Falling oil Prices and a Global Climate Agreement

The decline in oil prices underscores the risk associated with fossil fuel investment. On December 1 as the COP20 talks began in Lima Peru, the UN's climate chief said that falling oil prices show the "high risk" of fossil fuel investments compared with renewable energies. This perspective was underscored by the December 14th Lima draft agreement that included mention of a world free from fossil fuel emissions by 2050. A final global climate agreement is scheduled to be signed in 2015 at COP21 in Paris. Prior to the Lima agreement there were agreements by the US and China and the European Union to cut greenhouse emissions from the burning of fossil fuels.

Video - Why Oil Prices Will Keep Falling

Oil prices are already low and they continue to decline as more downward pressure is expected. On Friday December 12th the International Energy Agency (IEA) forecast a decline in demand for 2015 and they further predicted that healthy non-OPEC supply gains were poised to aggravate a global oil glut. The current outlook for global oil demand for 2015 was cut from 230,000 barrels per day (bpd) to 0.9 million bpd.

An Upside to Low Oil Prices?

While there is a clear downside to lower oil prices for renewable energy, there may also be a silver lining. Low oil prices are bad for renewable energy, but if they fall low enough they could decrease extraction of some of the dirtiest fossil fuels.

Declining oil prices are attributable to the fact that there is now more supply than demand. The low oil prices may be part of an effort by OPEC to leverage market forces that will slow extraction of tar sands oil in North America.

The Economic Costs of Canada's Oil Obsession

Canada's dependence on fossil fuels not only contributes to climate change it represents a serious threat to the economy. As oil prices plummet to a five year low, the Canadian economy is feeling the heat.  The declining price of hydrocarbons have driven down the value of the Canadian dollar and impacted stock prices on the TSE.

Canada's ruling Conservatives have bet on oil and this has disastrous implications for all Canadians. The fact that Canada is so closely tied to fossil fuels means that the nation's petro-currency is subject to profound market volatility.

Low Oil Prices will Slow Renewable Energy and Impede the Growth of the Green Economy

With oil prices at a 5-year low, renewable energy and the green economy are being hit with some serious headwinds. Low oil prices are not only detrimental to the growth of renewable energy it is also decreases demand for hybrid and electric cars as well as cleantech in general. High oil prices buoy interest in renewables, while low oil prices put downward pressure on the growth of the low carbon economy.

For more than a quarter century we have been exploring the ways in which oil prices are related to renewable energy. A 1989 World Bank study showed how renewable energy technologies are directly impacted by the price of oil. However this study added the caveat that the impact is muted in remote and rural applications (where fossil fuels are less available).

10 Leading Wind Energy Countries

24/7 Wall St. recently reviewed the Global Wind Energy Council’s (GWEC) 2011 ranking of the ten biggest producers of wind power in the world. Wind power keeps growing despite a recession and slow economic growth. According to the GWEC report the world’s wind energy capacity increased by 17.3 percent in 2011.

Six Markets where Global Wind Energy Keeps Growing Despite Economic Uncertainty

Although some have reported that the wind industry is "gasping for air," a new report shows that the economic volatility we saw in 2011 did not keep the sector from growing. The dire prognosis for wind power is contradicted by AWEA CEO Denise Bode who said, "American wind energy's long-term fundamentals are strong."