A rushed transition into renewable energy would cause spiraling inflation and social unrest, the chief executive of Aramco warned at the World Petroleum Congress in Texas this week, noting that investments in oil and gas needed to continue in order to avoid such a scenario.
“I understand that publicly admitting that oil and gas will play an essential and significant role during the transition and beyond will be hard for some,” Amin Nasser said as quoted by the Financial Times.
“But admitting this reality will be far easier than dealing with energy insecurity, rampant inflation, and social unrest as the prices become intolerably high and seeing net-zero commitments by countries start to unravel,” the executive added.
The warning should ring true for many Europeans despite a great effort on the part of EU and other officials to deny that the EU’s quick buildup of wind and solar power capacity had any role to play in the ongoing energy crunch, at a time when the world’s top wind turbine makers both warned on lower profits because of lower wind speeds.
Nasser’s warning was echoed by U.S. oil majors, too. Per a Houston Chronicle report, the chief executives of Exxon and Chevron said that while they were all for a transition to a lower-carbon energy system, oil and gas would continue to be part of this system.
“The growth of emissions-free energy is good for society and an objective our company supports,” Exxon’s Darren Woods said. “The fact remains that under most critical scenarios, including net-zero pathways, oil and natural gas will continue to play a significant role in meeting society’s needs.”
“The world needs affordable, reliable and ever cleaner energy every day. It’s indispensable in today’s global economy,” Chevron’s Mike Wirth said. “Our products make the world run, and we can make it run even better.”
By Irina Slav for Oilprice.com
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And whilst the whole world knows this fact, only the chief of the International Energy Agency (IEA) and the EU energy commissioner are in denial. They delude themselves by blaming gas producers for the crisis taking a stab at Russia in particular.
Environmentalists who call for an abrupt end to fossil fuels and a sudden adoption of renewable energy fail to recognize that renewables on their own aren’t capable of satisfying global demand for electricity and energy because of their intermittent nature, namely inability to generate wind electricity when the wind is still or solar electricity when the weather is cloudy.
And while the process of global energy transition will continue to move forward, a total energy transition is an illusion. Even a partial one will never succeed without huge contributions from natural gas and nuclear energy.
Therefore, the best way to combat climate change is for the global oil industry to focus on reducing carbon emissions from fossil fuels and not their actual use.
Oil and gas will continue to drive the global economy well into the future.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London
Wow, Amin Nasser is smart!
Though 'social unrest' is a very polite way of putting it.