The UAE and Saudi Arabia are investing heavily in electric vehicle infrastructure and aiming for significant reductions in carbon emissions by 2050, despite facing challenges in their transition.
In recent years, the adoption of electric vehicles (EVs) has been gradually gaining momentum in the Gulf region, notably in the UAE and Saudi Arabia. A pivotal aim set by the UAE is to ensure that EVs make up 50 percent of all car sales by 2050. This ambitious goal underscores the nations’ commitment to reducing carbon emissions and transitioning their transportation sectors towards a more sustainable future.
The backdrop of this initiative is the significant urbanisation and economic growth in both countries, which has led to an increase in emissions stemming from the transportation sector. Governments are now recognising decarbonisation as an essential element in their environmental strategies, particularly as they strive towards net-zero carbon emissions.
Both the UAE and Saudi Arabia are investing in the necessary infrastructure to support this transition. Initiatives such as Dubai’s driverless metro system and Saudi Arabia’s extensive railway and metro projects are part of a broader strategy to enhance public transport options while reducing reliance on internal combustion engines. However, the region faces specific challenges, including extreme summer temperatures and the need for substantial investment in charging infrastructure.
A report from the King Abdullah Petroleum Studies and Research Center (KAPSARC) sheds light on the expected growth in EV sales in Saudi Arabia and highlights the potential implications on oil consumption and electricity demand. Oil demand in the transportation sector of Saudi Arabia peaked in 2015, but has since seen declines, primarily due to domestic fuel price adjustments and improvements in fuel efficiency. Nevertheless, the report projects a rebound in demand as the country continues to expand its economic footprint and urban development.
Saudi Arabia currently ranks ninth globally for gasoline consumption and fourth for per capita usage. The report expresses concern over the implications of rising demand for oil on future exports and greenhouse gas emissions. Significant projects within the Saudi Vision 2030 initiative, such as NEOM, the Red Sea Project, Qiddiya, and Diriyah Gate, are anticipated to further influence oil demand in the transportation sector.
KAPSARC forecasts that the number of Internal Combustion Engine (ICE) vehicles in Saudi Arabia could rise to 29.6 million by 2050, which is approximately 2.5 times the current figure. If a business-as-usual scenario continues, oil demand for transportation could reach 67 million tons of oil equivalent (TOE) by 2050. Conversely, a high penetration rate of EVs could lead to a reduction in demand by 20.2 percent, translating to a saving of 13.5 million TOE.
The report outlines various scenarios for EV adoption in Saudi Arabia. Under a “low growth” scenario, the country may see 14.8 million EVs by 2050, while “moderate” and “high growth” scenarios suggest figures of 17.8 million and 20.7 million, respectively. Estimated annual electricity requirements for these EVs in the high growth scenario may reach 47.7 terawatt-hours (TWh). The business-as-usual scenario anticipates emissions to hit 198 million tons of CO2 by 2050, while a high EV growth scenario could decrease that to 158 million tons.
The government’s commitment to boosting the EV market is evident, with efforts like the Red Sea Project introducing electric vehicle fleets, including models from Lucid Motors. Lucid, backed by the Saudi Public Investment Fund (PIF), commenced production of EVs from a facility in the King Abdullah Economic City this year, with initial production capabilities aiming to reach 5,000 units per year, with expansion plans for 155,000 units.
In addition, Saudi Aramco has signed a preliminary agreement with Ma’aden to establish a joint venture centred on transition minerals, particularly lithium. This partnership anticipates a substantial increase in global lithium demand, with expectations of supporting the battery production for half a million electric vehicles.
Despite these ambitious plans, challenges remain. The higher cost of EVs, spurred by battery expenses and limited local production, along with a scarcity of public and private charging stations, could impede growth. The KAPSARC report indicates that the kingdom is working to address these issues, with Riyadh planning the installation of solar and wind-powered charging stations. There are also plans to modernise and expand the national electricity grid, with an expenditure of approximately $270 billion projected for this effort.
In conjunction, the UAE is pursuing its own decarbonisation goals, striving for a 50 percent share of EVs in total car sales by 2050, which is projected to result in a 40 percent reduction in energy consumption in the transportation sector. Abu Dhabi is also targeting a 20 percent reduction in transportation emissions by 2035.
Oman is actively pursuing similar initiatives with its own “Net Zero 3” initiative, aiming to reduce transportation-related emissions through various projects supporting the deployment of EVs. The government is providing incentives like tax reductions and subsidies, while also transitioning the public sector fleet to electric vehicles.
Both Gulf nations face obstacles on their journey toward a more electrified transportation ecosystem. Addressing the historical prevalence of fuel subsidies and scaling up necessary infrastructure will be vital to achieving their objectives and curbing greenhouse gas emissions. As developments continue, the trajectory of electric vehicle adoption in the region is set for significant transformation.
