Saudi Arabia is putting its ‘money where our mouths are’ on climate funding – minister

The Gulf country still derives some 40 percent of its gross domestic product from oil revenues, but the country has looked to rapidly diversify its economy, moving away from petroleum and dumping large amounts of money into green projects and investments.

Saudi Crown Prince Mohammed bin Salman announced two initiatives that will cost around $10.4 billion over the next decade to fund the circular carbon economy and provide clean fuel to help feed 750 million people worldwide.

The kingdom will foot 15 percent of that bill and seek the remainder from regional funds and other countries.

“We’re also putting our money where our mouths are,” Al Saud said.

Saudi Arabia has championed the concept of a circular carbon economy which aims to remove carbon, store it, and reuse the substance responsible for a large part of global climate change. The kingdom recently pledged it would reach net zero emissions by 2060 ahead of the COP26 climate conference that kicks off next week in Glasgow.

“At the very fundamental carbon level, we think about recycling carbon itself, and whether it be carbon emissions, or whether it be solid carbon, we imagine a future where we’re refining CO2 to make the products we need in our daily lives,” Jennifer Holmgren, CEO, carbon capture company Lanzatech said during the panel.

Technologically, the world is getting there, but the tech is expensive to develop and scaling it remains an issue.

Holmgren said once the first commercial product is built, building more becomes easier and cost and efficiency curves come down as the technology is diffused.

At the "Science in Action: Investing in the Circular Economy" panel at #FII5, @LanzaTech CEO Jennifer Holmgren shared her visions of a sustainable future. #ImpactOnHumanity pic.twitter.com/peL83YkNdv

— FII Institute (@FIIKSA) October 27, 2021

But investing in unproven tech is risky for investors who are primed to avoid risk.

“What we want to see as an infrastructure investor, is the technology proven? And if it’s proven, then we can invest in the infrastructure that will enable it to scale it,” said Matthew Harris, founding partner at investment fund Global Infrastructure Partners.

The funding gap for environmental, social and governance projects is an estimated trillion-dollar gap, and experts are increasingly calling on the private sector to play a greater role in filling that gap.

However, regulatory frameworks and policies must be in place to incentivise that money flow. One of those policies is a cost on carbon.

“It starts with a regulatory framework, and starts with a common understanding of how we’re going to adopt policy. And then also it comes into promoting the right financing the right stimulus for the recycling of carbon and the carbon economy to be circular,” said Lorenzo Simonelli, chairman and CEO at oil company Baker Hughes.

Harris said: “We need transparency. Ideally, what I’d like to see is a global price on carbon, so that we can easily factor in the price of decarbonisation.”