The fossil fuel industry is beginning to feel the impact of climate change action, and will become increasingly vulnerable, according to academics.
Two articles published in the latest issue of MRS Energy and Sustainability, a journal from Cambridge University Press and the Materials Research Society, suggest there are a number of new or intensified threats currently facing the industry, including heavier regulation by governments and financial instability of the market.
Greater legal accountability, competition from clean energy alternatives and dwindling appetites for carbon intensive resources all pose problems to the future of non-renewable energy.
An ever-growing sustainability movement is also putting more pressure on companies and governments to tackle harmful emissions despite a lack of binding legislation.
This news comes after the UK had its first coal-free day since the industrial revolution last Friday in a landmark occasion.
Citigroup estimated that $100 trillion in fossil fuel revenues could be lost by 2050 if commitments to reduce greenhouse gases are upheld, causing economic and political instability worldwide. Coal, oil and natural gas industries currently provide more than 20 percent of GDP in two dozen nation states, yet remain responsible for two-thirds of emissions.
Only a third of current conventional crude oil reserves are likely to be abandoned to meet current global climate change targets, as opposed to half of gas and 82 percent of coal reserves.
Coal firms stand to lose out the most, with a combined 31,000 jobs and $30 billion in share value already lost since 2010 in the US alone. While natural gas has absorbed much of the coal market share worldwide, it lacks the viability to compete with lower-carbon substitutes long term.
Research by Jim Krane, energy studies fellow at Rice University in Houston, showed different sectors of the energy industry will be better equipped than others to withstand pressures to reduce emissions of greenhouse gases.
“It is clear that carbon-based businesses and economies face increasing impediments to the consumption of their products,” Krane wrote. “Whether through taxes, legal restrictions, moral arguments, favouritism for competitors, or hampered access to financial markets, the industry faces a future that is less accepting of current practice.”
“Unless a technological breakthrough can restrict carbon releases, the fortunes of the fossil fuel industry and the stability of Earth’s climate will be locked in a zero-sum game,” he concluded. “Climate’s gain is the industry’s loss and vice versa.”
In a commentary on Krane’s research, Ritchie D. Priddy, who worked in the US energy industry for over 30 years, said that the ‘sustainability movement’ has already made significant headway in disrupting conventional energy practices.
“As [sustainability efforts] become more ingrained in the daily operations of all companies—primarily through peer pressure—they will, collectively, become more powerful than any international treaty, and something that cannot easily be removed,” Priddy concluded.
The oil sector however has rebuffed the immediate impact of reduction targets. Given that two-thirds of the world’s oil is consumed in the transportation sector, few viable alternatives exist to challenge the dominance of oil.
A joint investigation by Energydesk and Private Eye last week found that the UK government has given £6.9 billion in financial support to fossil fuel companies since 2000 — the bulk of which (almost £5 billion) has been handed out since 2010.
In 2015, more than £500 million of taxpayer money was also given to BP, Exxon and Shell to encourage economic recovery in the North Sea, despite climate risks and greenwashing efforts by the firms.
This could be a problem because, as Krane said, “oil is unlikely to lose its primacy in transportation without concerted government policies that impose heavy penalties on emissions or favor alternatives.”
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