By Jessica Corbett | Common Dreams
In a new analysis that bolsters climate activists' arguments for transforming the global energy system, the London-based financial think tank Carbon Tracker warned Thursday that declining demand and rising investment risk due to cheaper renewable technologies, aggressive government policies, and the coronavirus pandemic could cause a $25 trillion collapse in future fossil fuel profits.
“The disruption of #Covid19 calls for urgent government action to phase out coal and transition to clean renewable energy—to create jobs, support people and communities, and protect our health.”
—Climate and Health Alliance
The report, Decline, and Fall: The Size & Vulnerability of the Fossil Fuel System, says that the ongoing Covid-19 crisis is accelerating the “terminal decline” the fossil fuel industry was already facing because of competition with renewable energy and climate policies.
An annual International Energy Agency report projected in April that “renewables demand is expected to increase because of low operating costs and preferential access to many power systems,” but the pandemic is expected to cause significant declines in demand for coal, gas, and oil as well as nuclear power this year.
Based on a 2018 World Bank estimate that put future coal, gas, and oil profits at $39 trillion, Decline and Fall say that if fossil fuel demand drops 2% annually in line with the 2015 Paris agreement, that figure could fall to $14 trillion, “sending shock waves through the global economy.”
Warning⚠️The #FossilFuel industry is approaching terminal decline because of competition from clean technologies & tougher govt polices to achieve climate targets & increase energy security. The #COVID19 crisis is accelerating this decline https://t.co/lzXqB6TerC pic.twitter.com/hH7VR6feuD
— Carbon Tracker (@CarbonBubble) June 4, 2020
Decline and Fall serve as a signal to both investors and policymakers about the financial risks of propping up the fossil fuel system—which scientists warn is taking the world down a path to climate catastrophe—and the urgent need to pursue a rapid but thoughtful transition to clean energy explained Carbon Tracker energy strategist and report author Kingsmill Bond.
“We are witnessing the decline and fall of the fossil fuel system.”
—Kingsmill Bond, Carbon Tracker
“We are witnessing the decline and fall of the fossil fuel system,” Bond said in a statement Thursday. “Technological innovation and policy support is driving peak fossil fuel demand in the sector after sector and country after country, and the Covid-19 pandemic has accelerated this. We may now have seen peak fossil fuel demand as a whole.”
“This is a huge opportunity for countries that import fossil fuels, which can save trillions of dollars by switching to a clean energy economy in line with the Paris agreement,” he added. “Now is the time to plan an orderly wind-down of fossil fuel assets and manage the impact on the global economy rather than try to sustain the unsustainable.”
As Covid-19 has killed over 386,000 people, infected more than 6.5 million, and triggered economically devastating lockdowns across the globe, international bodies and governments have been urged to pursue a #PeoplesBailout, Just Recovery, Healthy Recovery, Green Recovery, Green Stimulus, and Global Green New Deal.
Greenpeace International executive director Jennifer Morgan highlighted Carbon Tracker's report on Twitter Thursday and reiterated calls from climate campaigners, healthcare workers, and progressive policymakers to #BuildBackBetter from the pandemic with relief plans that support the global economy and phase out fossil fuels.
“We are witnessing the decline and fall of the fossil fuel system…sector after sector and country after country, and the #COVID19 pandemic has accelerated this.” @CarbonBubble
It's time for a #GreenRecovery: resilient, fair, sustainable economies that meet the climate crisis. https://t.co/RCWfJPdXev
— Jennifer Morgan (@climatemorgan) June 4, 2020
Other climate action advocates around the world shared similar reactions to the report on social media:
Post-COVID, we can't just return to the status quo. The disruption of #COVID19 calls for urgent government action to phase out coal and transition to clean renewable energy — to create jobs, support people and communities and protect our health. https://t.co/VERbe9XlM6
— Climate and Health Alliance (@healthy_climate) June 4, 2020
Coronavirus outbreak could trigger a $25 trillion collapse in fossil fuel industry by accelerating terminal decline for world’s most polluting companies: https://t.co/3pGsLwLPGH
Time for an urgent #justtransition out of coal, oil & gas @Fonterra @Megan_Woods @GreenpeaceNZ
— Tim Jones (@timjonesbooks) June 4, 2020
The new report and responses from advocates come after campaigners have spent months ramping up pressure on investors to ditch the planet-wrecking fossil fuel industry. In January, advocacy groups launched Stop the Money Pipeline, a campaign urging banks, insurers, and asset managers to cut ties with dirty energy companies.
Shortly before fossil fuel giant ExxonMobil's annual shareholders meeting at the end of May, international climate, human rights, faith, and Indigenous groups unveiled the Finance Climate Challenge, which calls on the global finance sector—including asset managers, pension funds, and endowments—to “end its support for fossil fuels and climate chaos.”
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