**Abstract**

The objective of this chapter is to draw the attention of government policy makers internationally to a strategy for alleviating global warming through proven cost-effective energy efficiency measures. The Saudi Arabian government has embraced the approach with demonstrable success over the past 20 years, with rates of return on investments averaging more than 25%. Even though Saudi Aramco is the National Oil and Gas company, the company takes the threat of climate change to the world's economies very seriously and initiated programs for, systematically and responsibly, transition to less-polluting energy sources. Primarily, the chapter will define the supply chain components of Saudi Arabia's energy sector and explain the existing conditions and efficiencies of each of its components. It analyzes the existing energy management framework and its achievements, as well as its current and forthcoming commitments, status, and updates. It will also explain the vital equipment, systems, and processes in the supply chain, with possible energy efficiency improvement gaps based on existing literature/Energy Assessment Reports conducted by Saudi Aramco professionals in numerous industrial facilities. The chapter will pinpoint the highest achievable efficiencies areas in major systems, processes, or equipment and discusses its impact on the primary energy fuels and green house gas (GHG) emission reduction.

**Keywords:** energy efficiency, industiral energy power generation, energy transmission, energy oil and gas

#### **1. Introduction**

Oil and gas are the world's most used energy sources based on the share of each source of global energy consumption. More than half of the global energy demand is fulfilled by oil and gas, as shown in **Figure 1** [1]. The production of these primary energy fuels (oil and gas) involves them going through various stages of processing before it is used directly in the vehicle or converted to electricity in the power plant for other end-users. It can be characterized as a typical supply chain, which is defined as a complex structure of supply facilities linked together in order to serve end customers, collectively called the "supply chain" network. In the present context, it can be referred to as the energy supply chain. The main objective of the energy supply chain is to deliver crude oil, natural gas, and refined products safely and economically to customers. These energy supply chain networks are subject to various losses in primary energy (oil & gas) as well as secondary energy (electricity), some of which are unavoidable while some are not. Improvements in the

**Figure 1.** *World total energy supply by source [1].*

**Figure 2.** *Sankey diagram of Saudi Arabian energy flows 2019 [2].*

overall efficiency of the energy supply chain certainly result in enhanced profit margins and mitigated environmental impacts. Consequently, a comprehensive strategy to develop efficient energy supply chain network is inevitable.

The Kingdom of Saudi Arabia (KSA) is among the top crude oil producing and exporting countries in the world as well as one of the major producers of natural gas. KSA has invested heavily to improve the overall efficiency of its energy supply chain and demonstrated an approach that is driving the business towards excellence with a noticeable improvement in the preservation of the livable environment. To identify the most significant opportunities for increasing energy efficiency and reducing energy losses, it is vital to determine where and how energy is used—how much is used, where are the losses—how much is lost, where energy losses could potentially be recovered or reduced, and to what extent. **Figure 2** shows an overall picture of KSA's Energy flow, as a Sankey diagram, represents KSA's total production, consumption, and exports [2]. It will aid the understanding of overall energy usage that occurs from source to end-user in KSA's energy supply chain and consequently provides insights to identify areas of improvement and overall efficiency enhancement. **Figure 2** [2] clearly establishes KSA as the leading oil exporter,

#### *Energy Efficiency: The Overlooked Energy Resource DOI: http://dx.doi.org/10.5772/intechopen.101835*

however, the main emphasis here is about understanding the energy flow and the overall efficiency of the energy supply chains. There are certainly energy consumptions as the energy flows from sources to end-users, but a reduction in the amount of energy used to process and deliver it to the final users have greater implications as it will improve the performance as well as save the product i.e., energy, which will eventually be added to the product. Even though some losses occur at every stage in the energy supply chain, it is evident from **Figure 3** that a significant energy loss occurs at power generating stations.

From an overall efficiency improvement standpoint, primary energy is the best place to look at for energy use as well as for losses. As illustrated in **Figure 3**, a typical industrial pumping system utilizes only 10% of the primary energy resources, if pumping is considered to be the end-use of the energy from the primary energy sources and typical losses for all components in the supply chain is considered. Energy "footprints" could be created for all users, illustrating energy flows along the utility supply chain from energy sources to an industrial end-user based on which energy use, loss, and opportunities analysis shall be conducted to prioritize efforts to improve the overall efficiency of the energy supply chain.

