Oil prices are nudging closer to $50 a barrel. That’s nearly an 80% rally since prices hit bottom in January 2016. The recent glut of oil has been eased slightly by increasing demand and production disruptions, from wildfires in Canada to militant attacks in Nigeria. However, analysts don’t see oil returning to $100 anytime soon.
Will the rise in oil prices be enough to make renewable energy competitive again? If oil prices stay low, are investment and innovation in sustainable energy technologies at risk? What happens if high oil prices aren’t coming back? Will we cause catastrophic damage to Earth’s climate well before we run out of cheap oil?
Curious to know more about renewables and CO2 emissions in Europe? We’ve put together some facts and figures in the infographic below (click for a bigger version).
We had a comment sent in from Matej, arguing that cheap oil is slowing down progress towards a sustainable energy mix. He believes it’s having a negative impact on innovation, delaying investment in technologies that could make renewables more competitive.
To get a response, we spoke to Clare Wenner, Head of Renewable Transport at the Renewable Energy Association. How would she respond to Matej?
Renewables certainly find it difficult to compete when oil prices are as low as they have been in 2016, and it’s true that there will be a balancing act between renewables and continued production of oil and fossil gas. However, I don’t think that that will always be the case. Certainly in 2014, oil prices were higher than the prices for bio-ethanol, for example. And consumers weren’t able to take advantage of that cheaper source of energy, so I think there are anomalies.
Certainly the economics are absolutely fundamental, and that’s why those of us who believe we have to combat climate change really have to be a lot more coordinated and firm about saying that the options for renewables have to be explored and go on being explored. The more renewables we have, the cheaper they become. And that’s been very much the case, for example, with wind and solar. So, to just simply say this new technology can’t compete is very defeatist, and it’s anyway not the case. Both because oil will become more expensive, and because renewables will become cheaper…
We also had a comment from Susie, who wonders about the EU’s progress on green energy. Is Europe on course to meet its 2020 renewables target (i.e. 20% of energy being produced by renewables by the year 2020)?
I think, perhaps, on balance, that the whole of the EU will meet its renewable energy target. I think there is a big question mark, however, whether transport will be able to meet its 10% target, and will be able to contribute in the way that it was envisioned at the outset. So, I think the power sector is, generally speaking, fine; heat is probably okay; but I do think there’s a big question mark over transport.
Can renewables compete with cheap oil? Or does sustainable energy need higher oil prices to encourage investment and innovation? Let us know your thoughts and comments in the form below, and we’ll take them to policymakers and experts for their reactions!
IMAGE CREDITS: CC / Flickr – nate2b
The European Commission support for the production of this publication does not constitute an endorsement of the contents which reflects the views only of the authors, and the Commission cannot be held responsible for any use which may be made of the information contained therein.
Shhhh.. don’t tell the SNP lol
Subsidise green energy instead of oil subsidies. Charge them billions for oil spills and make them pay for clean-ups or suspend trading licences for a year. Tax them for pollution and use that money to subsidise green energy.
They can never make oil cheaper than electricity . How much electricity do we use to refine crude oil ? Answer : We could drive all cars on electricity they use to refine oil. TESLA ! EU and all EU member states should invest in Tesla and build 20 factories in the EU , those should manufacture 10 000 000 cars/Year by 2020 . EU should make it illegal to sell fuel cars after 2025 in the EU . https://www.youtube.com/watch?v=BQpX-9OyEr4
They are already successfully competing with big oil and with no subsidies! And where there are subsidies, they are nowhere near the subsidies given for all these years to big oil!
They are already successfully competing with big oil and with no subsidies!
And where there are subsidies, they are nowhere near the subsidies given to big oil for all these years!
wrong question! it´s not a question of “can”; there´s no alternative! Today is too late.
We shouldn’t focus only in money right? Wrong question!
The important question is whether you want to live in a c lean or in a dirty world. Se don’t want to be rich de want to be happy and healthy.
I thik that now a days the most important is to give more and more use to those energies that are more clean and not cheaper !!!!
Cheap oil is still dirty but it initiates wars and weapon industry. Big business!
Probably not at this stage but that is not the point. 1 they will reduce the carbon foot print (which is the point) 2 through use they will be developed to be more efficient and therefore less expensive.3 they will not run out and unlike fracking they do not damage ground water 4 they can be built and developed locally meaning we are not reliant on a foreign (possibly hostile ) state
As technology develops and methods improve renewables will be more and more available to the average people as well. I’m hoping to cover my whole roof in a couple of years with solar panels. It will be expensive but it will supply my electricity and energy for heating in winter. And during the warmer months I can sell the sufficit to the grid. :)
Oil Industry’s are the ” Bad Mother” of “The peaceful wars”.
on industrial level production of energy not-not yet but households could be benefit from solar panels and farmers could use wind power if the legal system was more flexible and more friendly to New ideas. also there are issues of environment and issues that have to do with foreign policy that can be solved by becoming less dependent from oil
Surely cheap renewables(except forbitten nuclear) can compete with oil.
