Renewable Energies in a Cheap Oil World.

Johan Yugar

Few things are harder to predict than the future international oil price.  Back in 2008 when the oil was having its historical peak, it was hard to imagine that we would be back in cheap oil world so soon.

The bad moment of China, the incomplete recovery of United States and Europe, the over production of oil and the refusal of the main producers to cut down the production have configured a scenario of really cheap oil. For the first time in decades we have saw an oil barrel cheaper than a bucket of fried chicken.

We can now safely say that we are in a commodity super cycle of low prices. This new cycle affects the renewable energy industry, since when the oil barrel is at $35 the renewables are no longer a priority.

And so, while cheaper crude may be good for the economy, particularly in the developed world, its consequences for the planet will be detrimental.

So, what can we do?

It is always hard to fight the basic forces of the economy, and most of the countries will welcome the low crude prices as positive for their economies, but there are a few reasons for optimism.

  • As we all know, the oil price is determined by the supply and demand. It is hard to imagine an upturn in the demand with the current trends, but the non-traditional oil, important part of the current oversupply, cannot endure such low prices for a long time.
  • Renewables now accounts for more than 20% of the global electricity generation and most of the sectorial analysis anticipates an increase in its share for the end of the decade, and this raising goes even further in the long term analysis.
  • Renewables keep improving. All the technologies have a learning curve, a period in which new technology is developed and the efficiency and costs of the process are improved. For coal and oil this learning curve is far behind, while for solar and wind energy the learning has just started, and we will see continuous improvements in these technologies in the next years.
  • Maybe the COP21 failed to deliver the wide and ambitious agreement that we expected; nonetheless the commitments reached in the COP21 will change the energy policies of many countries. In order to improve their energy sector while maintaining their environmental goals, many countries will appeal to renewable energies.

Last but not least, we should not forget that we have power. We, as citizens, can always influence in our politicians and their policies. A better informed, more committed community can be an extraordinary tool for positive change.