To establish the effectiveness of the policy framework of overall efficiency enhancements for the energy supply chain, it is essential to evaluate macroeconomic benefits from such an approach. It is a very common and well-established causality relationship between energy consumption and gross domestic product (GDP). The ratio of energy use to GDP indicator is referred to here as "aggregate energy intensity" or "economy-wide energy intensity". Economic-wide energy intensity is measured by dividing the cumulative energy consumption requirement of a particular region by its GDP. Its trend indicates the general relationship of energy consumption to economic development and provides a rough basis for projecting energy consumption and its environmental impacts on economic growth. It estimates the absolute amount of energy needed to generate a single unit of gross domestic product. GDP is represented at a consistent exchange rate and an increasing parity of power to exclude inflation, which influences and indicates the diversity of energy consumption and general energy price levels in the real economic scenario. The economic-wide energy intensity and GDP of some major countries are shown in **Figures 4** and **5** respectively [3, 4]. The trend for the USA shows that even though the GDP is growing, energy consumption is declining. Most of this is due to a shift away from low-margin energy-intensive manufacturing to more profitable financial and IT services, not due to better energy efficiency. A similar profile can be observed for Germany. In KSA however, it appears that energy consumption is rising faster than GDP till the year 2010 which reflects energy inefficiency in the energy supply chain including end-users inefficiency.

**Figure 3.** *A typical industrial pumping system.*

#### **Figure 4.** *Economic-wide energy intensity of countries [3].*

#### **Figure 5.** *World Bank provided GDP of countries [4].*

It is important to have a look at the energy consumption in different sectors to improve the energy scenario and provide recommendations to meet the country's goal of rational energy consumption patterns. According to the Saudi Energy Efficiency Center (SEEC), 90% of domestic energy consumption in Saudi Arabia is consumed by the construction, transport, and industry sectors [5]. The industrial sector consumed 47%, the construction sector consumed 29%, while the transportation sector's consumption was about 14% of the country's primary energy in 2017 [5, 6].

**Figure 6** shows trends of energy consumption in different sectors from the year 1990 to 2014 [7], indicating a sharp rise in industrial and building sectors. The trends with inference from GDP (**Figure 7**) movement suggest that energy consumption is increasing as a result of economic activity without any improvement in the consumption patterns. Consequently, energy efficiency policies need to be developed with an emphasis on the three most energy-intensive sectors i.e., industrial, transport, and building sectors.

*Energy Efficiency: The Overlooked Energy Resource DOI: http://dx.doi.org/10.5772/intechopen.101835*

#### **Figure 6.**

*Total energy consumption in different sectors for the Kingdom of Saudi Arabia [6].*

**Figure 7.** *GDP of the Kingdom of Saudi Arabia [4].*

The best way to improve energy productivity as a way forward for the Kingdom's strategy would build on the competitive advantages by enabling a strong and energyefficient industrial sector. As for the other two sectors i.e., transport and building sectors, they need more regulatory and behavioral improvements. For example, given the low energy prices in the Kingdom, it is difficult to invest in energy-efficient home appliances (AC units, refrigerators, or efficient lightings) to improve buildings' energy performance. Similarly, for transport, fuel-efficient vehicles will not be preferred by the masses if the gasoline prices are very low. It is obvious that there will be very little to no incentive for owners to invest in energy efficiency. Consequently, this will likely remain an issue, till the energy price regulation/reforms are fully implemented. However, when we see the supply side of these sectors, it is part of the energy supply chain i.e., part of the industrial sector, thus these sectors have a unique feature, where its boundaries are not completely dictated by its sector but by other sectors too. If the benefits from avoided energy consumption or improved efficiency in the supply side (power plant) which resulted in the avoidance of the new electricity generation facility, are considered, energy efficiency investments seem highly cost-effective.

