CERAWeek, Houston, U.S.A. Remarks by Amin H. Nasser Aramco President & CEO

• A Consumer-Led Shift in the Center of Gravity on the Road to Transition Reality

Thank you Dan, and good morning Ladies and Gentlemen.

It is always a pleasure to be back in Houston, particularly as Aramco’s U.S. headquarters celebrates 50 years in this great city. 

We meet when the future of energy, and our role in the global energy transition, is incredibly high on the geopolitical agenda. 

But these conversations are no longer limited to Davos or D.C. because the hopes and ambitions of 8 billion energy consumers around the world are at stake. 

And as the current transition strategy increasingly impacts the majority, not just a tiny minority, consumers around the world are sending powerful messages that can no longer be ignored.

We know they want energy with lower emissions, and rightly so. 

But many are struggling to afford the energy they need. 
And they worry about ample and reliable supply, which the recent energy crisis showed is not guaranteed. 

So the full message from consumers is actually this – they want energy that helps protect the planet and their pocket books, with minimal disruption to supplies and their daily lives.  

Unfortunately, the current transition strategy overlooks these broader messages from consumers. 

It focuses almost exclusively on replacing hydrocarbons with alternatives, more on sources than on reducing emissions. 

And, despite our starring role in global prosperity, our industry is painted as transition’s arch-enemy!

But slogans are not solutions; demonization is not dialogue; and posturing is not delivering the progress we need on our shared climate ambitions.

In fact, in the real world, the current transition strategy is visibly failing on most fronts as it collides with five hard realities. 

The first is that, despite the world investing more than $9.5 trillion on energy transition over the past two decades, alternatives have been unable to displace hydrocarbons at scale.

Today, wind and solar combined, supply under 4% of world energy. 

Meanwhile, the total penetration of EVs is less than 3%.

Three to 4% is not nothing, and we welcome the progress in both renewables and EVs. 

But 3% to 4% is not everything either. 

By contrast, the share of hydrocarbons in the global energy mix has barely fallen in the 21st century, from 83% to 80%.

Yet percentages can blind people to the real energy story, which is that absolute demand for hydrocarbons has grown by almost 100 million barrels per day of oil equivalent over the same period.

Indeed, global oil demand is expected to reach an all-time high in the second half of this year. 

And there is significant demand growth potential in developing countries, where oil consumption currently ranges from less than 1 to just below 2 barrels per person per year. 

This compares with 9 barrels for the EU and 22 barrels for the U.S.

It is an important reason why some are predicting growth through 2045.

Likewise, gas remains a mainstay of global energy, growing by about almost 70% since the start of the century.

Even coal is at record highs.

This is hardly the future picture some have been painting. 

And even they are starting to acknowledge the importance of oil and gas security. 

All this strengthens the view that peak oil and gas is unlikely for some time to come, let alone 2030.

It seems no-one is betting the farm on that!

The second hard reality is that despite the contribution of alternatives to reducing GHG emissions, when the world does focus on reducing emissions from hydrocarbons it achieves much better results.

For example, over the past 15 years, efficiency improvements alone have helped reduce global energy demand by almost 90 million barrels per day of oil equivalent. 

The equivalent contributions from wind and solar have substituted just 15 million barrels.

Or look at the results with electricity generation here in the U.S.  

A shift from coal to renewables has certainly helped. 

But the shift from coal to gas accounts for almost two-thirds of the reduction in CO2 emissions.

Examples like these show the massive potential benefit of a sustained focus on reducing GHG emissions, not the energy sources.

The third reality is that many alternatives in play are simply unaffordable for the majority of people around the world.

For example, despite its significant long-term potential, hydrogen still costs in the range of $200 to $400 per barrel of oil equivalent, while oil and gas remain much cheaper.

Meanwhile, without subsidies, EVs are up to 50% more expensive than an average internal combustion engine car.

They cannot be subsidized forever.

And increasing consumer doubts about their cost and benefits is preventing mass adoption. 

The fourth reality is that the energy transition narrative will increasingly be written by the Global South. 

I have already mentioned the gap in oil consumption with the Global North. 

As prosperity eventually rises in the Global South, so will demand for energy, and these nations cannot afford expensive energy solutions.

Yet despite representing over 85% of the world’s population, they currently receive less than 5% of the investments targeting renewable energy.

These four realities help explain the growing political and public change in sentiment around the world. 

In turn, this is driving the fifth hard reality – that a transition strategy re-set is urgently needed – and my proposal is this. 

We should abandon the fantasy of phasing out oil and gas, and instead invest in them adequately, reflecting realistic demand assumptions. 

We should ramp up our efforts to reduce carbon emissions,  aggressively improve efficiency, and introduce lower carbon solutions. 

And we should phase in new energy sources and technologies when they are genuinely ready, economically competitive, and with the right infrastructure, adjusting all of the above as needed, as we go.

Finally, alongside the energy transition, consider the huge upside potential of a materials transition. 

Conventional materials like steel, aluminum, and cement already account for almost a quarter of all global CO2 emissions, while demand for materials is expected to double by 2060.

Unless we complement conventional materials with more durable and less emission-intensive ones, global net-zero ambitions are unlikely to be achieved. 

Ladies and Gentlemen, many of us have been saying for a long time that the world has been trying to transition in fog, without a compass, on a road to nowhere. 

Consumers increasingly agree, as transition realities bite. 

They are demanding a transition that is affordable, reliable, and flexible, and that supports our climate ambitions. 

This welcome clarity from consumers is shifting the transition’s center of gravity to a multi-source, multi-speed, multi-dimensional road to reality.

And to the right side of history, where everyone’s hopes and ambitions can actually be met.

Thank you.

 

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