A strategic step towards industrial sustainability
In a significant step aligned with the goals of Saudi Vision 2030, the Saudi Energy Efficiency Center announced the launch of the technical regulations for the third cycle of energy efficiency and feedstock utilization targets in the industrial sector. This cycle, spanning from 2026 to 2030, aims to enhance sustainability, improve operational efficiency, and bolster the competitiveness of the national economy on the global stage.
The general context within Vision 2030
This new regulation is an integral part of broader national efforts to achieve economic transformation and diversify income sources away from oil. The Saudi Energy Efficiency Center was established as the executive arm of the Saudi Energy Efficiency Program, which aims to rationalize and improve energy consumption efficiency in the Kingdom. These initiatives are cornerstones in achieving the goals of the Saudi Green Initiative, through which the Kingdom is committed to reducing carbon emissions and contributing effectively to international efforts to combat climate change.
Targeted sectors and their economic impact
The new regulations focus on four key industrial sectors that are pillars of Saudi industry: petrochemicals, iron, cement, and aluminum. The importance of targeting these sectors lies in the fact that they collectively account for more than 70% of total primary energy consumption in the Kingdom's industrial sector, making any improvement in their efficiency a significant impact on national energy consumption levels.
This cycle comes as a continuation of previous regulatory efforts; the first cycle (2014-2019) focused on energy consumption intensity targets, while the second cycle witnessed an expansion to include feedstock utilization efficiency alongside energy consumption, reflecting the gradual maturation of the regulatory framework.
Innovative and flexible implementation mechanisms
The center explained that the third cycle will rely on a cumulative evaluation methodology to measure performance over the years 2028 to 2030, with 2024 designated as the base year for comparison. These requirements will apply to existing industrial facilities, as well as new factories and production lines whose initial designs begin in early 2026.
To maximize efficiency, the regulatory document outlines a flexible mechanism allowing companies to compensate for any performance shortfalls on certain production lines by transferring efficiency credits to other lines within the same company, thus encouraging investment in more efficient technologies. The regulation also endorses enabling measures to improve efficiency, such as cogeneration, waste heat recovery, and the use of renewable energy sources and alternative fuels.
Expected impact locally and internationally
This regulation is expected to contribute to significant energy savings and reduce operating costs for factories, thereby enhancing their competitiveness in both domestic and international markets. Environmentally, reduced energy consumption will decrease harmful emissions and support the Kingdom's efforts to achieve net-zero emissions. Internationally, this step strengthens the Kingdom's position as a responsible player in the global energy market and underscores its commitment to fulfilling its international climate obligations.
