As a global community, we’re known for a long time now that it’s imperative for the worldwide economy to decarbonize rapidly and in earnest if we have any chance of avoiding catastrophic climate change. But as clear as this message has been and as loud as the pleading from the scientific community and elite international consortiums like The Intergovernmental Panel on Climate Change (IPCC) has gotten in recent years, global leaders and the private sector have been excruciatingly slow to lead the charge toward a more climate-friendly world. It turns out that maybe all we needed was a global apocalypse to finally catalyze the global clean energy transition. The novel coronavirus dealt such a sweeping interruption to the economic status quo and the monumental momentum of business as usual that, for the first time since the industrial revolution, the world was able to take a breather and make a real attempt to realign our industrial and economic trajectory.
Organizations as respected as the World Economic Forum have advocated using the pandemic’s disruption as an opportunity to create a “new energy order” and a “great reset.” International agencies such as the United Nations, the International Energy Agency, and the European Union, are all drafting or already imposing green stimulus plans. Even the private sector is getting on board--a surprising number of blue-chip companies are pushing for a green energy stimulus. But, until now, the United States has been resistant to follow the sweeping transition toward cleaner, greener practices.
Now, with a new administration coming into power and the Democratic party taking control of both the Senate and the House of Representatives, it looks like the United States might finally be on track to take a place at the helm of the decarbonization movement. Already, the news of the blue wave solidified by this week’s runoff elections in Georgia has “stoked a record flood of cash into renewable-energy exchange-traded funds” according to a Bloomberg report released on Friday. Related: India Oil Demand Falls For First Time In 20 Years Due To COVID
Back in April, at what proved to be just the very beginning of the COVID-19 outbreak, Oilprice reported that “the coronavirus pandemic is one of the biggest and unprecedented seismic shifts in the global economy that we’ve ever seen in modern history, and it’s just getting started.” That statement has proven to be a fortuitous one, and the upcoming “financial revolution” described in that article is now well underway as the Environment, Sustainability, and Governance (ESG) investment trend is proving to be a lasting one.
Just this week, “the $6.2 billion iShares Global Clean Energy ETF (ticker ICLN) lured a record $691 million of inflows so far this week, according to data compiled by Bloomberg. Meanwhile, the $4.6 billion Invesco Solar ETF (ticker TAN) is on track to take in nearly $370 million this week -- another all-time haul,” Bloomberg’s Friday report detailed.
Investors are banking on the hope that with the combined forces of Joe Biden at the helm of the federal government and Democrats ruling Congress, green energy is going to get a huge boost from a green stimulus package as well as new and supportive policy measures, “boosting the appeal of ‘clean’ funds.”
The boost to clean funds, of course, is not universally celebrated. Fossil fuel tycoons and out-of-work laborers in the shale patch fear that the focus on developing green energy alternatives and diverting funds to ESG will come at their expense. But there is a strong argument to be made that even in West Texas, clean energy is the way forward and the key to job creation. Peak oil is upon us, and fossil fuels may never bounce back to their former glory. Various opinions from industry experts indicate that Texas would be better off placing its hopes in solar energy or renewable energy storage than in a revival of the shale play.
Furthermore, regardless of the current administration or the economic bottom line in the short-term, climate change will be very, very expensive for all of us. A 2018 report by scientists within the Trump administration found that global warming will cost the United States hundreds of billions of dollars each and every year, and that’s not even accounting for the massive impact on human and ecological health. Letting go of allegiance to the shale revolution is not only a smart environmental move, the data shows that it's also a great financial move regardless of your politics.
By Haley Zaremba for Oilprice.com
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