The Chief Executive Officer of Saudi Aramco Amin Nasser has warned that renewable energy won’t be able to replace oil and gas any time soon and that investment in sustainable energy must not come at the cost of investment in hydrocarbons.
“As the energy crisis in Europe has demonstrated, alternatives are not ready to shoulder the heavy burden of global demand,” Nasser said at the Saudi Capital Markets Forum in Riyadh on Sunday as carried by energyintel.com.
The Aramco chief said environmental, social and governance (ESG) factors are “clearly a rising trend” in capital allocation decisions and a move in the “right direction.”
But he added that if ESG policies are “implemented with an automatic bias against any and all conventional energy projects, the resulting underinvestment will have serious implications for the global economy, for energy affordability, and for energy security.”
He said this was already happening in fact, with the cost of capital for oil and gas projects rising due to higher perceived risks, and upstream investment of around $400 billion last year amounting to less than half of its peak level in 2014.
Saudi Arabia has set a target of net zero emissions by 2060, but Aramco — its national oil company — is also pursuing an expansion of its oil production capacity by 1 million barrels per day to 13 million b/d by 2027.
Jennifer Morgan, Germany’s special envoy for international climate action, held talks in Riyadh on Monday with Saudi Energy Minister Prince Abdulaziz Bin Salman.
“Every country has to find its own path for a just [energy] transition but crucial to exchange and cooperate to contain the climate crisis,” Morgan said in a tweet about her trip to Saudi Arabia.
Germany has ambitious energy transition targets, but has had to scramble to find alternative supplies of oil and gas after moving to end its prior heavy dependence on imports from Russia after that country’s invasion of Ukraine.
Saudi policymakers believe there are many pathways to net zero, including the use of technologies to reduce emissions from oil and gas and capturing and utilizing CO2.