Alternative energy is important as we transition to a greener future, but it will not be able to replace oil and gas overnight, which produce up to 80% of all energy that we consume, as part of the world’s energy transition efforts, Saudi Aramco’s chief executive has said.

Amin Nasser, CEO and president of Saudi Aramco, warned the capital markets during the Saudi Capital Market Forum in Riyadh about the ripple effect that unrealistic energy transition plans would have on the world’s energy supply.

“Popular energy transition narratives paint a picture of a utopian world where alternatives are ready to replace oil and gas overnight. They assume the massive global energy system in many developing countries can be transformed instantly,” Nasser said while adding, “Alternatives are not ready to shoulder the heavy burden of global demand.”

“For a less risky global energy transition, everyone, including capital markets, must take a more realistic view of how the energy transition will unfold,” Nasser added. 

Further, he noted that an increased focus on climate undermined investment in oil and gas to the point where it now posed a threat to the world’s energy security. The upstream investments in 2022 were $400 billion, or half as much as they were in 2014. He continued by saying that pressure was brought on by “flawed arguments and assumptions.”

Finding the proper balance between funding new energy sources and maintaining support for traditional energy and its decarbonization, according to Nasser, is the fundamental challenge facing the world’s capital markets.

He continued by saying that the imbalance is hazardous because emerging markets are already dealing with high energy prices.

The world pledged $1.1 trillion to the global energy transformation in 2022. He emphasized that less than 1% of the overall expenditure was made in the two key areas of carbon capture storage and clean hydrogen.

“We should be concerned that continuing to impose energy transition plans will lead to unintended consequences not limited to compromising affordability, creating energy insecurity, and bringing back people to burn more coal and animal waste. Something that is already happening,” Nasser said.