Amin Nasser, CEO of Saudi Aramco (the state-owned oil giant of Saudi Arabia), made a striking statement at an energy conference recently that strongly encouraged people to abandon any illusion that oil will eventually go away. He highlighted challenges associated with current energy transition strategies. He noted that global demand for oil and natural gas is likely to increase significantly over the coming years – leading to deeper thought on energy’s future. This viewpoint has created much debate.

Nasser Illustrates the Dilemma of Energy Transition

Nasser noted that although the International Energy Agency projects that oil, natural gas, and coal demand will peak by 2030, realizing this projection in the short term may be challenging. Demand dynamics within the United States, Europe, and developing nations all play an important part. Furthermore, renewables still make up only a relatively minor share of the global energy supply (wind and solar account for less than 4% combined, while the electric vehicle adoption rate currently sits below 3%)

Fossil fuels’ share in energy consumption has declined but remains substantial, and daily demand for hydrocarbons keeps setting records worldwide. Nasser noted a 70% surge in natural gas usage since 2000 – particularly as more Americans turn away from coal toward natural gas to reduce carbon emissions and carbon footprints. He warned against overly optimistic projections regarding future oil and natural gas demand as more individuals become concerned over its security as an energy source.

As developing countries develop, their demand for oil and gas is anticipated to continue expanding, yet renewable energy investments only account for five percent of their total energy spending. Investment in renewable energies should increase; however, more emphasis should be placed on researching ways to reduce emissions from oil and gas as a source of pollution. Over the past fifteen years, improvements in energy efficiency have reduced global daily energy demand by nearly 90 million barrels equivalent, with wind and solar replacing only 15 million.

Nasser insisted that new energy sources and technologies should only be adopted once they are truly ready and economically competitive. He called for collective efforts to find an equilibrium in energy transitioning, moving away from idealistic fantasies and closer toward practical reality. His words not only underlined the difficulty associated with transitioning away from fossil fuels but also highlighted their essential role in shaping global energy policy’s future.

Chinese Companies Assist Saudi Arabia With Its Energy Transition

Saudi Arabia has garnered much media coverage with their progress toward energy transformation. Under Vision 2030, they aim to diversify their economy through renewable energy development while decreasing their reliance on oil. One goal of Vision 2030 is increasing renewable capacity from current levels to 130GW by 2030 – such as Al Shuaibah Photovoltaic Power Station, which, when completed, will boast one of the world’s highest installed capacity single solar projects, providing them with ample clean energy supply to power their nation and region.

Chinese photovoltaic (PV) companies have played an instrumental role in Saudi Arabia’s energy transformation, working closely with the kingdom on solar power projects for which equipment needs are supplied by Chinese PV firms and considering setting up manufacturing bases there. With favorable sunlight conditions in Saudi Arabia coupled with their desire to increase local manufacturing of PV components, Chinese PV firms have had great success expanding into this market and exploiting wider markets through geographic proximity and strategic advantage.

Leading Chinese PV companies like LONGi Green Energy and JinkoSolar have entered into several agreements with Saudi Arabia for power station construction and equipment supply. TCL Zhonghuan and Trina Solar also reached agreements to establish factories there, while GCL Technology recently revealed it is in negotiations to open an overseas factory there.

Al Shuaibah Photovoltaic Power Station project features cutting-edge N-type bifacial photovoltaic modules and single-axis automatic tracking brackets, developed in collaboration between China Energy Engineering Corporation’s International Group, Guangdong Electric Power Design Institute, and Northwest Engineering Corporation. With an installed capacity of 2.6 GW over 35 years, this project should generate around 282 billion kWh in total energy production.

The project is scheduled to reach its milestone for reverse power transmission by March 31 of this year. Trial operations of 600MW capacity should commence, and the grid connection should be completed before July 31. The project is estimated to finish by November 30, 2025.

Notably, Saudi Power Procurement Company (SPPC) recently unveiled the final phase bidders for the National Renewable Energy Program’s (NREP) fifth round. They include China-based JinkoSolar Solar Panel Company Limited, State Power Investment Corporation’s Upper Yellow River Hydropower Development Company, and China Electric Power Construction Group as bidders.

The tender includes numerous solar power projects, such as the 2GW (AC) Al Sadawi Station in Eastern Saudi Arabia and the 1GW AC Al Masa’a Project in Hail Province—totaling 3 GW installed capacity! Also on offer are the 400MW AC Al Henakiyah 2 Station located in Western Medina and the 300MW AC Rabigh 2 Station from Western Mecca, respectively, totaling 3.7GW installed capacity overall.

TCL Zhonghuan recently made headlines for its efforts in investing in and building a photovoltaic crystal chip factory in Saudi Arabia, dispatching a team to progress this project, and complying with all disclosure obligations in a timely manner.

Public records demonstrate that Vision Industries, a local Saudi company co-building the crystal chip project with TCL Zhonghuan, specializes in investing in and developing renewable energy sources like solar PV, wind power, and hydrogen power. Their chairman also chairs Saudi International Power and Water Company (ACWA Power). As one of the largest privately-held seawater desalination companies globally, ACWA Power plays an integral part in Saudi Arabia’s transition toward renewables.

Saudi Aramco’s Initiatives towards Net Zero in Saudi Arabia

Saudi Arabia’s journey toward net-zero emissions requires more than simply replacing fossil fuels with renewable energy resources. CCUS, the Carbon Capture Utilization and Storage technologies, are being actively explored, researched, constructed, and deployed to reduce the carbon emissions of fossil fuels. Saudi Aramco, their state-owned oil giant, has initiated investments into CCUS technologies as part of their plan to reach net zero by 2050 – they’ve been involved with carbon capture research and development since 2010. In December 2022, they signed a memorandum of understanding with China’s Shandong Energy Group that involved collaboration on carbon capture technologies between both companies.

Saudi Aramco plans to capture, use, or store 11 million tons of carbon dioxide equivalent annually by 2035 using carbon capture utilization storage (CCUS) technology; however, costs and efficiency remain key obstacles. According to data from China Energy Media’s Energy Security New Strategy Research Institute in 2023, their carbon capture capacity only stood at 800,000. To meet their ambitious target they plan on setting up a center capable of capturing 9 million tons annually of carbon.