Digital rendering of NEOM’s The Line project in Saudi Arabia
The Line, NEOM
Saudi Arabia’s Public Investment Fund (PIF) has allocated $5.2 billion to projects as of June 2024 of the $8.5 billion raised through green bonds, according to an allocation and impact report released on Friday.
This allocation was up from $1.3 billion in June last year.
Green bonds are a type of proceeds used to finance projects that benefit the environment. PIF became the first sovereign wealth fund to issue a green bond in October 2022. The company then issued its second green bond in February 2023.
The giant sovereign wealth fund, which manages $925 billion in assets, has a capital expenditure requirement of $19.4 billion for what it deems “eligible green projects,” according to PIF’s annual report.
PIF said the funds were “allocated to development finance in line with eligibility criteria with large-scale spending on renewable energy, green buildings and sustainable water management projects,” and that eligible green projects were “We will contribute to the development goals of the world,” he added.
Saudi Arabia has set a goal of reducing greenhouse gas emissions to net zero by 2060, and is pouring billions of dollars into what it calls sustainable development projects. The drive is part of Crown Prince Mohammed bin Salman’s Vision 2030 plan, which aims to diversify and modernize the kingdom’s economy and reduce its dependence on oil.
Saudi Arabia’s much-touted Vision 2030 ambitions have many critics. It is the reliance on heavy industry and strict requirements for construction and building materials that cast doubt on the sustainability of megaprojects like Neom, a 10,200 square mile urban development on the Red Sea coast. This level is extremely high even though much of the Saudi economy remains dependent on oil production.
Phillip Oldfield, principal of the University of New South Wales School of the Built Environment, told architecture and design magazine Diezen in 2022 that the carbon costs of building Neom “will overwhelm the environmental benefits”, adding that the project is expected to exceed 1.8 It is estimated that this could result in carbon costs of 1 billion tons of carbon dioxide by volume.
PIF’s Allocation and Impact Report highlights case studies that support its sustainability pledge. The project is about a planned water sustainability project in Neom that will develop a “complete circular system to achieve water positivity” that will enable “100% wastewater recovery and energy-neutral recycling.” I’m explaining.
PIF also noted its focus on green hydrogen, which many industry experts see as playing a key role in the energy transition. Neom Green Hydrogen, a joint venture between Neom and Saudi firm ACWA Power Air Products, will be the world’s largest green hydrogen plant and will be run “completely on renewable energy,” according to the report.
PIF is providing partial or full financing for each of the case studies mentioned in the report, all of which have not yet been completed.
