Saudi Oil Minister Warns Against Hasty Transition to Renewable Energy

  • Published on February 15th, 2009

According to Saudi Arabia’s Oil Minister Ali Naimi, renewable energy sources are not fully equipped to meet the world’s energy demands and that governments should avoid making huge investments in developing clean energy systems.

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At a conference in Houston, Mr. Naimi argued that recent injection of billions of dollars by governments to develop renewable energy systems could lead to the collapse of the oil industry. He said that such steps would drive away investors which would hurt the oil producing nations as demand and prices of oil products has been falling sharply. His remarks were clearly aimed at the Obama administration which is reversing President Bush’s policies by openly encouraging massive investments in the renewable energy sector.

United States has been a ‘close friend’ and seeing President Obama acting on his promise of energy independence seemed to have alarmed the Saudis. Bills approving of oil exploration along the US coasts, massive subsidies for renewable energy projects and Obama administration’s intent to reduce carbon emissions means a medium to long-term decline in oil imports and which have left the Saudis (and OPEC) concerned. 

Addressing concerns about the rapid growth in renewable energy investment around the world, the minister said:

“We must be mindful that efforts to rapidly promote alternatives could have a ‘chilling effect’ on investment in the oil sector. A nightmare scenario would be created if alternative energy supplies fail to meet overly optimistic expectations, while traditional energy suppliers scale back investment.”

In a sense, he is right in defending his country’s interests but the conditions that prevail in today’s world are not in favor of the oil sector. According to the International Energy Agency oil supply would peak in 2020, governments around the world are planning to invest billions to build low carbon economies and energy security & energy independence find greater consideration in national policies of governments that ever before.

The time is right to invest in renewable energy systems. The world is facing a plethora of complex problems like climate change and economic recessions, the solution to these problems find common ground in building low carbon green economies which create jobs by promoting energy independence.

The world leaders must see the opportunity and necessity to act to reduce carbon emissions. Transition from imported fossil fuels to jobs creating renewable energy projects could lead the world to the path of economic resurgence and meeting emission reduction goals under the new climate treaty.

Image: jenlund70 (Creative Commons).

About the Author

currently works as Head-News & Data at Climate Connect Limited, a market research and analytics firm in the renewable energy and carbon markets domain. He earned his Master’s in Technology degree from The Energy & Resources Institute in Renewable Energy Engineering and Management. He also has a bachelor’s degree in Environmental Engineering. Mridul has a keen interest in renewable energy sector in India and emerging carbon markets like China and Australia.

28 comments

  • thank you America 4 getting off of oil… i lived in Japan for two years. You can have trains in cities, trains to ride from city to city(high tech speed trains), you can keep your trucking system. But you need to get your city cars to run on something other than oil. Oil is a thing of the past. But it still can and should be used for fertiliserz, truckes, farming equipments (i don't think those can run on electrical engines). You can also generate electricity from diverse sources. It will take years anyways. Don't buy into the oil scam. Hit the street and demand your right for a different America. Many countries are doing it, they're changing for the better. Your biggest hurdle is greedy for profit lobbyists in your government and profits used to prop up inneficient car companies. Become capitalistic again, be proud!!! from canada

  • BTW – Dubia is part of the UAE and is NOT in Saudi Arabia. The UAE is also building this since they know they are going to run out of oil soon. The Saudis has not invested their money in their own country very well. They have bought a lot of crap just like coal miners in the US when they were making money. With SO much money, you would think that the Saudis would have the best school system in the world.

    The green revolution will be the only think that will help us out of this recession. Every increase in global GPD has led been precipitated in cheaper energy.

  • I am glad to see alternative energy is finally being taken seriously. With our talents pulled together we can out tech anybody. More important to pull together as a nation right now and come up with solutions.I am willing to give of my extra time and talents as an ex auto worker and electrician to help the cause. We must be careful at this point not to hurt our own infrastructure. There are alot of taxes on gas and oil and those things will need a shift in funding. There is difinitly a global shift of power in the air.Maybe our captures will become our captives economically speaking.War never solves problems only technology does. I know I was in Nam.

  • Thank you all for the comments.

    I'll agree with some of you who pointy out that renewable energy systems would become reliable and affordable only after 20 or so years. I think they are reliable and in the future it would make great sense to establish your national grid based on renewable energy.

    Energy independence is extremely important as it not only has economic but strategic and geopolitical consequences too. And i agree that offshore oil drilling is a step in that direction but it is a short term solution. It's not easy to move from fossil fuels to renewable energy sources and we won't be achieving that in one or two years but maybe in a decade or so. But we must start acing now, yes oil isn't going away for sometime in the future but we must understand that renewable energy is the future.

