Make no mistake about it, we are living in strange times when it comes to energy production. After decades of being dominated by big oil and gas, today the renewable energy sector is thriving in countries right around the world. Part of the reason for this clean energy success over fossil fuels has been the innovation and improvements made to solar, wind and other renewable technologies over the years. Solar, wind and geothermal plants are producing more energy than ever before, while homeowners are buying solar PV systems and solar thermal home heating systems like the SunPump in record numbers. Renewable is now the efficient, affordable and dare I say moral choice. However, to really understand the uniqueness of the changes happening today, it’s important to look at what is going on with oil and gas worldwide. Because even though we know that fossil fuels are literally destroying the planet, fossil fuels are cheap, and the companies behind oil and gas production are political and financial powerhouses. And let’s face it, for lots of people the current cheap prices help make oil and gas appealing. Yet, despite cheap prices and political backing, clean energy is making constant gains on fossil fuel. The factors that allow renewable energy and the clean tech sector to compete with these powerhouses is fascinating, and deserves a closer look.
Oil and Gas: Cheap Prices Today, Expensive Tomorrow
To begin lets take a look at the price of West Texas Intermediate (WTI) oil over the past 70 years. As you can see, today WTI is pretty cheap, coming in at $44.39 a barrel on April 27th 2016. Compared to the June 2008 high of $151.72, it’s practically a giveaway. However, in December of last year oil was even cheaper at $28.50 a barrel. If you look at the graph as a whole, a clear and predictable pattern emerges. Sometimes oil is very cheap, sometimes it is incredibly expensive, but since the mid 1970’s prices have been highly unpredictable. And this unpredictability is beginning to tell, with businesses and investors less willing to invest in oil and gas. The Rockefeller family, a dynasty steeped in oil production, has pulled its money out of fossil fuels, publicly stating that renewable energy makes for a better investment than oil. Throw in the expense of shale oil (and the Saudi push for cheaper oil in order to drive shale oil off the market) plus the general instability of the Middle East and it’s not hard to see why some of the biggest investors are pulling their money from the fossil fuel industry.
Here Today, Gone Tomorrow
There was a time when the worst press big oil and gas could get was a spill, leak or explosion. In and of themselves these events can amount to ecological disasters, doing untold damage to the land or oceans, and quite often costing human lives in the process. However, terrible as these events can be, there is a difference in class between a local disaster and global destruction. When you look at the consequences of global warming (rising oceans and food shortages leading to mass migrations of people, untold political turmoil and even doomsday runaway greenhouse effect scenarios), you can begin to see why educating people about the dangers of fossil fuels has led to a real desire for clean, renewable energy. Sometimes it doesn’t matter how much money or political power an industry has; if it is eventually going to ruin the world, people will look for an alternative.
Renewable Alternatives Offer Their Own Cheap Prices
The final piece of the puzzle is the fact that renewable energy is finally ready to take centre stage. Through decades of invention, innovation and dedication, the clean tech sector is finally competing with oil and gas (we have already talked about it here). The playing field isn’t anywhere near even (fossil fuel companies benefited to the tune of US$333 billion in subsidies in 2015 – a stupendous statistic), but the products coming out of the clean tech sector have never been more impressive. Companies like SunPump can now produce solar heating hybrids that are far more efficient and cost-effective than gas or oil boilers, saving homeowners lots of money on monthly bills while moving them onto renewable energy at the same time. Cheap prices for fuel is no longer exclusive to fossil fuels. There are similar stories being told for wind, solar PV and geothermal energy. The fact of the matter is that, even with the appeal of (temporarily) cheap oil and gas, and even with the billions of subsidies and all the political clout that big oil and gas have to offer, investors, businesses, politicians and homeowners are starting to choose renewable energy. It’s a snowball effect, and fortunately for the environment, it’s a snowball that is very hard to stop now that it is rolling.