Paraphrasing a famous “presenter”, he quickly dropped.
Coal suffered a historic drop in use last year. Buyers paid producers up to $ 37 a barrel of crude oil in April. The price of plastics has dropped about half in the past four years.
The fossil fuel economy, which functioned happily for a century, is rapidly depleting. Gas, once considered a viable option to bridge the transition from “dirty” fossil fuels, such as coal and oil, to renewable energy, is now more likely to serve as the end of the era of the fossil fuels instead of the beginning of renewable energy. years.
Originally hailed as a boon to both American exporters and Asian economies, liquefied natural gas (LNG) prices have hit a 10-year low. Texas energy companies have found that burning $ 750 million in gas is cheaper than trying to sell it. Additionally, the company that pioneered gas fracking, Chesapeake Energy Corp., filed for bankruptcy protection earlier this week.
Neither the oil or gas industry problems are new. But the coronavirus pandemic, which is expected to affect approximately $ 8 trillion of the US economy over the next decade, has put the problems of the energy industry at great relief, forcing companies and investors to face the reality and resort to renewable energy. The evidence that the renewable energy and storage sectors reached a milestone was clear in May: a record solar rate of $ 13.50 per megawatt hour (MWh) was awarded in Abu Dhabi, which is 13 percent below the world record previous; The New Mexico Public Regulatory Commission approved 100 megawatts of solar generation and 50 megawatts of dispatchable battery storage for $ 30 per MWh; California awarded seven projects for a total of 770MW of battery storage; two mega-renewable hydrogen projects worth a total of $ 5 billion were reported in China; and more.
By mid-June, US wind turbines, solar panels, and dams had produced more electricity than coal in 90 separate days, demolishing the record from the previous year.
The push for renewables continued until June, when utility companies in Arizona, Colorado and Florida announced plans to shut down coal-fired plants and replace them with renewable sources, without using gas plants as “bridge” fuel.
While a recovery from the worst economic recession since the Great Depression should be encouraged, energy demand is unlikely to return to pre-pandemic levels for years. Falling demand means low prices for fossil fuels, and low prices make it difficult for producers to make a profit from mining coal or drilling for oil and gas wells.
Renewable energy is also more likely to benefit from federal policy, even with an ardent supporter of coal in the White House. If Congress enacted more stimulus legislation in 2021, the measures may be similar to the 2009 economic stimulus package that included $ 90 billion in clean energy investments and tax incentives.
Even without federal assistance, investors are likely to continue to invest money in renewable projects around the world, now considered low-risk investments that promise stable returns, in stark contrast to the volatility and uncertainty affecting the oil and gas sector. gas. In addition, many investors, increasingly concerned about the risk of climate change, seek to shift their funds to sustainable projects and industries and away from fossil fuels.
While there are many good reasons for the energy transition to occur sooner rather than later (mitigating climate change, controlling pollution, and avoiding the risk of stranded assets, to name a few), the bottom line is that the transition to a Renewable energy world be accelerated by the end result. The pandemic that is devastating public health and the economies of the planet is not the cause of the problems in the fossil fuel sector; it simply exposes the weaknesses of a continued dependence on obsolete oil, gas, and coal.
Dennis Wamsted is editor and analyst at the Institute for Energy Economics and Financial Analysis (IEEFA).
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