Remarks by Amin H. Nasser at the Singapore International Energy Week (SIEW)

Your Excellencies, Ladies and Gentlemen, good morning.

It is a pleasure to be with you all. I would like to thank everyone at the Energy Market Authority for their hospitality, and organizing this important annual conference.

This country has an outstanding reputation for turning vision into reality, through leadership, talent, and a relentless focus on what works. That has important lessons for the global energy transition, as I will explain this morning.

It is also wonderful to see people from across the region, as Asia becomes the world’s economic center of gravity once again. Asia now accounts for almost half of world GDP, as well as half of the world’s population.

This year alone, Asia is likely to contribute roughly 60 percent of global economic growth. And Asia consumes more than half of global energy supplies. 

Crucially, 84 percent of that consumption is still supplied by conventional energy. In short, Asia is vital to the global economy, our shared climate ambitions, and the hopes and dreams of billions of people. 

So you would think that Asia’s priorities play an equally vital role in global energy transition planning. But as Singapore’s late, great leader, Mr. Lee Kuan Yew, might have said, the hard truth is that you would be wrong. 

This may be Asia’s century. But Asia’s voice and priorities, like those of the broader Global South, are hard to see in current transition planning, and the whole world is feeling the consequences. Transition progress is far slower, far less equitable, and far more complicated than many expected. 

Three reality gaps stand out in particular.

First, oil-use sectors differ significantly, which matters. The only major one where a practical energy alternative is currently available is light duty vehicles. Electric vehicles are certainly making progress. But out of almost 1.5 billion vehicles on the road, only 57 million are EVs, or less than 4 percent.

Even that low level of penetration is mostly limited to the US, China, and the richer countries in the EU, driven by policies, subsidies, and incentives. In the rest of the world – particularly in Asia, Africa, and Latin America, where a lot of the population and energy demand growth is expected – EVs lag far behind.

Consumers generally struggle with affordability and infrastructure concerns, while they increasingly appreciate that the electricity used to charge batteries comes from different energy sources. In Asia, almost 70 percent of electricity is still powered by conventional energy, with only 12 percent by wind and solar. 

Furthermore, electricity consumption per person is one-tenth the levels of advanced economies. So powering EVs is likely to be increasingly challenging in the region. Also, EV sales are beginning to face headwinds in the mass market now that the niche market of early, affluent adopters is mostly served.

Additionally, EV progress has no bearing on the other 75 percent of global oil demand. Massive segments like heavy transportation and petrochemicals have few economically viable alternatives to oil and gas.

Second, geographic regions differ and also matter. Yes, oil growth has plateaued in a few mature economies such as the EU, the U.S., and Japan, but they still consume large quantities of oil.

And while U.S. oil consumption is roughly 22 barrels per person per year, and the EU is around 9 barrels, it is 2.4 barrels in Vietnam, 1.4 barrels in India, and only 1 barrel in Africa. So the Global South is likely to see significant growth in oil demand for a long time as national economies grow and living standards rise. Just as developed countries enjoyed for decades.

Third, forecasts differ and matter too. Most analysts agree that even when the growth in global oil demand stops at some point, no abrupt drop in overall demand is anticipated. And that stage is likely to be followed by a long plateau.

If so, more than 100 million barrels per day would realistically still be required by 2050. This is a stark contrast with those predicting that oil will, or must, fall to just 25 million barrels per day by then. Being short 75 million barrels every day would be devastating for energy security and affordability.

And we are not long on confidence, with a sizeable gap between prediction and reality already. Despite trillions of dollars being invested in the global energy transition, oil demand is at an all-time high. Gas demand has also grown, by almost 70 percent since 2000.

So, rather than an energy transition, we are really talking about energy addition, where just the growth is mostly met by alternatives, instead of replacing conventional energy in any meaningful way.

Yet the current transition plan continues to ignore this reality, which is why it has failed to deliver in the three core areas we were promised it would help most.

One, energy that is affordable. For example, electricity prices in Europe rose as much as three to five-folds in many countries over the past two decades, despite the shift to renewables.

Two, progress is way off the pace. I mentioned low EV penetration, while wind and solar combined supply under four percent of world energy.

And three, transition will be expensive for everyone, with estimates of between 100 and 200 trillion dollars required globally by 2050. For developing countries, almost 6 trillion dollars may be required each year.

Moreover, in a transition that requires staggering amounts of front-end capital investment, the cost of capital is more than twice as high in developing countries where the need is greater. And for the least developed countries the future looks especially bleak if many have to spend up to half their total GDP every year on transition alone.

It is why almost all the recent growth in clean energy investments has been in advanced economies and China. In other words, despite progress in the Global North, the Global South cannot afford massive investments in new energy, especially when many countries are only at the start of their development journey.

Trying to force an unworkable, unaffordable transition plan on them will only threaten their economic progress and even social cohesion. And the hammer blow for the current plan is that it has not even been able to reduce demand for highly carbon intensive coal, let alone replace it, with the highest levels ever seen!

Because of these multiple deficiencies, the world is not on track to meet affordability, transition speed, or emissions reduction targets. So the world urgently needs a transition plan that works.

What could that re-set look like? To begin with, planners must stop assuming the world can replace its conventional energy needs with half-baked alternatives, almost overnight, particularly in the Global South.

This assumption is seriously discouraging investments in these crucial conventional sources. Let us be clear: all sources of energy will be required for decades to come. Planners must also abandon the belief that a single plan can meet the needs of more than 200 countries.

That assumption is like asking for a wi-fi password in a village without electricity! Each country should choose an energy mix that helps them meet their climate ambitions at a speed and manner that is right for them.

And those actual priorities, especially those of the Global South, must be the DNA of global transition if it is to succeed. In addition, the world must of course accelerate the development of new energy sources and lower carbon technologies that can one day compete on price and performance.

Consumers can then embrace lower carbon products without the mandates, subsidies, and tariffs that distort markets. But our main focus should be on the levers available now. This means also encouraging the essential investments in proven and reliable energy sources like oil and gas that developing nations need and can afford.

It also means prioritizing the reduction of greenhouse gas emissions associated with those conventional sources. For example, a shift from coal to renewables has certainly reduced CO2 emissions from US electricity generation.

But the shift from coal to gas accounted for almost two-thirds of the reduction. And it means going after the low hanging fruit of more efficient energy use, a Circular Carbon Economy, and CCUS.

This ideology-free approach simply prioritizes systematic emissions reduction, where the impact is greater, at an acceptable cost, within reasonable timeframes, and whatever the source or technology.

It is what I call a multi-source, multi-speed, and multi-dimensional approach that addresses the actual security, affordability, and sustainability priorities of all countries, not just a few.

A Transition Plan 2.0, with Asia at its heart.

Ladies and Gentlemen, as energy consumers around the world are served an increasingly unrealistic and expensive transition, the less they like the taste. They hunger for something that connects their passion for the net-zero future we all want, with a reality we can all afford, and a relentless focus on what works.

This was Mr. Lee Kuan Yew’s mindset, and I believe it could change mission impossible into mission possible.

Thank you.

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