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Global transition away from fossil fuels could take 30 years, Saudi finance minister says

While the global economy faces a 'very difficult six months', Saudi Finance Minister Mohammed Al-Jadaan said, the outlook for Gulf Arab oil producers was 'very good' and would possibly remain so for the next six years.

The New Arab Staff & Agencies
26 October, 2022

Riyadh's Finance Minister Mohammed Al-Jadaan was speaking at Saudi Arabia's investment forum FII [FAYEZ NURELDINE/AFP/Getty]

Saudi Arabia's finance minister said on Wednesday the world's energy transition away from fossil fuels could take as much as 30 years, necessitating continued investment in conventional resources to ensure security of supply.

While the global economy faces a "very difficult six months", Mohammed Al-Jadaan said, the outlook for Gulf Arab oil producers was "very good" and would possibly remain so for the next six years.

Saudi Arabia, the world's top oil exporter, and fellow Organization of the Petroleum Exporting Countries (OPEC) producers have warned of underinvestment in hydrocarbons especially while spare production capacity is thin and demand still relatively healthy despite strong economic headwinds.

"The thinking about energy and renewables and climate change… [has] now became more realistic that actually transition will take not only a year, not 10 years, [but] possibly 30 years," Jadaan said.

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"So we need to invest in our energy security, but at the same time not neglect climate change."

He was speaking at Saudi Arabia's investment forum FII, a showcase for the crown prince's drive to diversify the economy and attract foreign capital.

"In the region… we are making a lot of efforts to actually reduce emissions… We are investing as much in conventional energy but also investing in climate change initiatives," he added.

The Future Investment Initiative (FII) forum, which began on Tuesday, is expected to hold an auction of 1 million tonnes of carbon credits.

Ahead of the event, Saudi wealth fund PIF announced the establishment of the Regional Voluntary Carbon Market Company.

Saudi Arabia and fellow Gulf Arab states have sought to bolster their green credentials.

Riyadh last year said the kingdom aims to reach net-zero emissions of greenhouse gases, mostly produced by burning fossil fuels, by 2060.

Jadaan said global collaboration was needed to bring about stability and that Gulf Arab states would help countries in the wider region dealing with a "very difficult" economic outlook.

Bahrain's Finance Minister Sheikh Salman bin Khalifa Al Khalifa told the gathering that Gulf countries needed to build their production and export capabilities, since the majority of their non-oil GDP was currently built on consumption and imports.

(Reuters)