Tuesday, May 26, 2015

Saudi Arabia to Reduce Oil, Export Electricity

Saudi Arabia says it is ready to start phasing out fossil fuels. It is a surprising change in strategy from one of the world’s largest oil producers and consumers and the country with the most extreme oil subsidies. Those subsidies, though, will be phased out over the next 10 to 20 years, a key step in reducing carbon emissions to try to stabilize the global climate. By 2040 Saudi Arabia plans to replace most of its oil consumption with electricity. The country could easily generate from renewable sources more electricity than it uses. Its plan is to export electricity to neighboring countries, but that probably won’t work, with countries like Kuwait and Egypt also able to generate a surplus of electricity. Probably somehow the region’s electric output could be exported to cloudier places. Turkey and Europe will likely remain energy importers and would gain a measure of economic stability with the addition of a large-scale new source of energy. Another scenario is that a country with an excess of electricity could desalinate water and export it through pipelines. Water, of course, will become more scarce in many places over the next century.

Saudi Arabia must start to make plans for a post-oil economy, as its oil is becoming more expensive to find and extract. By starting now, it can make the transition gradually and smoothly.