Industrial Decarbonization in Saudi Heavy Industry: A Practical Path to Lower Energy Intensity

Saudi evidence suggests policymakers should be careful about “automatic” decarbonization narratives. A Saudi Arabia study using annual data from 1970–2022 finds that once energy intensity is controlled for, structural change toward services has no robust short-run association with carbon intensity. The same study also reports that urban population scale is associated with higher carbon intensity in already high-intensity regimes at upper-middle quantiles (τ = 0.7–0.8), but not elsewhere in the distribution, and it finds no structural break around 2014, 2016, or 2020. In practice, that points planners back to the basics: manage demand growth, cut energy intensity, and decarbonize the energy mix.

What It Takes to Lower Energy Intensity in Heavy Industry

One practical lever is to make low-carbon electricity easier for manufacturers to buy and to plan around. A Saudi industrial competitiveness preprint recommends industrial renewable procurement through bankable structures such as long-term offtake/PPAs and green tariffs. The logic is direct. Renewables can offer lower and more predictable generation costs, which can reduce manufacturing input costs and help decarbonize products for export markets. The same source notes that energy use can look “good” when it reflects expansion, but it can look “bad” when it reflects high energy intensity and weak efficiency, making efficiency upgrading and innovation critical to long-run competitiveness.

For emissions that cannot be eliminated quickly in energy-intensive processes, CCS is positioned as a system tool. A ScienceDirect review notes techno-economic assessments indicating that a 2035 target of capturing 44 million tonnes per annum of CO₂ across industrial sectors is feasible at a volume-weighted average cost of $52/tCO₂. Another CCS-focused assessment emphasizes that a national-scale marginal abatement cost curve should integrate capture, transportation, and storage costs together, because CCS projects incur both transport and storage costs simultaneously. It also highlights the value of CCS hubs and clusters for infrastructure optimization, including pipeline routing and storage site prioritization.

Near-term hub design and industrial clustering are repeatedly cited as the implementation pathway. One market-focused source describes the Jubail CCS Hub as designed to capture 9 million tonnes of CO₂ annually starting in 2027, and frames Jubail and Yanbu as international CCS hubs serving clustered petrochemical, steel, and cement producers with shared infrastructure. The same source states that Saudi Arabia’s refining sector generates approximately 49.5 million tonnes of CO₂ emissions annually across nine refineries, with individual facilities producing between 2.6 and 9.4 million tonnes per year. Separately, a Saudi energy-transition review reports that Saudi Aramco’s flaring minimization programs prevented 80 million tonnes of CO₂ equivalent from being emitted over recent years. Together, these figures show why lowering industrial energy intensity in Saudi Arabia must be paired with scalable abatement where efficiency and electrification are not enough.