Amin Nasser, CEO of Saudi Aramco, speaks at S&P Global's CERA Week 2024 in Houston, Texas, on March 18, 2024.
F. Carter Smith | Bloomberg | Getty Images
HOUSTON — The energy transition is failing and policymakers must abandon the “fantasy” of phasing out oil and gas, as demand for fossil fuels is expected to continue growing in the coming years, Saudi Aramco CEO Amin Nasser said Monday.
“In the real world, the current transformation strategy is clearly failing on most fronts because it collides with five hard realities,” Nasser said during an interview at CERAWeek organized by S&P Global Energy in Houston, Texas.
“There is an urgent need to reset the transition strategy, and my proposal is: we must abandon the fantasy of phasing out oil and gas and invest in them that appropriately reflect realistic demand assumptions,” the CEO said to applause from the audience.
The Paris-based International Energy Agency predicted last year that peak demand for oil, gas and coal would come in 2030. Nasser said demand was unlikely to peak anytime soon, let alone that year. Nasser pointed out that the International Energy Agency is focusing on demand in the United States and Europe and needs to focus on the developing world as well.
Al-Nasser said that alternative energy sources have not been able to replace hydrocarbons on a large scale, despite the world investing more than $9.5 trillion over the past two decades. He added that wind and solar energy currently provide less than 4% of global energy, while the total penetration of electric cars is less than 3%.
Meanwhile, Nasser said the share of hydrocarbons in the global energy mix has barely declined in the 21st century from 83% to 80%. The CEO said global demand increased by 100 million barrels of oil equivalent per day during the same period and will reach an all-time high this year.
Al-Nasser said that gas has grown by 70% since the beginning of the century. He said switching from coal to gas is responsible for most of the reductions in carbon emissions.
“This is not the future picture that some were painting,” Nasser said. “They are even beginning to acknowledge the importance of oil and gas security.”
The CEO said that developing countries in the Global South will boost demand for oil and gas as prosperity rises in those countries that represent more than 85% of the world's population. He said that these countries receive less than 5% of investments targeting renewable energy.
Al-Nasser said that the world should focus more on reducing emissions from oil and gas in addition to renewable energy sources. The CEO said efficiency improvements alone have reduced global energy demand by about 90 million barrels per day of oil equivalent.
“We have to start using new energy sources and technologies when they are already ready, economically competitive, and equipped with the appropriate infrastructure,” Al-Nasser said.
