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Climate action is imperative regardless of the oil price, and the market’s volatility is an evergreen argument for investing in stable clean energy.
However, prices have an impact on the calculation of all decisions, from household spending to taxes to government taxes.
The IMF advised policymakers that it was the right time to reduce fossil fuel subsidies after the crash in oil prices in 2014-16. Oil majors reduced their exploration budgets. The flip side was lower cost savings by trading in a petrol vehicle for an electric.
Crude oil is now trading at close to $90 per barrel, and gas prices are spiking. This means that frontier oil development is back in play. The International Energy Agency has been clear that no new oil is compatible with a 1.5C limit on global warming – but climate policy is still driven by measures to cut demand and they are not biting yet. This year, oil consumption is expected to return to pre-pandemic levels.
Climate Tracker, a London-based thinktank, has identified the most dangerous climate gamblers. Major oil projects in Kuwait, Nigeria, Brazil and Mexico won’t pay off in a Paris-compliant future. Although there is an equity argument for developing countries being allowed to drill longer than developed nations, it is an unsound economic strategy.
Germany defends gas as a transition fuel under the EU green finance guidelines. This would be a worryingly low benchmark for the rest, given that the EU is generally considered a climate leader.
Campaigners have accused the UK, Switzerland and others of providing a safe haven for fossil fuels interests during negotiations to reform the controversial Energy Charter Treaty. (Bonus content – Subscribers to our Extra newsletter received an exclusive interview with the head of the ECT about the possibility of modernization talks.
This week’s stories
There is another oil industry that poses a threat for forests: palm oil. Last year, Indonesia ended a contract with Norway. It complained about delayed payment for forest protection efforts.
A study published this week found that Indonesia had prevented greater carbon emissions than Norway. The methodology for calculating avoided emissions is contentious – and at least one criticTwitter refuted the conclusion.
This raises a fundamental question about the dynamics of such partnerships. The funding available to protect trees can’t be used to grow palm oil on that land. Until that happens, the demand for palm oils to be used in globally traded goods like cosmetics or food will continue driving deforestation.
Source: Climate Change News