Digital rendering of NEOM’s The Line project in Saudi Arabia
Line, NEOM
Saudi Arabia’s Public Investment Fund (PIF) has allocated $5.2 billion of the $8.5 billion raised through green bonds to the project by June 2024, according to an allocation and impact report released on Friday.
This allocation is up from $1.3 billion in June last year.
Green bonds are a type of revenue used to finance projects with environmental benefits. PIF became the first sovereign wealth fund to issue green bonds as early as October 2022.
According to PIF’s annual report, the massive sovereign wealth fund manages $925 billion in assets and considers capital expenditure requirements for “qualified green projects” to be $19.4 billion.
Funds “have been allocated to development projects that meet the qualifying criteria, with major expenditures on renewable energy, green buildings and sustainable water management projects,” the PIF said, adding that qualifying green projects “contribute to the achievement of sustainable development in the United Nations” Target”.
Saudi Arabia has a stated goal of achieving net-zero greenhouse gas emissions by 2060 and has invested billions of dollars in what it calls sustainable development projects. The move is part of Crown Prince Mohammed bin Salman’s Vision 2030 plan, which aims to diversify and modernize the Saudi economy and reduce its dependence on oil.
Saudi Arabia’s much-vaunted Vision 2030 ambitions have their critics, who question the sustainability of large-scale projects such as Neom, a 10,200-square-mile urban development along the Red Sea coast, because of their reliance on heavy industry in construction and construction. Demand for the material is so high and the vast majority of Saudi Arabia’s economy still relies on its oil production.
Philip Oldfield, dean of the School of Built Environment at the University of New South Wales, told architecture and design magazine Deezen in 2022 that the carbon cost of Neom’s construction “will overwhelm any environmental benefits”, estimating that the project could generate more than 1.8 gigatonnes of embodied carbon dioxide. .
PIF’s Allocation and Impact Report highlights case studies that support its commitment to sustainability. It describes Neom’s plans for a water sustainability project that will develop “a full-cycle system for water positivity” that will achieve “100% wastewater recycling and energy-neutral recovery.”
PIF also noted its focus on green hydrogen, which many industry experts believe plays a vital role in the energy transition. According to the report, Neom Green Hydrogen is a joint venture between Neom and Saudi Arabian ACWA Power and Air Products companies. It will become the world’s largest green hydrogen plant and will operate “entirely on renewable energy.”
PIF has provided some or all of the investment and financing for each of the case studies mentioned in the report, all of which have yet to be completed.
