Nuclear needs to shift gear

12 July 2012

Riyadh has the wealth and the impetus to commence spending on plans for its nuclear programme, but time is of the essence

Saudi Arabia has amassed foreign assets of more than $500bn as a result of its oil wealth. This fortune continues to grow rapidly and gives the kingdom incredible leeway to spend its way out of any crisis it faces.

Over the past few years, it has shown its willingness to do so, with promises to spend about $130bn on initiatives such as unemployment benefits, salary hikes and housing construction.

However, a more serious set of long-term challenges now faces the kingdom that threaten to be even more destabilising.

Inefficient and wasteful energy consumption, coupled with a rising population, is leading the kingdom to burn even more of its natural resources at home, rather than selling them abroad and adding the proceeds to that half a trillion dollar cash pile. Unless action is taken, the kingdom could find it needs the oil price to be $320 a barrel by 2030 just to balance the budget.

By developing nuclear power, as part of a wider renewable energy strategy, Riyadh hopes to save more oil for export. Nuclear is the cornerstone of this strategy and by 2032 could provide 17GW of the country’s power, but time is of the essence.

To move ahead quickly, Riyadh is expected to consider using some of its considerable wealth to accelerate plans for a portion of the nuclear programme, while encouraging private sector financing in the rest, according to one of the advisers pitching to help in the development of the nuclear plans.

By creating the King Abdullah Centre for Renewable and Atomic Energy (KA-Care), the king has shown he is well aware of the looming crisis. The challenge now is transforming that awareness into a coherent plan.

Saudi Arabia is in a unique position to move forward with its nuclear programme faster than anyone expects, and it has the political imperative to do so.

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