But attendees at the oil and gas industry shindig can’t ignore the fact that demand for fossil fuels, particularly oil, has effectively peaked in the US and other western countries. And despite the troubled progress towards a global climate agreement, the push to support renewables, clean energy and efficiency is only strengthening in both the developed and developing world.
Of course whether this poses a big threat to the hydrocarbons sector is debatable. After all, global energy demand as a whole is expected to rise quickly over the next 20 years thanks to growth in emerging economies, and fossil fuels have the massive advantage of the built environment.
So perhaps it’s not surprising that E&E News reported talk of renewable energy “generating snickers” at the conference.
Saudi Aramco chief executive Khalid al-Falih took it a little more seriously than that, warning of a ‘green bubble’ forming. He cautioned against “wishful thinking” on renewables, according to a Forbes report, which added:
Not that Aramco is against alternatives. Al-Falih jokes that the Kingdom was endowed with plentiful sunshine and silica: “All factors aligned to make Saudi Arabia a great place to invest for solar energy.” Aramco, he says, will build large-scale commercial solar plants, like one currently under construction with IBM that will use solar power to run the world’s largest water desalination plant.
Yet Al-Falih says he’s worried about assumptions that the world’s energy mix can be transformed overnight. He cautions about boosterism of green energy alternatives based on “wishful thinking.”
Yet there’s a bit of a mixed message here. Al-Khalil maintained that the world will still get 80 per cent of its energy from fossil fuels in 2030, regardless of how fast renewable energy grows.
However, only on Monday, Saudi Aramco was again pushing its green credentials, with a company official telling a conference in Jeddah that Saudi Aramco was spending $300m on R&D “for projects directly linked to energy and the environment”. While big, it is just a drop in the ocean compared to the $90bn al-Falih says is being spent on increasing oil production capacity.
But the company wants to be known for being green. The National wrote on Tuesday about an Aramco executive imploring journalists to “please, write about what we are doing for the environment” during a press conference on its planned development of the sensitive Manifar Bay area.
Saudi Arabia faces a conundrum on renewables. It is a wealthy country thanks to its oil exports, and its own domestic economy also benefits from heavily-subsidised oil, which is used in electricity generation. But i does share some common interests with the renewable energy industry – and not just building the odd solar plant.
Because of its role as the swing producer of the world’s oil, Saudi Arabia is more responsible for keeping oil prices high than any other country.
Without Opec’s production quotas – even with compliance levels falling – it’s widely believed oil prices would be much lower than they currently are. That almost certainly would have made the slump in renewables investment that began in 2008 much worse.
Unfortunately for the clean tech industry, however, Saudi Arabia is also cautious about not letting oil prices get so high that they destroy demand for the fuel – Opec’s latest meeting demonstrated just how much of a concern this is. And Aramco’s big capital investment programme could go some way towards avoiding a mid-term supply crunch, helping it continue to export vast amounts of oil for many years.
Opec’s interest in reducing emissions (FT Energy Source)
Revealed: Opec’s fears that rich countries’ appetite for oil is waning (FT Energy Source)