All around us there are clear signs that the fossil fuel industry is dying. For some divestment from fossil fuels is a proactive strategy that mitigates against the risks of stranded assets while others see it as a basic moral imperative. Whatever the reason the trend away from fossil fuels is unmistakable. Much of this momentum is being created by local community movements. However, there are also a number of trends at the international and national levels that foreshadow the end of dirty energy.
Allianz, the world’s biggest insurance company by assets, said it would cease insuring coal-fired power plants and coal mines, and Maersk, the world’s largest maritime shipping company, said it would end its use of fossil fuels, and be carbon neutral by 2050. Even some fossil fuel companies are coming to terms with their own end. Repsol is the first major fossil fuels producer to say it would no longer be seeking new oil and gas leases.
Ireland is the world’s first country to divest from fossil fuels, and New Zealand is euthanizing its oil industry to combat climate change. Eleven European nations have either closed their coal fleets or they have announced that they will close them. This includes France by 2023, Italy and the UK by 2025, and Denmark and the Netherlands by 2030. Spain shut down most of its coalmines last year. Denmark has joined China, India and 14 other countries that have pledged to ban internal combustion engines by 2040.
Even the United States is being impacted by changing market forces. The US set a new record for coal plant closures in 2018, with 22 plant closures in 14 states. This effectively shut down 15.4GW of dirty energy.
The collapse of oil prices may be the most powerful evidence we have that fossil fuels are dying. Oil prices have fallen from a high of almost $120 a barrel in 2014 to $30 in 2016. This led to a record number of oil and gas company insolvencies and bankruptcies in recent years.
According to a 2016 CNBC article there were 100 bankruptcies in the North American oil and gas sector with an expectation that there will be at least 100 more.
A study by the UK accountancy firm Moore Stephens indicates that 16 oil and gas companies went insolvent in 2016. To put this into context there were no insolvencies in the oil and gas sector in in 2012. As indicated by Canadian Government statistics the annual insolvency rate for Mining and Oil and Gas Extraction spiked to 3.1 in 2016 and 2.1 in 2017. As reported by the Insolvency Insider there were 12 oil and gas insolvencies in Alberta in 2018.
In 2017 Royal Dutch Shell agreed to sell $8.5 billion worth of its Canadian oil sands assets. The company’s chief executive warned that the industry risked losing public support without progress towards cleaner energy.
Thierry Lepercq, head of research at French energy company Engie, believes the cost of oil will continue to decline. “Even if oil demand continues to climb until 2025, its price could drop to $10,” Lepercq said. In 2017 Stanford University economist Tony Seba published a report which predicted the collapse of the price of oil and the end of fossil fuel powered cars.
No matter how you look at it fossil fuels will end, it is only a matter of time.
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