How the UK can help to put Saudi Arabia on an accelerated path to a sustainable future

In June over 280 policymakers, industry leaders and financial professionals from the UK and Saudi Arabia attended the City of London Corporation’s and Saudi British Joint Business Council’s UK-Saudi Sustainable Infrastructure Summit.

Globally, the world faces a $15 trillion investment gap to fund needed infrastructure projects, necessitating innovative financing solutions and risk mitigation strategies to mobilise capital for sustainable infrastructure projects

The UK, with its expertise in sustainable finance and global infrastructure financing, is well placed to help, ranking as the world’s number one international sustainable finance centre according to the Global Green Finance Index.

Saudi Arabia is undergoing dramatic transformation. Under Saudi Vision 2030, an ambitious programme to revolutionise the country’s economy, the Kingdom is constructing 14 massive “Giga-Projects”, real estate and infrastructure developments designed to spur economic growth, diversify Saudi Arabia away from oil and help achieve net zero by 2060.

Just one of these, NEOM, will create a futuristic new region covering 26,500 square kilometres 100% powered by renewable energy and housing the world’s largest green hydrogen plant.

Given this agenda, in June the City of London Corporation and the Saudi British Joint Business Council held The UK-Saudi Sustainable Infrastructure Summit

Saudi Arabia is part funding its programme via the Public Investment Fund, the country’s sovereign wealth fund, as well as from other sources. But, given the huge scale of its ambitions, it will still need significant additional funds. Globally, according to the Global Infrastructure Hub, the world faces a $15 trillion shortfall to fund the infrastructure needed by 2040.

Bridging the investment gap

Countries that fail to bridge their investment gaps will limit their potential for economic growth and social advancement. The UK, especially the City of London, with its expertise in sustainable finance and global infrastructure financing, is well placed to help.

It is the world’s number one international sustainable finance centre according to the Global Green Finance Index and, to date, has listed 487 sustainable bonds raising over £176 billion. London boasts unrivalled expertise in designing and implementing sustainable financing models from insurers taking risks off the balance sheet to London’s capital markets supplying essential finance.

Further, the City of London Corporation can help play a vital role in helping establish mutually beneficial connections. The UK-India Infrastructure Financing Bridge, an initiative led by the City of London and the National Institution for Transforming India, has been instrumental in fostering closer economic ties between these two countries.

Cutting the risks on new technologies

Collaboration is key. When companies, governments and investors work in tandem, the results can be dramatic. Experience in the UK has shown us that where public policy strikes the right tone it can dramatically accelerate the roll out of early-stage nascent technologies, many of which will prove crucial in helping governments meet their net zero targets.

Innovative financing mechanisms like public-private partnerships or Contracts for Difference, which guarantee developers a fixed price for electricity generated, have helped underpin a vibrant renewables market. Indeed Contracts for Difference in the UK have proven pivotal in giving investors in renewable energy technologies greater certainty and a lower cost of capital and is one of the reasons the UK boasts one of the world’s largest offshore wind markets.

This is highly relevant for Saudi Arabia which, as one of the world’s largest oil economies, is embarking on a major sustainable transition programme that goes well beyond infrastructure. The Kingdom has ambitions to be the world’s largest supplier of hydrogen and is looking to invest heavily in carbon capture as well as in pioneering technologies in indoor farming.

Creating a greenshoring hub

A welcoming environment for companies and investors will prove crucial for Saudi Arabia which also has aspirations to become a low carbon centre for manufacturing - or greenshoring hub - based on its potential for solar, wind and carbon capture. Government incentives for green projects as well as the Saudi backed Global Supply Resilience Initiative will all help to achieve this.

Partnerships are key

But, above all, establishing local partnerships and relationships will prove the key to success for all involved. This bodes well for companies, investors and professional services firms in the UK, given not just the UK’s relevant experience and skills but also its long-standing commercial ties with Saudi Arabia.

The City of London Corporation and the Saudi British Joint Business Council, with their expertise and connections across both countries, stand ready and waiting to help foster such ties, bringing much needed investment and knowledge to accelerate Saudi Arabia on its path to a sustainable future.

The Rt Hon The Lord Mayor of London,
Alderman Professor Michael Mainelli