Renewable energy investments and government policies in Saudi Arabia for economic diversification and carbon emission reduction

Saudi government policies, renewable energy investments, and economic and environmental effects from 2015 to 2023 are examined dynamically. It supports the Kingdom’s Vision 2030 and NDC goals by showing how renewable energy can diversify the economy and reduce GHG emissions. For robust policy evaluation, the analysis captures short- and long-term impacts across solar, wind, geothermal, and bioenergy sectors using the System Generalized Method of Moments (GMM). Renewable energy investment increases GDP, employment, and GHG emission reductions, says this study. National GDP increases by 0.2%, 500–700 jobs are created, and emissions decrease by 0.15 MtCO₂e for every SAR 1 billion invested in renewables. Geothermal energy has less impact due to regulatory constraints, limited capacity, and high initial costs than solar and wind energy. Transitional construction-phase effects increase emissions during project implementation, but renewable capacity decouples growth from carbon output. This study presents the first policy-driven econometric assessment of Saudi renewable energy transition. The findings show that coherent government strategies—fiscal incentives, regulatory streamlining, and innovation support—maximize socio-economic benefits and reach 2060 net-zero. Comparative analysis shows that these findings apply to other resource-rich and developing economies pursuing low-carbon transformation under similar policy environments. The study found that incorporating renewable energy policy into long-term economic planning promotes sustainable development. It adds methodological and empirical value to the energy transition discourse and gives policymakers actionable advice on balancing economic growth and environmental responsibility.