OIL BUSINESS LIQIUDITY PROBLEMS A PLUS FOR CLIMATE ACTION

With senior Australian Government politicians still questioning the degree to which human generated emissions are contributing to climate change, we have every right to be concerned about the Government's commitment to the Paris climate change agreement.

However, there is encouraging news from around the globe. A combination of individual actions, efficiency measures, and businesses prepared to jump on the renewable energy bandwagon, has reportedly seen the total value of energy generated by fossil fuels plummeting by more than half in just 20 years.

Also, when oil prices climbed above US$70 a barrel, the industry borrowed heavily, but the subsequent price plunge has made it virtually impossible to repay those debts. A conservative estimate of industry debt of US$2.5 trillion has led Deloitte Financial Services to predict that at least 35% of the world's independent oil companies will declare bankruptcy by the end of 2016.

Last November, climate analyst, Carbon Tracker, was ridiculed by the fossil fuel industry over predictions that six of the world's largest energy companies, Royal Dutch Shell, Peabody Energy, Glencore, Coal India, and Exxon Mobil were “over-exposed” to debt.  In February, Peabody declared itself bankrupt, and is unlikely to be the last.

The fossil fuel industry is facing serious liquidity problems, and there is little doubt that the profitability crisis facing many companies is the result of an inevitable transition to renewables.

Texas A&M University researchers claim that by 2050 fossil fuels and nuclear power will become obsolete as viable energy sources due to increasing costs. More importantly, they claim that 50% of remaining fossil fuels must remain unburned if global temperature rises are to remain below 2ºC, and to achieve this, and avoid catastrophic climate change, 50% of the world's energy must come from renewable sources by 2028.

That is the challenge we face.

On the positive side solar power production has reportedly doubled every year for the past 20 years, while with every doubling of photo voltaic infrastructure there has been a 22% drop in cost. Amazingly, simple economics may be the world's saviour, and hopefully our Government will play its part.

-          John Edwards

 This  post originally appeared in the VOICES FOR THE EARTH column in The Daily Examiner on 2nd May, 2016.