Saudi Arabia’s Road to Fuel Economy

Saudi Arabia is a private car-oriented society, and has one of the world’s highest per capita fuel consumption in the transportation sector. This is primarily due to lack of efficient public transportation and current fuel subsidy policy. The country is witnessing an escalating demand on its domestic energy needs and it is imperative on policymakers to devise policies for conservation of energy resources and reduction of GHGs emissions in the transportation sector. Adapting energy-efficient fuel standards will help Saudi Arabia country to bridge the gap with the developed countries. The enforcement mechanism for the establishment of Saudi fuel economy standards will lead to achievement of strategic energy conservation objectives.

Energy intensity in Saudi Arabia has set high records reflecting the growth of the economy and the increasing demand on fossil energy in the domestic use and heavy industries operations. Energy intensity in the Kingdom was twice the world average in 2010 and with unbalanced growth between energy use and economy, this should rang the bell for the Saudi government to adapt a bundle of energy policies that curtail the increasing growth of energy demand domestically.

CAFE Standards

Corporate Average Fuel Efficiency standard (CAFE) was first enacted after the Energy Policy and Conservation Act of 1975 in the USA. That policy was due to energy security concerns and environmental objectives. The USA current standard is 27.5 mpg for passenger’s vehicle and 20.7mpg for light trucks. Similarly to the USA CAFE objectives, the Kingdom approach is to reduce gasoline consumption and induce conservation and increasing efficiency of the light-duty vehicles (LDV).The proposed standard mandates require that all new and used passenger vehicles and light trucks either imported or locally manufacture should comply with new fuel standards. The framework for this law to be effective will start by January 1, 2016 and fully phased out by December 31, 2025. The Saudi Energy Efficiency Center (SEEC) and other entities including the Saudi Standards, Metrology and Quality Organization, Saudi Customs, and Ministry of Commerce and Industry have been asked to monitor the implementation of the CAFE standards.

The purpose of the fuel standards is to commit the light-duty vehicle manufactures sell their cars in the kingdom and comply with the Saudi CAFE. This standard has a double dividends from the automobile manufacturer side its incentivize them to introduce the up-to-date efficiency technologies and cut the supply the low-efficient technologies to the Saudi market. The Saudi CAFE standard targets an improving in the overall fuel economy with an average of 4% annually. This would lift up the Kingdom’s fuel economy LDVs from its current level of 12 km per liter to 19 km per liter by 2025.

The Saudi CAFE standard shows a focused strategy to setting long-term standards over the course of a given time frame and its committed efforts to manage both newly imported or used LDVs. According to Prince Abdulaziz bin Salman al-Saud, the Saudi transportation sector consumes about 23 percent of the total energy in the kingdom and about 12 million vehicles consume about 811,000 barrels of gasoline and diesel per day. Moreover, there are 7 LDVs entering the market every year with a forecast to reach 20 million by 2030.

Conclusion

Saudi Arabia’s CAFE standard is a means to stimulate energy efficiency and encourage resource conservation and contribute to the environment. This will enable consumers to save money, reduce fossil fuel consumption and strengthen the Kingdom’s role in the fight against climate change.

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About Eaman Abdullah Aman

Eaman Abdullah Aman is MRLS graduate in Environmental and Natural Resources Law and Policy with a specialization certificate in Energy Law and Policy from Denver University, USA. Her expertise encompasses international petroleum transactions, petroleum contracts and agreements, international petroleum investment operations, energy policy and economics of natural resources law and policy. She has rich knowledge on issues related to climate change mitigation, environmental law and policy, environmental ethics, energy security, sustainable development etc.
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One Response to Saudi Arabia’s Road to Fuel Economy

  1. Issam says:

    Thank you for the interesting article.

    You have mentioned:
    “This would lift up the Kingdom’s fuel economy LDVs from its current level of 12 km per liter to 19 km per liter by 2025”

    What are the references for both of the numbers, 12 and 19 km/l ? Thank you.

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