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Energy transition failing, phasing out oil a ‘fantasy’ – Saudi Aramco CEO

Activists have frowned at submissions made on Monday, March 18, 2024, by Saudi Aramco CEO, Amin Nasser, that the energy transition is failing, and policymakers should abandon the “fantasy” of phasing out oil and gas, as demand for fossil fuels is expected to continue to grow in the coming years.

Amin Nasser
Amin Nasser, CEO of Saudi Aramco, speaks at the 2024 CERAWeek by S&P Global conference in Houston, Texas, on March 18, 2024.
Photo credit: F. Carter Smith, Bloomberg, Getty Images

“In the real world, the current transition strategy is visibly failing on most fronts as it collides with five hard realities,” Nasser said during a panel interview at the CERAWeek by S&P Global energy conference in Houston, Texas.

“A transition strategy reset is urgently needed, and my proposal is this: We should abandon the fantasy of phasing out oil and gas and instead invest in them adequately reflecting realistic demand assumptions,” the CEO said to applause from the audience.

The Paris-based International Energy Agency forecast last year that peak oil, gas and coal demand would come in 2030. Nasser said demand is unlikely to peak anytime soon, let alone by that year. Nasser suggested that the IEA is focusing on demand in the U.S. and Europe and needs to focus on the developing world as well.

Nasser said alternative energy sources have been unable to displace hydrocarbons at scale, despite the world investing more than $9.5 trillion over the past two decades. Wind and solar currently supply less than 4% of the world’s energy, while total electric vehicle penetration is less than 3%, he said.

Reacting to Nasser’s claims, environmental watchdog group, 350.org, said he (Nasser) wasn’t an isolated case as other oil executives at the event claimed that a rapid phase out of fossil fuels is “not based on reality”.

Jeff Ordower, 350.org’s North America Director, said: “The fossil fuel industry continues to make distorted claims about our energy future. They work night and day to torpedo a transition to renewable energy and then have the audacity to critique the slowness of the transition itself. CERAWeek should highlight a global vision toward a clean and equitable future, and instead, we get talking points from the 1970s.

“Fossil fuel emissions account for more than 90% of global emissions and this industry announces obscene profits year over year. The fossil fuel industry is thriving, when people across the world are having to choose between eating and heating. We should be skeptical of any solutions touted by the industry because it’s clear they don’t have a real interest in halting the climate crisis.

“What these executives are purposefully leaving out are the trillions of dollars they profit from every year, that instead, could be invested in the transition they call unrealistic.

“Wind and solar energy initiatives are producing record amounts of clean electricity year after year and getting cheaper every day. We currently do have the tools and technology. We do have the resources; we just need to redirect them. We must make the fossil fuel industry and rich nations who have been by far the greatest ones to blame for the climate crisis pay.”

Meanwhile, the share of hydrocarbons in the global energy mix has barely fallen in the 21st century from 83% to 80%, Nasser said. Global demand has increased by 100 million barrels of oil equivalent per day during the same period and will reach an all-time high this year, the CEO said.

Gas has grown 70% since the start of the century, Nasser said. The transition from coal to gas is responsible for two-thirds of the reductions in carbon emissions in the U.S., he said.

“This is hardly the future picture some have been painting,” Nasser said. “Even they are starting to acknowledge the importance of oil and gas security.”

Developing nations in the global south, meanwhile, will drive oil and gas demand as prosperity rises in those nations, which represent more than 85% of the world’s population, the CEO said. These nations receive less than 5% of the investment targeting renewable energy, he said.

Nasser said the world should focus more on reducing emissions from oil and gas in addition to renewables. The CEO said efficiency improvements alone over the past 15 years have reduced global energy demand by almost 90 million barrels per day oil equivalent. Wind and solar, meanwhile, have substituted only 15 million barrels over the same period, he said.

“We should phase in new energy sources and technologies when they are genuinely ready, economically competitive and with the right infrastructure,” Nasser said.

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