Oil and gas prices are rising once again, which is driving concerns that the global economic comeback may teeter because of the higher input costs. The speed at which prices have been rising also has fueled scrutiny over the energy policies of nations around the world that are seeking to edge hydrocarbons out of their supply chain in favor of wind and solar energy.
Now, the leader of the world’s largest oil company has weighed in, too.
Amin Nasser, president and CEO of Saudi Aramco, said he considers the energy transition to be growing “ever more chaotic,” and fueling the situation are “highly unrealistic” assumptions. “For example, it is increasingly assumed that the entire world can run on alternatives and the vast global energy system can be totally transformed, virtually overnight,” he said.
In seeking to drive home the financial realities at stake, Nasser suggested that the world needs to spend roughly $115 trillion over the next 30 years to fully decarbonize—but that it most likely won’t. “Most worrying of all is the assumption that the right transition strategy is in place," he added. "It is not. It is deeply flawed.”
Nasser was speaking to industry executives and government officials at this week’s World Petroleum Congress in Houston while presenting an award to the renowned energy and economic expert Daniel Yergin.
The reality check provided by Nasser included a list of areas where the energy transition so far is showing signs of weakness. He cited that 99% of the global vehicle base remains running on gasoline and diesel and that the combined share of wind and solar energy in the primary energy mix is still below 2%.
The message he wants the world to digest is that a move toward an energy mix dominated by alternatives is decades out on the horizon. Without naming names, Nasser said some key stakeholders concerned with the matter of climate change acknowledge these realities privately but not publicly.
“I understand their dilemma. Publicly admitting that oil and gas will play an essential and significant role during the transition and beyond will be hard for some,” Nasser said.
“But admitting this reality will be far easier than dealing with energy insecurity, rampant inflation, and social unrest if prices become intolerably high. And net-zero commitments by countries may start to unravel.”
In response to the societal pressure for action, the oil and gas industry in recent years has been stepping up its efforts to direct more capital and expertise toward meeting new climate goals. Nasser pointed to a few of the initiatives Aramco has been spending millions on in recent years, including blue hydrogen, low-emissions engines, and its vision for a "circular carbon economy," which relies, in part, on large-scale carbon sequestration.
The executive concluded his remarks by encouraging others in the oil and gas industry to speak out on the need for a “stable, practical, and inclusive strategy” for the energy transition.
