As Saudi Oil CEO Claims Energy Transition is “visibly failing,” Saudi Arabia Invests Heavily in Clean Energy

As Saudi Oil CEO Claims Energy Transition is “visibly failing,” Saudi Arabia Invests Heavily in Clean Energy
Photo by NEOM / Unsplash

One good rule of thumb in investing, never trust an oil company CEO.

Last month, Amin Nasser, the CEO of Saudi Arabia’s state-owned oil company Aramco, told the audience at CERAWeek in Houston that the global transition to clean energy “is visibly failing on most fronts.” This line was met by applause by the audience at CERAWeek, which contained many other oil company CEOs. In his speech, Nasser also lamented that “despite our starring role in global prosperity, our industry is painted as transition’s arch-enemy!” 

In the United States, oil companies like Exxon can choose not to invest in solar or wind energy production as that is apparently what their shareholders prefer. Last November, at a talk in Boston, Exxon CEO Darren Woods stated that “There is a somewhat superficial view that [if] you’re an energy company, you should go into wind and solar.” For reasons I've previously written about, I highly recommend not taking investment advice from oil company CEOs like Darren. 

But while Aramco’s CEO Amin Nasser attacks the clean energy industry in efforts to convince the public they have no choice but to keep buying oil and gas, Aramco is also a state-owned company. And guess what else the state of Saudi Arabia is investing heavily in? Clean power, green hydrogen and electric vehicles. Darren Woods and other private oil company CEOs have different goals than the Kingdom of Saudi Arabia. Exxon executives personal goals are simple: Maximizing personal executive compensation. Rex Tillerson, the previous CEO of Exxon was quite honest when he told Charlie Rose, “my goal is to make money.” If you are an oil and gas CEO of an American based company like Exxon, the best way to maximize your money making is to slow down the switch to your clean energy competitors, sell as much oil as you can in the meantime, and then declare bankruptcy and leave the public with the cleanup bill. However, Saudi Arabia’s economy is heavily dependent on oil profits and state run entities like Aramco to keep the whole economy afloat and to buy golf leagues. And while Exxon apparently does not care if their efforts help the American people,* Saudi Arabia needs to keep its population happy in the future, not just its oil executives. And since they know quite well that the energy transition is happening, likely much faster than they initially expected, the country is using some of its oil profits to invest in its future.

*Lee Raymond was CEO of ExxonMobil until 2005 before Rex Tillerson took the helm. He once stated that, “I’m not a U.S. company and I don’t make decisions based on what’s good for the U.S.”

Saudi Investment in Clean Energy 

So where does the Saudi government like to invest? Last year they announced investment in what was at the time the world’s largest solar power plant. Saudi Aramco, the oil company, is one of the investors in the project which is part of the country’s plan to generate 50% of its electricity from renewables by 2030. Amin Nasser didn’t include that fact in his speech at CERAweek. 

The Saudis are also investing in lithium production. This article from last year explains the reasoning for this investment, “Saudi Arabia’s ambitions for an electric vehicle supply chain are part of its push to diversify the national economy away from oil, a project guided by the government’s Vision 2030 reform plan.” Part of the plan is a quarter trillion dollar investment in renewable energy such as “plans to develop 30 solar and wind projects over the next nine years as part of a $50 billion program to boost power generation and cut oil consumption.” They are also investing to upgrade their national power grid to be able to increase capacity. 

Last month the Saudi’s invested another billion dollars in U.S.-based electric vehicle manufacturer Lucid. The Saudis now own 60% of the company

And while the economics of exporting hydrogen are unlikely to work, the Saudis are also moving ahead with their massive wind-powered green hydrogen project

The reality is that none of this is motivated by desires to address climate change. The motivation to move to clean power production to “cut oil consumption” isn’t about emissions. It’s because they can make more money selling that oil as exports than they can by burning it for power. And to make that plan work, it would be really helpful if while the Saudis are investing heavily in clean energy technology, that the rest of the world didn’t. Which certainly would appear to be the motivation for the “visibly failing” rhetoric. Watch what they are doing, not what they are saying. 

About That Failing Energy Transition

China is the world’s largest auto market and auto exporter. In 2023 there were twice as many cars sold in China as in the #2 auto market in the U.S. China sells 6 times the amount of cars as are sold in Japan, which is the #3 auto market. As you can see, China dominates the world auto market. 

In March 2024, 41.5% of the new vehicles sold in China were either all electric or hybrids. This is one reason why the CEO of Saudi Aramco is worried.  

In 2023, Europe’s emissions from power generation fell 24% due to the move to renewable power generation. Electricity prices are lower in Spain and Portugal than the rest of Europe due to the high amount of renewables. This is also why the CEO of Saudi Aramco is worried.

California would be the world’s fifth largest economy if it was a country. There are now regular periods where the state is producing more renewable electricity than it uses.

Source: LinkedIn

California is leading the U.S. in electric vehicle adoption and gasoline consumption in California is declining. 

Source: EIA

Source: Bluesky

It’s pretty clear why the oil CEOs are worried. And why Saudi Arabia is investing in clean energy and electric vehicles. 

It’s also clear that the oil industry is doubling down on oil production. Which is why, more than ever, they can’t be trusted. They misled the public about climate change and the health impacts of their products like natural gas for decades. They knew. Just like Amir Nasser knows now that what he says about the energy transition simply isn’t true. The oil industry can see the future of their business. It isn’t good. Just this week there was a column at CNN that stated “Investing in oil and gas doesn’t make sense anymore.” They know. Expect them to fight like hell to delay that reality. It’s what they do, and unfortunately for the rest of us, they are really good at it. 

Additional reading recommendation: If you are unaware of the history of Saudi Aramco, you are in for a treat. The Wiki page is a good place to start where you learn that it was initially called the Arabian-American Oil Company. Learn the basic history including fun phrases like “the golden gimmick.”

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