SAUDI RED SEA PROJECT GETS GREEN FUNDING

SAUDI RED SEA PROJECT GETS GREEN FUNDING

Over the past three years, international capital markets have agreed to a framework for ‘green financing’ that seeks to encourage new projects that recognise the need to limit carbon emissions and reverse the impact of climate change.

This week, Saudi Arabia announced that its Red Sea Development Company is to receive $3.76 billion from a green Riyal-denominated credit facility – the first such eco-finance scheme to be used in the Kingdom.  The money will be used to part-fund the construction of 50 resorts along Saudi Arabia’s Red Sea coast, with a view to attracting tourists from around the world.

The Red Sea tourism initiative may seem wholly out of kilter with Saudi Arabia’s previous reputation as an austere and closed society that closely guarded the holiest sites of Islam (the cities of Mecca and Medina) and maintained tight controls over all aspects of public and private behaviour.  The announcement of this initiative is another step in Saudi Arabia’s Vision 2030 plan on diversifying the economy, including greater liberalisation of society. 

Not only will tourists be encouraged to visit Saudi Arabia, to enjoy its warmth and sunshine, its culture and history, the use of this green funding initiative, signals Saudi Arabia’s resolve to play a major and active role in addressing the full range of climate change challenges. This follows other Gulf states which have similarly recognised and embraced the need to combat climate change.  While many outsiders still perceive the Gulf as the world’s gas station, they fail to recognise the potential impact on the Gulf region as a whole if global temperatures continue to rise; threatening not only to make average temperatures untenable but also risking rises in sea levels that will threaten many of the region’s most prominent cities – not least the 4.5 million residents of Jeddah on Saudi Arabia’s Red Sea coast.

While scepticism may linger, there is every reason to believe that the Gulf states are genuine in their determination to work with the rest of the world to reverse the devastating impacts of climate change. The green initiative announced for Saudi’s Red Sea plans should not be dismissed as any kind of vanity project rather it need to be understood as an early indication of Saudi and the rest of the Gulf’s determination to play a full part in addressing the climate challenges of the coming decades.