We’ve known for decades that in order to curb the impact of perpetually rising carbon emissions, we would have to radically disrupt the machinations of global industry and change the way we live, think, and dream. We have to actually buckle down and make behavioral and systematic changes instead of hedging our bets on futuristic technological innovations that will save our butts at the last second. No small task, to be certain. And the impact of this shift on the oil sector could be severe, unless the giants of the industry begin to make some significant changes. Right up until the spread of the novel coronavirus over the past year, the simple inertia of business as usual and myopic visions of the bottom line had time and again proven themselves to be stronger than all of the world’s scientific community, environmentalists, and melting polar ice caps put together. Despite how rapidly this shift has approached, most of us have been helpless to stop our collective trajectory into the abyss. But the gas-guzzling global economy has finally met its match: COVID-19.
Pandemic pandemonium has thrown a wrench into the status quo and allowed the world to take a breather to reevaluate the state of things and reorient our industries and priorities toward a less terrifying future. For the first time in a long time it feels possible to decarbonize the planet, but we also have less time than ever to get it done. That’s why the way that we adjust to the new normal and rebuild our economy this year will seal our fate, not just in the short term, but in a life-and-death kind of way.
International authorities on global warming such as the Intergovernmental Panel on Climate Change (IPCC) have crunched the numbers on just how much our fossil fuel dependence will have to change, and how quickly, in order to avoid more significant challenges. The top researchers on the planet have discovered that it’s imperative for the world to keep global temperatures from rising more than 1.5 degrees Celsius (2.7 degrees Fahrenheit) above pre-industrial averages. To do so, we will need to cut oil use by 37% and gas use by 25% by just 2030. That means that this year determines this decade which seals our fate for decades to come.
Things are already changing. Around the world, leaders in the public sector are creating green stimulus packages for post-pandemic recovery that features clean energy as a central tenet. Denmark, the European Union’s biggest oil producer, became the first country to promise to phase out oil production entirely. Renewable energy stocks are seeing record investments as Environment, Sustainability, and Governance (ESG) investment edges closer to becoming the norm and not just a buzzworthy trend. Elon Musk became the world’s richest man on the back of electric cars and his green energy innovations. Even the United States, the world’s largest economy, is getting on board with decarbonization as the new president put the kibosh on the Keystone XL pipeline and started the process for rejoining the Paris climate accord on his very first day in office.
But will that be enough? No. Simple as that. We’re moving in the right direction, but preventing potential disaster will prove to be much more difficult and more radical than what we’ve achieved so far, even with the help of an unanticipated disruption to worldwide industry. According to a new report by Gizmodo’s Earther, there are four tactics that can be taken to get us on track to meet this decade’s climate goals: legally binding treaties to phase out fossil fuels (à la Denmark), regulations against plastic use and production, divesting from oil and gas, and holding Big Oil accountable, both legally and in the court of public opinion.
Of course we won’t be able to wean ourselves off of fossil fuels overnight, but the wheels of change are in motion, and even Big Oil is getting involved. It’s time to invest in serious clean energy R&D. We’re at a turning point; this is the year that could change it all. Something that investors aren’t taking for granted.
Oil companies have seen a sharp decline in their share prices over the past several years, but this could accelerate if they do not adapt to the current environment and adhere to shareholder demands. And Climate Action 100+, a group of more than 450 leading asset managers, pension funds and others with a combined $40 trillion in assets, is leading the charge.
Together, the group of investors holds a significant stake in some of the oil giants on the planet, and their voice is being heard. Several supermajors are already pushing for greener operations, and this is just the beginning.
By Haley Zaremba for Oilprice.com
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