FII7: One-size-fits-all approach not acceptable, says Aramco CEO
Amin Nasser examines the challenges of the energy transition and the growing needs of the Global South.
“A ‘one-size-fits-all’ approach to the energy transition is not acceptable.” This was the key message Aramco president and CEO Amin Nasser delivered to delegates at the 7th annual Future Investment Initiative conference in Riyadh, in October.
Speaking at a panel session titled “Rebalancing the Global Energy Equation,” Nasser took the opportunity to draw a marked contrast between the Global North and Global South to illustrate the extent of the current complexities of the global energy transition.
He was joined on the panel by Henrik Andersen, Vestas president and CEO, Jennifer Holmgren, LanzaTech CEO, and Patrick Pouyanné, TotalEnergies chairman and CEO. The session was moderated by John Defterios, former CNN emerging markets editor.
The Global South
“We need to support solving the energy transition [dilemma] for the whole world,” Nasser said. “A one-size-fits-all approach is not acceptable. You need to have a transition that takes into account the economic maturity of different countries.”
Nasser cited affordability as a key issue in delivering an orderly and pragmatic energy transition for the Global South, where daily life for many means economic survival. Home to 85% of the world’s population, of which almost half live on less than one dollar a day and without reliable access to electricity, the Global South refers to underdeveloped and developing economies in areas such as Africa, Latin America, and Asia.
The region, which includes India and China, currently consumes approximately 80% of the world’s energy output — with the figure expected to rise to about 90% by 2050. Nasser stated that by 2050, there is estimated to be an additional 2 billion energy users, with 98% of these in the Global South.
“If renewables are not affordable (for the Global South), they are likely to go for whichever energy source is affordable,” Nasser explained. “We need an orderly and pragmatic transition which considers the 84% (Global South) of the world’s population, and not just focus on the 16% [Global North]. We need solutions for all.”
To ensure a realistic, orderly and pragmatic transition, Nasser stated that the energy industry must keep its focus on affordability and security, while also addressing sustainability.
“If you look at solar and wind, for example, it’s 5% of the total energy mix. Oil, gas, and coal — all together — are approximately more than 80% [of the energy mix],” Nasser explained.
“To make that shift [to renewables], you need a more realistic timeframe for the transition to take place, rather than asking for an unrealistic timeframe at a time of economic headwinds, when a lot of countries cannot afford it.”
“There needs to be a multi-speed transition, otherwise we’re not going to meet the 2050 ambitions we’re aspiring toward.”
Early in the session, Defterios asked panelists how the world can achieve a realistic energy transition, with Nasser responding that meeting demand-led growth is vital, particularly with the prospect that the global economy could soon strengthen further. Nasser cited record oil demand this year — between 102 and 103 million barrels per day — despite major economies facing economic headwinds, and tight monetary policies and high interest rates still impacting oil demand.
Demand is strong and for that you need to make sure that you have adequate, reliable, available, affordable sources of energy. This is why we are investing to bring additional capacity of oil, gas and, at the same time, continuing to invest in potential lower-carbon solutions, such as green and blue hydrogen.
— Amin Nasser
On hydrogen, Nasser explained that Aramco is ready and able to supply the energy source, but there needs to be demand and cost challenges need to be overcome.
Despite “the rhetoric” the current costs associated with hydrogen mean that it is “difficult” for customers to sign offtake agreements, Nasser stated, and development of the required infrastructure is crucial to lower costs — this requires investment.
Aramco’s efforts in providing reliable energy to the world were evident as Nasser outlined the company’s strategic imperatives, while also highlighting the work that the company has already undertaken toward reducing greenhouse gas emissions.
In closing, Nasser observed that the upcoming United Nations Climate Change Conference (COP28) in Dubai could provide an opportunity for the oil and gas industry to highlight its readiness to execute projects that can support an orderly energy transition.
“The industry needs to be part of the dialogue,” Nasser said. This didn’t happen at previous COPs, but we have been promised that at COP28 there will be better dialogue with the industry. We are in a position where we can deliver (on potential climate solutions), where we can execute plans, and we can help achieve net zero by 2050.”
Caption for top photo: Amin Nasser speaks during a panel session titled “Rebalancing the Global Energy Equation” during the 7th annual Future Investment Initiative conference in Riyadh.