Aramco’s CEO believes energy alternatives are not yet capable of meeting global demand.

Energy transition policies and targets have created a dangerous path for global demand as alternatives fail to supply the world, Aramco’s chief has warned.

At the Saudi Capital Markets Forum in Riyadh, Saudi Aramco CEO Amin Nasser gave a speech warning capital markets about a global energy shortage caused by unrealistic energy transition plans.

“Popular energy transition narratives paint a picture of a utopian world where alternatives are poised to replace oil and gas overnight. “They assume that the massive global energy system of many developing countries can be transformed instantly,” he said.

“Alternatives are not ready to bear the weight of global demand.” “From my perspective, for a less risky global energy transition, everyone, including the capital markets, must take a more realistic view of how the energy transition will take place,” added Nasser.

He explained that investment in oil and gas had dropped precipitously, with investments totaling more than $400 billion in 2022, half of the 2001
 peak. He further added that the reason was “the pressure of false arguments and assumptions.”

“We should be concerned that requiring energy transition plans will have unintended consequences, including jeopardising affordability, creating energy security, and driving people to burn more coal and animal waste.” “Something that is already happening,” he added.

Nasser noted that striking the right balance is the biggest challenge facing global capital markets in financing new energy sources while supporting traditional energy and its carbon emissions added to the current imbalance is leading down a dangerous path, as emerging markets are already struggling with high energy costs.

In 2022, the world will have dedicated $1.1 trillion to the global energy transition. However, he explained that investments in two major areas, carbon dioxide recovery and storage, and clean hydrogen, accounted for less than one percent of total investments.

“Capital markets have a clear opportunity to simultaneously address the triad of energy affordability, energy security, and sustainability by restoring investment in important traditional energy sources, increasing investment in technology that reduces the carbon footprint of oil and gas, and investing in new renewables and green and blue hydrogen,” he finished.

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