Ashraf Al Ghazzawi
Aramco's Ashraf Al Ghazzawi said recent events have made the world quickly realise the cost of not factoring in the affordability and security of energy. Image Credit: Afra Al Nofeli/Gulf News

Abu Dhabi: The energy transition, particularly for a country like Saudi Arabia, is far from straightforward, according to Ashraf Al Ghazzawi, Executive Vice President of Strategy & Corporate Development at Aramco.

Al Ghazzawi said that the global energy system, which currently supports a $100 trillion global economy, involves staggering quantities of energy.

“First, you have to appreciate the global energy system’s scale and magnitude. You’re talking about a global energy system of about 270 million barrels of oil equivalent. This system energises a $100 trillion global economy,” he said. “If you fast forward to 2050, the global economy will double to $200 trillion with, give or take, two billion additional energy consumers coming.

“So any discussion, any plan on energy transition, we’ll have to acknowledge the complexity and the magnitude but also understand that our assumptions and premises have to be underpinned with realistic expectations, realistic solutions and realistic paths towards the energy transition.”

Aramco’s role in decarbonisation

Aramco has committed to aligning its plans with Saudi Arabia’s goal of achieving net-zero emissions by 2060. This alignment is not just a lofty aspiration, it’s backed by tangible action, said Al Ghazzawi. The company has a history of reducing emissions since the 1970s and is considered an industry leader in emissions reduction.

In addition to emissions reduction, Aramco is diversifying its investments to embrace sustainability fully. The company is venturing into renewable energy projects, with plans to develop 40 gigawatts of renewable capacity by 2030 in partnership with PIF and ACWA Power. They also invest heavily in carbon capture and sequestration (CCS), collaborating with global partners Schlumberger and Linde on a massive CCS project. Nature-based solutions are also a part of Aramco’s strategy, with plans to plant 650 million trees by 2035.

Balancing the energy trilemma

Addressing the energy trilemma — availability, affordability, and sustainability — is paramount. The recent global events, such as the Ukraine conflict and post-pandemic supply chain disruptions, underscored the critical importance of energy security and affordability. Neglecting these aspects can lead to market volatility and hinder an orderly energy transition.

“If you look at the recent events, with the conflict in Ukraine that occurred at the heels of the pandemic. It made the world quickly realise, you know, the cost of not factoring in the affordability and security of energy,” said Al Ghazzawi. “We’ve witnessed tight supplies, years of underinvestment and upstream, which resulted in a mismatch.”

“That created a lot of volatility in the market, and we’ve seen it in certain parts of the world where utilities and energy prices rocketed almost 15 times, which brought to reality to the world that every time you ignore the affordability or security of supply, you will never be able to have an orderly and adjust transition.”