In common with other parts of the energy sector transformation, it is important for actions to be based on an integrated strategy with clear goals. Energy efficiency and other demand-reduction measures will need to be analyzed together with supply expansions to find the best balance in terms of both service delivery and costs. It is critical to ensure that the opportunities offered by new digital technologies are fully utilized to enhance the efficient interaction of ever-more integrated energy system supply and demand elements. The system is first modified to use energy in a more effective manner, more energy efficiency opportunities are readily available to meet the emissions targets, within the given time frame. Moreover, it will have positive effects on energy transition as it will minimize demand and result in a lesser number of needed renewable/green energy installations. However, energy efficiency measures often need policy support to be implemented and strategies must address the main barriers to the adoption of energy efficiency measures and promote structural and behavioral changes. Furthermore, they must be considered across different sectors and areas, for instance, buildings, transport, and industrial sectors.

To address the global agenda of enhancing energy productivity, KSA's vision 2030 program has identified and addressed many areas in which energy efficiency can be improved significantly and cost-effectively. One of the outcomes of KSA's vision 2030 program is the Saudi Energy Efficiency Center (SEEC), which has taken wider initiatives to address national energy efficiency improvement and carbon emissions. It is functional from the inception of the year 2010. In 2012, SEEC launched a national program to raise energy efficiency in the Kingdom, using initiatives designed according to local market potential, by involving all stakeholders (government, companies, and the public). The program focuses on three key sectors (buildings, transport, and industry), which consume about 90% of the total energy in the Kingdom [6]. The program developed the factors and possible supporting mechanisms to boost its activities.

The program was launched as a dedicated system for energy efficiency improvements, to ensure the implementation and enforcement, including a mechanism to update when necessary, with an executive committee that holds all the power necessary to manage the program through an organizational structure. Since its formation to date, the impact of the programs on the overall national-level energy efficiency index is visible as shown in **Figure 4** (from the year 2012 onwards). It is important to note that other agencies and their initiatives contributed to this energy productivity improvement.

The Kingdom is implementing many other initiatives as well, including renewable energy (wind, solar), safe nuclear power, cost-effective energy efficiency, and minimization of needless fuel emissions through flare management. Best of all, these technologies are mostly well-established and proven for all commercial applications. It has been clearly observed that from 2012 to 2018 the overall supply chain energy efficiency improved significantly because of major efficiency improvement in utility plants, one of the most significant components of the supply chain. Overall national level utility plants efficiency has improved from 31.8–38% and is targeted to reach 45% by 2030 [8] through the incorporation of combined cycles and integration between power generation and seawater desalination at the same site. Towards this end, the formerly separate Ministries of Water and Electricity were merged by a Royal Decree into a single entity—MOWE. The combination of such strategic decisions justifies the reasons for such significant efficiency improvement in Saudi Arabia's Industrial and Public Utility sectors.

Energy efficiency in Saudi Arabia has included the establishment of a framework for an energy efficiency market involving energy service companies and a range of regulatory measures to drive the market. These were focused on the building,

#### *Energy Efficiency: The Overlooked Energy Resource DOI: http://dx.doi.org/10.5772/intechopen.101835*

transport, and industry sectors which covered around 90% of energy consumption in the Kingdom [5, 6]. The approach adapted is to develop a baseline for setting policies, establish performance relative to international benchmarks, prioritize initiatives based on potential impact, achieve consensus and coordination among implementation agencies, and establish execution teams and empowering policy environment. Then, finally, to monitor and evaluate progress, with a view of registering feedback into the design of the overall approach.

Energy supply chain is an essential part of the kingdom, as it fulfills energy requirements for all sectors and also provides products to export. As the Kingdom is one of the largest exporters of crude oil, the industry sector, which is the largest energy consumer in the kingdom, is predominant with the components of the energy supply chain. Accordingly, any improvement in the energy supply chain will result in a greater effect on the energy productivity of the whole kingdom. There are two key drivers to improve the energy productivity of the Kingdom, firstly, structural change in the economy by moving away from energy-intensive to a high margin value manufacturing and, secondly, energy efficiency in energy-intensive manufacturing. Both aspects of energy productivity are important for the Kingdom but the energy efficiency improvements provide a quick win for the kingdom. Moreover, the solutions to improve the energy efficiency of the energy supply chains are applicable to other sub-sectors of the industrial sector and could be leveraged across all industrial sectors. Improvements in the energy supply chain will have great implications on the abundant natural resources of the Kingdom i.e., the counts of barrels saved in the processing will be added to the export/usage.
