Assessing the Impact of Energy Transition Initiatives on the Policy Cost of Saudi Arabia's Net-Zero Ambition

Abstract

Saudi Arabia's ambitious goal to achieve a net-zero economy by 2060 offers a unique opportunity to diversify away from fossil fuels while fostering long-term economic resilience and sustainability. Crucial to this transition are energy policies that guide the Kingdom from a fossil fuel-based economy toward carbon neutrality. This study uses GCAM-KSA, a multi-sectoral integrated assessment model tailored to Saudi Arabia's economic and energy systems, to evaluate the impact of early energy transition initiatives on the policy costs of achieving the Kingdom's net-zero target. These initiatives include ongoing and proposed energy efficiency measures, renewable energy deployment, and fuel displacement targets. The study highlights that early implementation of these initiatives can significantly reduce barriers to adopting low-carbon technologies, ultimately lowering the economic burden of achieving the net-zero goal. Compared to a delayed implementation scenario, early action reduces long-term policy costs by 38–72% over the period from 2025 to 2060, driven by accelerated energy system transformation. These findings provide valuable insights into how Saudi Arabia's energy policies can mitigate economic challenges, promote economic diversification, and contribute to global emission reductions, reinforcing the Kingdom's transition to a sustainable net-zero economy.