Top oil executives kicked off the CERAWeek by S&P Global conference in Houston on 18 March by expressing their reservations about the swift transition from fossil fuels, highlighting the potential societal costs of replacing oil and gas infrastructure.
ExxonMobil CEO Darren Woods said that while the company has “stuck pretty consistently” to managing the fundamentals of the energy transition, he finds that the external conversation is evolving.
“People are now beginning to understand that the energy transition is a very complex issue that will require a lot of different variables to be managed effectively,” said Woods.
He questioned the need for the narrow set of solutions currently driven by ideology, saying that the world needs to “open up the aperture to consider more solutions because we are going to need everything that works to drive emissions down.”
Woods noted that when President Biden’s administration came in intending to advance reductions in emissions and climate change, the industry responded by challenging itself to offer solutions that could meet that objective.
“We’ll bring the molecule solution set, and others are bringing the electron solution set. I’m not suggesting one is better than the other,” Woods said. “I’m suggesting we need both, and we need companies with scale, capabilities, and technical expertise in transforming hydrogen and carbon molecules to get involved and help solve the issue, just as you need companies electrifying society by bringing wind and solar.”
The good news, he added, is that there is an opening in the dialogue. He cited the industry’s participation in COP28 as one way the industry contributed uniquely to the conversation by bringing solution sets to the discussion.
Aramco President and CEO Amin Nasser emphasized the need for a new, realistic pathway for the energy transition that includes oil and gas.
“The global energy transition is incredibly high on the geopolitical exchange, but these conversations are no longer limited to Davos or COP because the hopes and ambitions of 8 billion energy consumers around the world are at stake,” Nasser said, adding that the “current strategy impacts the majority, not just a tiny minority.”
Nasser said the current transition strategy “is visibly failing on most fronts as it collides with five hard realities.”
The list of realities includes the need to reset global efforts to meet climate ambitions, the inability of alternatives to displace hydrocarbons at scale, the costs associated with alternatives, meeting the energy requirements of the “Global South,” and the potential for further emissions reductions from hydrocarbons.
He noted that despite the world investing more than $9.5 trillion on energy transition initiatives over the past 2 decades, alternative energy sources have been unable to displace hydrocarbons at scale.
On that last point of further emissions reductions, Nasser said: “We should abandon the fantasy of phasing out oil and gas and instead invest in them adequately, reflecting realistic demand assumptions,” he said, drawing applause from the audience.
“We should ramp up our efforts to reduce carbon emissions, aggressively improve efficiency, and introduce lower-carbon solutions. And we should phase in new energy sources and technologies when they are genuinely ready, economically competitive, and with the right infrastructure,” he said.
