Saudi Electricity Company (SEC)

SEC set a target to reduce its scope 1 and 2 emissions by 25% by 2025 compared to 2016. The company needs to increase its targeted scope 1 and 2 emission reductions by a factor of 2.8 to align with its 1.5°C pathway. The time frame of the target is well before the retirement age of most of its fossil fuel generating assets. Any emission target should include short-term intermediary targets to incentivise management to act and long-term targets to enable strategic consideration of the lifetime emissions of new generation assets.

SEC’s investments in renewable energy dropped significantly from SAR 28 million (about USD 7.5 million) in 2019 to SAR 1.5 million (USD 0.4 million) in 2020. The company decreased its emissions intensity by about 4% annually between 2016 and 2020. However, between 2020 and 2025 the projected annual decrease is 2%. The company needs to decrease its emissions intensity by 6% per year to align with its 1.5°C pathway. Based on projected emissions between 2020 and 2035, SEC exceeds its carbon budget by 44%.

SEC is investing in low-carbon innovation. In 2020 some of the research projects focused on renewable energy technologies, energy storage and smart grids. The company can improve its transparency by publishing its low-carbon innovation expenditure and by disclosing a breakdown of investment by technology type, highlighting the investment in non-mature technologies. The company, which electricity generation portfolio is dominated by fossil fuels, is expected to develop new technologies and invest in carbon capture and storage (CCS) and hydrogen research projects.

SEC released a ESG Report in 2020 and Green Sukuk Framework where several future climate-related initiatives have been announced. However, the company is expected to conduct a climate change scenario analysis and risk assessment, evaluating the risk of “stranded assets”, increased costs and changed operating environment. The results should be expressed in value-at-risk, or other financial terms, and inform the company’s transition plan.

SEC set a target to reduce scope 1 and 2 emissions by 25% by 2025 compared to 2016 and phase out liquid fuel by 2030. The target is not aligned with the company’s 1.5°C pathway.

The company will invest SAR 7.1 billion (about USD 1.9 billion) by 2025 into renewable energy integration projects, growing the grid’s renewable energy capacity to approximately 19 GW. Liquid fuels will be replaced by natural gas.

In 2020 the company focused on fuel-saving initiatives and fuel efficiency improvement projects. These projects include converting diesel oil units to operate on crude oil and on natural gas.

Between 2016 and 2020, SEC’s scope 1 and 2 emissions intensity decreased by 4% annually due to energy efficiency improvement projects and purchased renewable energy. To align with its 1.5°C pathway, the company should decrease its emissions intensity by at least 6% per year.

SEC plans to increase the share of gas within its generation portfolio and works on energy efficiency measures for oil units. In 2020 investments in renewables were negligibly small and investments in carbon capture and storage technologies were not disclosed.