The viability of energy efficiency in facilitating Saudi Arabia's journey toward net-zero emissions

Abstract

Assessing the contribution of energy efficiency to climate change mitigation is crucial as global warming continues to persist. This study assesses the impact of energy efficiency on carbon intensity in Saudi Arabia and evaluates its potential contributions to the country's net-zero emissions target. We analyze time-series data for Saudi Arabia from 1971 to 2020 and estimate a quantile regression model. The results show that energy efficiency is critical for mitigating carbon dioxide emissions, indicating the importance of activating this lever to accelerate the decarbonization process. The model is robust to changes in the proxy for energy efficiency, confirming energy efficiency's ability to mitigate environmental degradation in Saudi Arabia. Moreover, energy efficiency has a greater impact on the twenty-fifth to seventy-fifth quantiles of carbon intensity than on the tenth and ninetieth quantiles. These heterogeneous effects across carbon intensity quantiles should be considered when the Saudi government discusses and sets its decarbonization objectives. We further extend the analysis by forecasting carbon intensity through 2060 under a scenario in which energy efficiency improves. The results show that energy efficiency improvements may account for up to one-fifth of Saudi Arabia's decarbonization by 2060. This finding underscores energy efficiency's importance for achieving climate stability and building a better future.