Global energy transition ‘unworkable, unaffordable’: Aramco president calls for a 2.0 plan

SINGAPORE: The world’s current plans to transition from fossil fuels to renewable energy have failed, said the president and CEO of the world’s largest energy company on Monday (Oct 21).
Saudi Aramco’s Amin Nasser flagged a “sizeable gap between prediction and reality”, as despite trillions of dollars invested in the global energy transition, much of the world is still largely dependent on conventional sources, including oil and coal.
He attributed this to several reasons, the most pressing of which being the overall affordability of renewables, especially for lesser developed countries.
“Despite progress in the Global North, the Global South cannot afford massive investments in new energy, especially when many countries are only at the start of their development journey,” he said.
He added that almost all the recent growth in clean energy investments has been in advanced economies and China.
“Planners must stop assuming the world can replace its conventional energy needs with half-baked alternatives, almost overnight, particularly in the Global South,” he noted.
“Trying to force an unworkable, unaffordable transition plan on them will only threaten their economic progress and even social cohesion.”
Speaking to CNA’s Elizabeth Neo at the Singapore International Energy Week (SIEW) at the Sands Expo and Convention Centre, Mr Nasser also called for the world to come up with a workable plan instead.
Asia accounts for about 60 per cent of the world’s population and global gross domestic product, and consumes more than half of global energy supplies.
But the continent’s voice and priorities “are harder to see in current transition planning”, said Mr Nasser, adding that the region’s transition progress is far slower and more complicated than expected.
About 84 per cent of Asia’s energy needs stem from conventional sources. Electricity, for instance, is 70 per cent powered by fossil fuels and only 12 per cent by wind and solar, he said.
He noted that oil consumption has plateaued in mature economies such as the United States – at about 22 barrels per person per year. However, the number is much lower in Vietnam at 2.4 and India at 1.4.
As such, oil consumption is likely to increase. Over 100 million barrels per day would still be required by 2050, he said.
Mr Nasser added that all sources of energy – both traditional and new – will be required for decades to come.
“Rather than an energy transition, we are really talking about energy addition, where just the growth is mostly met by alternatives, instead of replacing conventional energy in any meaningful way,” he said.
Mr Nasser said energy transition requires estimates of between US$100 trillion and US$200 trillion globally by 2050. Developing nations will likely be looking at about US$6 billion each year.
He called the energy consumption and transition ideals today “unrealistic”, saying consumers instead want “a reality we can all afford”.
The world should also focus on developing new energy sources and lower carbon technologies that can one day compete on price and performance, Mr Nasser pointed out.
He added each nation should choose an energy mix that helps them meet their climate ambitions at a speed and manner that is right for them, as no single plan can meet the needs of almost 200 countries.
“We need to be pragmatic and ‘one size fits all’ is not going to work. We need to provide energy that is secure, affordable and sustainable. You cannot talk about sustainability without making sure to ensure security and affordability,” he said.
He added this will take time, likely decades, for technologies to scale up and become cheaper.
Meanwhile, traditional energy sources like oil and gas need to still be part of the energy mix, he said, adding that shifting from coal to gas can also reduce carbon emissions.
“We should not ask to stop using oil and gas while the other alternatives are not ready … and the cost of (alternative) energy is high compared to what is existing today,” he said.
The International Renewable Energy Agency (IRENA) said that while it shares Mr Nasser’s opinion that the transition could be problematic for some developing economies, renewables are the fastest way to reduce greenhouse emissions in line with the Paris Agreement.
Under the treaty, nations agreed to limit warming to 1.5 degrees Celsius to minimise further dangerous levels of climate change.
“If we want to reach Paris goals … the only technologies that can provide this are renewables,” said IRENA director-general Francesco La Camera.
“This is the scale and the speed (needed) because renewables can be deployed in a couple of years. Renewables is the technology to put the world in line with achieving Paris goals.”