    Yes, President Bush grant subsidies to various renewable energy projects but he and his administration did many other things like ignoring EPA's advice on granting California's demand to set its own emissions rules (that was done under the influence of the automobile companies), he didn't allow EPA to reduce the permissible emission limits of various pollutants. There are many things some of them good as some of you pointed out and many bad things as i pointed out.

    I believe we should see oil as a short to medium term thing with nuclear (provided we manage the wastes properly) and renewable energy as a long term solution. But we must start developing the technologies for tomorrow today.

  • Worry not, Saudi. Obama has already reversed the order granting more off-shore exploration and more shale oil development. He is doing the bidding of his Muslim masters.

  • I couldn't care less about Saudi Arabia's oil price problems, but this person has a point, inasmuch as the world currently runs on oil and natural gas, and must for the foreseeable future. Renewable energy sounds wonderful,, and may one day do what we all want it to do, but frankly it just isn't capable yet to compete; Ethanol is a complete waste of money and just adds to our debt via another stupid subsidy program that masks its real cost. Oil is not subsidized by the way. Wind is also heavily subsidized, and it is so incredibly non-competitive, it will be years if at all before it's truly useful.

    I like the idea of energy independence in order to reduce and eliminate our dependence upon foreign sources of oil and gas, but we're fooling and hurting ourselves by forcing the issue faster than technology can accommodate us. Nuclear and natural gas are the only real current alternatives to oil in the nearer future, and we should fast track both instead of pushing on the rope of "chic" wind, solar and wasteful ethanol choices. These should have to compete in efficiency and cost; to force them on us is tantamount to adopting the 5 year plans that never worked in the old Soviet Union.

  • We're not going to be off oil for a LONG time. We are probably the only developed country that has oil resources that we refuse to develop. Even Brazil, which is energy independentis developing oil found off of its shores. Because the real meaning of energy independence is the ability of a country to take care of its own energy needs NOT independence from oil.

    But just curious, hypothetically,suppose we were able to get off of foreign oil. Would that be a policy that they love us for or hate us for? And not just the middle east but Canada too? We are, after all responsible for all the reasons that our enemies hate us, at least as per the talking points.I thought Obama was all about the smart politics, and all the libs were realists now, not to mention all the rhetoric about how we are perfectly willing to negotiate so long as our enemies don't have clenched fists.

  • Just because he's clearly biased doesn't mean he's wrong. Every "alternative energy" proposal still goes crawling back to Big Oil for some cruicial component in its production process. Solar cells require petroleum-based resins to hold their photovolaic layers in place. Only a few types of plastic can provide the strength-to-mass ratio to make wind turbines productive. And everything with moving parts relies on some form of lubrication, with those derived from petroleum being far superior in logevity and consistency to any animal or vegetable substitutes.

    Even when we aren't burning oil products for power, we're going to be using it in construction. Before anyone says it, no, ending the use of oil for fuel won't make more available to produce plastics/resin/lubricants. Oil refining doesn't work that way; it's a distillation process, not a "stick a barrel of oil in a magic machine and it turns into whichever substance you want it to turn into" process.

  • Excuse me, Chadha, but it would be more important for us in the U.S. to promote jobs and create more energy independence by DRILLING for more oil and gas in our own country……esp Alaska. But since the Dems don't want it, and 41 Dems have always denied the "tactic", we are doomed to energy dependence on foreign oil for the next few years, which will be one of the several factors that crushes our economy.

  • Of course the Saudis are worried, as they should be. Allah giveth and Allah taketh away; the gravy train is coming to an end.

    But it is true that the transition must come responsibly. This is important! You don't want a 21st century version of Stalin's Collectivization or Chairman Mao's Great Leap forward. Some of you people who seem to be so gun-ho about radical policy changes should read some history.

    This is what concerns me. We need to get off oil, but we need to do it wisely and with great care.

  • Dear Randy,

    Exxon builds a platform that sits out in the Gulf of Mexico that goes through a mile of seawater and a mile or more of ocean bottom to pump crude oil that is piped to a refinery – a very sophisticated processing plant – then piped across the country then distributed by trucks to your corner gas station – for two dollars a gallon. You go inside and pay $1.19 for a pint of city water in a neat plastic bottle.

    Regards,

    Roy

  • Saudi Arabia need not worry about renewable energy sources driving down the price of oil because it is highly doubtful that renewable energy sources can keep up with the world's increasing demand for energy. Granted that during the current economic downturn energy usage is down and oil prices have dropped substantially, but when economies start expanding again the use of energy will go back up and oil prices will again rise. I would even go so far as to say that unless Pres. Obama does something entirely different than what he has promised to do, gas prices will be substantially higher at the end of his term then they currently are even if adjusted for inflation. The only way that will not take place is if the current economic downturn turns into a depression equal to or greater than the depression of the 30's, and based upon what some of the idiots in Washington are saying, they may very well turn a recession into a depression. A few more political payoffs similar to the recently passed economic stimulus bill could assure that type of outcome.

