An analysis credited to BloombergNEF has shown that global investments in the clean energy transition hit $1.1 trillion in 2022, equaling for the first time the amount invested in fossil fuel production.
It further indicates that the amount represents a 31% jump from 2021, but is still a fraction of what’s needed to slash greenhouse gas emissions enough to avert catastrophic global warming.
However, this shift in investment direction has raised concerns among top tier oil executives, who have argued in recent weeks that more should be invested in fossil fuels because they will still be needed for years to come.
One of such figures is Amin Nasser, the CEO of Saudi Aramco, who said that the increasingly mounting pressure from different quarters that new investments in oil and gas be cut was based on what he called “flawed assumptions.”
“Proponents of the popular energy transition narrative paint a picture of a Utopian world where alternatives are ready to replace oil and gas almost overnight,” he told the Saudi Capital Market Forum in Riyadh.
According to him, “if ESG-driven policies are implemented with an automatic bias against any and all conventional energy projects, the resulting underinvestment will have serious implications. For the global economy. For energy affordability. And for energy security.”
The Aramco helmsman said the focus on Environmental, Social and Governance criteria in investment was raising the cost of capital for oil and gas projects, which are now perceived to carry higher risk.
Nasser’s comments echoed those made earlier by Haitham Al-Ghais, the Secretary-General of OPEC, who said the oil and gas sector was plagued by “years of chronic underinvestment” and needs an annual $500 billion from now to 2045.