The Public Investment Fund (PIF) of Saudi Arabia is channeling funds from green bonds into significant projects, as detailed in its latest Allocation and Impact Report. By June 2024, $5.2 billion of the $8.5 billion raised has been allocated to initiatives with environmental benefits, a significant increase from $1.3 billion the previous year.
Green bonds, used to finance environmentally friendly projects, were first issued by the PIF in October 2022, marking it as the first sovereign wealth fund to do so. A subsequent issuance took place in February 2023. The PIF, managing $925 billion in assets, has earmarked $19.4 billion for “eligible green projects” as per its annual report. These projects span Renewable Energy, Green Buildings, and Sustainable Water Management, aligning with the United Nations Sustainable Development Goals.
Saudi Arabia aims to achieve net-zero emissions by 2060, investing heavily in sustainable development as part of Crown Prince Mohammed bin Salman’s Vision 2030. This strategy seeks to modernize the economy and reduce its oil dependency. However, critics question the sustainability of large-scale projects like Neom, a vast urban development on the Red Sea coast, due to the high demand for construction materials and the nation’s ongoing reliance on oil.
Experts like Philip Oldfield have expressed concerns about Neom’s environmental impact, estimating it could generate over 1.8 billion tons of embodied carbon dioxide, potentially negating its green benefits.
The PIF’s report includes case studies supporting its sustainability claims, such as a water project in Neom aimed at achieving “water positivity” through a fully circular system for wastewater recapture and recycling. Additionally, the Neom Green Hydrogen project, a collaboration with ACWA Power and Air Products, is set to become the world’s largest green hydrogen plant, powered entirely by renewable energy.
The PIF is either partially or fully funding these projects, although they remain under development. This effort underscores Saudi Arabia’s commitment to sustainability within its ambitious Vision 2030 framework.