To Hell this E.U’s Tyranny ! ….-….. “LEAVE-2-LIVE !”
The benefit of using clean energy is wider than environmental and monetary issues.
For example consider this : oil is feeding ISIS accounts …. Low demand =low price =less funds for ISIS . Terrorism is labour and capital Intensive business.
Because there is nothing cheaper than the cheaper.
it allready does, fossil fuels cost thousands billions in hiden costs, including military and health, and is shown as competitive while absorbing enormous amount of taxpayers money to pay the rent to a few private corporations, not even usefull to say whose countries and religion this money goes to.
Tesla sistems can beat it
Not while we have governments, like Spain, hindering clean and solar energy.
Look at Germany s landscape in the south and southwest, and get sad…
Look in all of Hungary and get 100 times sadder…
Oil: cheap habit, expensive side effects.
They Allred do. That’s why nuclear power have economic problems now when the electric price is so low. Also coal will have problems in economic after the price goes down.
And the more we build the harder will it get for the fossil fuels driven power plants.
Not a question of if it can (no doubt it can, specially if they turn the tables on the subsidies). The question is that fossil fuels must remain underground as fossils for the sake of climate change.
Nothing can compete with the energy that the sun produces in every second of every day. Once we understand this we would know exactly what we need to do, it’s time to put the combined knowledge and economic power of humanity together to come up with solutions to successfully harness massive amounts of energy that is being fired towards our planet all the time by the Sun and to use this to the benefit of humanity, the one true clean power source is the Sun.
Green change is just starting in the near future most cars in OECD countries will be vehicles of electrical cells or fuell and possibly also in places like China Solar will provide a tremendous amount of energy required to change the Sustainable Development
Absolutely YES! Just do the math, remove “cheap oil” subsidies and the answer will be an obvious yes!
Let us not forget that “cheap oil” is cheap because of massive subsidies!
In its basic form, without subsidies, with army protection, with oil wars, with secret services protection and with other hidden expenses it is not that cheap after all!
Move all that money to renewables and do the math again. You will be surprised.
Absolutely YES! Just do the math, remove “cheap oil” subsidies and the answer will be an obvious yes!
Let us not forget that “cheap oil” is cheap because of massive subsidies! In its basic form, without subsidies, with army protection, with oil wars, with secret services protection and with other hidden expenses it is not that cheap after all!
Just subsidise renewables instead of oil. Subsidies are paid with tax payer money. Here is an article on oil subsidies. Quote: “According to a startling new estimate by the International Monetary Fund Fossil fuel companies are benefitting from global subsidies of $5.3tn (£3.4tn) a year, equivalent to:
$14.5bn per day
$600m per hour
$10m per minute
$168,000 per second”
Unless you want to be dependent on imports of fossil fuels for everything, then you need to prepare for alternatives. At some point we have to transition from fossil fuels or prices for everything that is made from them will rise once there is shortage or sufficient conflict. Beside for urban areas and especially transportation and agriculture fossil fuels are primary concern. So we need systematic approach to find replacement for all those items made from fossil fuels and yes we need local energy supply as much as needed in order to minimize wasting electrical potential. Unless someone creates superconductors that can work at environmental temperatures.
In a global market, no. But if Europe wants to be independent from Russia and the Arab states, they should most definitely invest in renewables
YES , nothing is cheaper then solar . 100% solar, wind and hydro is very cheap and clean option for the EU. Price for solar panels is under 0,5 Euro/Watt . EU could simple order 2000 gigawatt solar panels for 1000 billion Euro . EU should give for free 10 to 50 kW of solar panels to all EU citizens willing to install it by themselves . They should pay off those panels with electricity they don’t use also with electricity they send back to the grid. To install it like this is simple and cheap , it is like IKEA furniture : https://www.youtube.com/watch?v=Dzar3xqCb6k
Oil prices dropping, yet here we just raised the price for gas.
Renewable also comes free of clean-up and pollution prevention costs. Not to talk about the huge amount of money poured into medical treatment for pollution induced diseases
rinnovabili , business in mano a chi ? The Goldman Sachs Alternative Energy Group.- J. P Morgan Asset Management & Global Real Assets .- ALLIANZ . – Bloomberg New Energy Finance.- Deutsche Bank ecc…ecc…ecc… Il passaggio dagli idrocarburi alle rinnovabili come sarà gestito ? Esiste un piano globale di transizione in modo pacifico ? Speculazioni, inflazione, deflazione, profitti, GUERRE , come sarà gestito ? Altro che energia pulita !!!
Cheap oil is a bag of gold for imperialistic repressors and graveyard to Earth and humanity
Renewables, wind, sea-wave/tidal and solar are worth subsidizing because they create jobs too by manufacturing, installing and maintaining these systems. The oil is going one day, let’s not be fooled by the current price. It is a fact that there is no more oil left than maybe for 40 years.