  • While the present pushfor energy is speeding,What has happened to the bill to drill for oil?Adequate energy from "Green Prjects" in any amount to fuel our economy won`t be available for 20 or more years.And the hot air from congress will be insignificant for anything to do with energy.

    the only one benefitting will be Gore with his connections to the Green Octopii

  • If everyone would remain silent for about thirty seconds, the sound of a very, very small violin just might be heard…

  • We are going to need gasoline and diesel to run all the generators Americans will need once we allow the replacement of reliable coal and nuclear electric plants with unreliable "renewables".

  • I thought policies for off shore drilling by the Obama administration will make it more difficult as the distances to the mainland have been moved farther out.

    "Climate change?" You mean global warming.

  • Hello,

    Two corrections.

    1) During George W's term, the following subsidies were in place:

    $0.50/gal subsidy on ethanol (carryover from Carter/Reagan/Bush/Clinton).

    $0.015/kwh subsidy on wind energy – renewed several times.

    $1.00/gal subsidy for ethanol not developed from corn or food

    $1.00/gal subsidy for synthetic diesel from coal (and other fuels).

    $????/car subsidy for buying a hybrid car.

    $????/kw subsidy for installed solar

    $????/kw subsidy for geothermal energy

    Granted – George W may or may not have liked all of these things, but he did sign them into law. I can't think of a veto against any of them. Matter of fact, I can't think of a W veto against anything.

    If Obama did nothing but keep these subsidies in place, the alternative energy industry would continue to grow exponentially. I guess Obama can be president during the steep part of the growth curve, and take the credit, but he doesn't need to change anything.

    2) As a practical matter, the oil substitution business will mostly be accomplished via in-ground refining of Canadian Tar sands, and Chinese conversion of coal to methanol. The Chinese are in the process of converting their electrical infrastructure to nuclear. As they do that, current coal consumption will be transferred to gasification->methanol plants.

    3) The oil business is global. What matters is global demand for oil vs global supply. If oil demand or supply changes in any country, the price of oil goes up or down for everyone. The Saudis ultimately care about that – not whether the US imports its oil or uses an alternative (though obviously, that can affect global demand/supply).

    James

  • OPEC, along with American oil companies, and aided by well placed political ‘friends’, have spent decades squeezing, gouging, and doing everything they could to manipulate the price of oil and control the market. Exxon is right now enjoying record profits while the rest of the planet is thrust into economic chaos. And did the rest of the world get a break when we were down? Not a chance! They expect to reap a windfall on every dime they invest, even though they really contribute nothing except for a raw commodity. There’s no toil in that, no inspiration in that, no significant achievement in that, only a ruthless and relentless pursuit of profit devoid of ethics or compassion.

    This economic stimulus package may not do very much to heal the economy, but if the alternative fuel initiative has the oil machine worried, I say it’s worth it even if only for that reason alone. The oil industry does not deserve a break!

  • This is an important consideration. While it is a good idea to acheive energy independence and reduce pollution, it is imperative to make the transition responsibly, and to heed any warnings from those who know the most about the oil situation.

  • HAHAHAHAHAHAHAHAHAHAHAHA!

    OMG I nearly peed myself I was laughing so hard. So the people who have made so much money gouging the world that they have built a city out of the desert(Dubai) want us to worry about their economy. Wow, that is supreme arrogance and a complete lack of reality. I hope every one of the OPEC countries reaps what they have sown.

  • Conflict of interest? I don't see any conflict of interest!!! (joke) Sure, they will be useful while we tool up to meet our energy demands with renewable and alternative energy sources. Also, we need to reassess our energy demand. Reduced consumption surely has to go hand in hand with the transition.

  • AS I recall, president George Bush asked the Saudi King for some relevance from the excessive costs associated with petrol. The whole world has grown addicted to the crack cocaine of the energy sector. They have lived a privileged lives and told the rest of the world to enjoy being raped by these thugs.

  • Poor Saudis!! Everyone please take out your violines. OPEC has enjoyed record oil profits and the expense of the rest of the world. Many of the OPEC nations want nothing less than the complete dependence of the west. We need to rise against these bullies at OPEC through the development of alternative fuels. in the words of a Turkish dipliomat "let them eat petroleum."

  • Of course, the Arabs want the world to remain addicted to oil. They were able to control the white house for 8 years and you saw what happened there with record profits and a resource war with Iraq. We have a small window of opportunity to make the transition otherwise without a steady transition, it will be very painful to make the changes necessary. All the positive things are in moving to a clean energy economy. Staying the course will prove disastrous not only to the environment but to the world economy. The high costs of oil is what caused a liquidity crisis which drove the world depression. Now, the world is confronted with climate change and one can clearly see that nothing good comes from oil. A planet that is disintegrating around us. An economy in a shambles, wars….it never stops. The end of big oil will be the best thing that ever happened to the world.

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