2016 looks like becoming a pivotal year. 2015 was the warmest year on record. Extreme weather events are becoming more common. December’s climate conference in Paris set a goal to try to limit warming to 1.5 degrees. The window of opportunity is narrow: speed of action is now critical. Standard & Poor’s, the influential credit ratings agency, suggest following Paris a surge of $16.5 trillion will flow into the renewable energy, clean tech and green finance sector.
In April I blogged the news that China was planning the closure of 2,000 coal mines: this week China has increased this to 4,300 mines and also imposed a three year moratorium on opening new coal mines. China’s coal use grew dramatically over the decade to 2012, levelled off by 2014 and fell in 2015. Coal use is now beginning to fall in many countries. This is one area where the UK is showing leadership, planning the phasing-out of all coal fired power stations by 2025. Humanity needs to acknowledge that the age of coal is over.
Dramatic changes are afoot in the world of oil. I last blogged about the falling price of oil back in August when the price had fallen to $42 per barrel. This week it dropped to $28. Some analysts are predicting the price of oil to keep falling, with prices as low as $20 or even $10 per barrel offered up as possibilities. Other analysts are forecasting the price to rise, perhaps sometime later this year. In truth nobody knows. Currently supply exceeds demand, so forcing prices downwards. Most countries are now producing oil at a loss. The break-even point for many fields is over $100: this is why we are seeing companies pulling out of the Arctic, deep water drilling and Alberta Tar Sands. However many countries are producing vast quantities of oil, losing money on every barrel, just to secure market share. They do this in the belief that in future this market share will be profitable. What few are contemplating is that this may never be the case. Some predictions are that Saudi Arabia will be bankrupt within 5 years as it keeps pumping vast quantities of oil at a massive loss, and keeps spending in the belief that it will be able to pay its debts with future oil profits.
Oil, like coal, is a fuel of an era that is over. The future lies with energy efficiency, clean tech and renewables. A growing number of countries are pioneering profitable economies in this new emerging world. I said recently to a friend that I thought Ethiopia might become a richer country than Saudi Arabia, possibly within a decade or so, and probably within a couple of decades. My friend laughed at me. It is hard to conceive of such a reversal of fortunes happening so quickly. Yet change needs to happen, and is happening remarkably quickly. We are witnessing the death throes of ‘The Fossil-Fuel Age’ and the birth of ‘The Solar Age’.