawaba, 2014). Through education initiatives, this program, and
others like it, are attempting to win the support of big businesses, the Saudi government, and
the people. Studies show that, oftentimes, investors and everyday citizens are not aware of the
benefits associated with green infrastructure (Taleb & Sharples, 2011). Not only are there health
benefits to environmental sustainability, there are also investment opportunities that,
theoretically, could make investors huge sums of money.
Another strategy implemented is to train investors and workers, alike, on sustainable
planning and construction. This includes green building training. The Leadership in Energy &
Environmental Design (LEED) is sponsored by the Saudi government, forward-thinking, and
timely. As of 2015, the Saudi government has given businesses five full years to meet the newly
established noise, water, and air pollution standards. These trainings will help facilitate the
transition, and make it as smooth and economic as possible (Al Bawaba, 2014).
Since numerous studies have shown, unequivocally, that solid waste management,
electricity generation, and the agriculture industry are the sectors in Saudi Arabia that are
culpable of producing the highest amounts of greenhouse gasses. The Saudi government is
trying to encourage investors to find new, innovative methods of providing the same services in
a greener manner. This appeal to technology industries is very effective since the government
offers subsidies and grants to innovative investors and inventors (Coad, 2012). This is just one
more strategy to try to get people to recognize the issues at hand and develop cost-effective and
feasible means to compensate (Coad, 2012).
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6. Opportunities
With any major infrastructure or operational change, there are always new opportunities
that emerge. This is a prime time in Saudi history for new businesses to enter into the
marketplace and provide greener strategies and infrastructure. Smart investors will leap at the
opportunity to take part in this changing norm. For instance, as per the Saudi Green Building
Forum, 76 green projects are underway that exceed $26 billion U.S. dollars (Al Bawaba, 2014).
Included in these projects is the King Abdullah Financial District, which is lauded as the world’s
largest green building development expanding over 1.6 million square meters. Moreover, the
Ministry of Islamic Affairs is currently planning to make a minimum of 90,000 Saudi mosques
eco-friendly via the use of various types of renewable energy sources, to include solar, wind,
and hydro energy (Al Bawaba, 2014).
Also, the government is currently looking for companies that are able to provide
software packages designed to monitor water consumption in existing Saudi households and
businesses, and provide a cost-analysis estimate of the amount of savings that would result in
various proposed changes. These programs should calculate the prospects for applying different
measures to everyday Saudi houses and apartments in order to manage energy and water usage
in a more sustainable manner. Then, based on these findings, the Saudi government will be
looking for companies and investors to put the best methods into practice (Al Bawaba, 2014).
Yet another opportunity would be for companies to invest in technologies and
mechanisms that would permit the oil and natural gas sectors to reuse their water. Already, the
government has stated that it is willing to provide significant subsidies to companies able and
willing to create the technology necessary to reuse and conserve water. Its overarching goal is to
increase “wastewater treatment and reuse in six high-altitude inland cities could save a further
$225 million dollars and conserve 2% of Saudi Arabia's annual electricity consumption”
(Kajenthira, Siddiqi, & Anadon, 2012, p. 184).
7. Conclusion
In sum, while there are, undoubtedly, obstacles that stand in the way of Saudi Arabia
transitioning to a greener and more sustainable nation, no obstacle is so significant that it cannot
be overcome with ingenuity and dedication. Moreover, the new push towards greener
infrastructure will create many new jobs and investment opportunities for proactive, forward
thinking individuals. The coming changings are much needed and well-supported by the Saudi
government. Saudi Arabians should expect to see major changes to their nation in the coming
years, to include cleaner water, soil, air, as well as more sustainable and renewable energy
sources.
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