The fossil fuel industry is at a crossroads.
Oil and gas giants such as Royal Dutch Shell, ExxonMobil and BP continue to reap stupendous profits from selling products that contribute to the high levels of carbon emissions causing climate change. Like the tobacco industry before it, these companies have poured money into lobbying and misinformation campaigns to escape restrictive regulations.
But, as world leaders gather in Paris for the month-long COP21 climate talks, the fossil fuel industry's future is in jeopardy. There may be an abundant supply of oil, gas and coal and -- at least for now -- a strong demand for these products, but there is a growing urgency among business leaders and policymakers to stem usage before the effects of global warming worsen dramatically.
“We are going to look back at some point in the future and see 2015 as a real turning point for the industry,” Andrew Logan, director of oil and gas program at the sustainable business nonprofit Ceres, told The Huffington Post. “Either companies will see the writing on the wall and realize that their business-as-usual approach is a fool’s errand -- that’d be the optimistic outcome -- or they up doubling down on the business-as-usual approach and end up sowing the seeds of their own financial demise down the road.”
Oil prices have been volatile this year. A glut of oil, driven largely by the increased production in the United States, sent the price per barrel of crude plummeting. The price of West Texas Intermediate crude was just $41.85 per barrel on Dec. 1. In a note to clients on Nov. 19, Goldman Sachs warned investors that oil could drop as low as $20 per barrel.
That has left Big Oil financially vulnerable. Profits sank across the industry. Oil giants have been forced to scale back costly research projects. In September, Royal Dutch Shell called off drilling exploration in the Alaskan Arctic.
“We’re at a time in the history of the industry where most companies still have a lot of projects on the books that are older, cheap and throwing off a lot of cash,” Logan said. “But they have nothing more to invest in other than things that are expensive and high-carbon. The industry has to decide whether it takes the money it’s generated and plows it back into the high-carbon, risky assets, or it does something else with it that’ll get it on a different path.”
Coal, still the biggest generator of electricity in the U.S., hasn’t fared much better. Industry giant Alpha Natural Resources went bankrupt in August. Though consumption remains high in China, the infamously smog-choked country has begun cracking down on coal. A growing number of universities and cities -- including New York -- are divesting from coal.
"Either companies will see the writing on the wall and realize that their business-as-usual approach is a fool’s errand -- that’d be the optimistic outcome -- or they up doubling down on the business-as-usual approach and end up sowing the seeds of their own financial demise down the road."
“It’s definitely the beginning of the end,” Naomi Ages, a climate campaigner and attorney at GreenPeace USA, told HuffPost. “From a financial side, the fossil fuel industry is seeing it’s not sustainable to continue with this business model. They’re going to have to invest in renewables.”
But it’s not enough. Global demand for oil continues to grow. And, even with pledges from 150 countries to cut emissions, the International Energy Agency still projects that global temperatures would rise by 2.7 degrees above pre-industrial levels by 2100. Many scientists predict that an increase more than 2 degrees Celsius, or 3.6 degrees Fahrenheit, would make the climate unsustainable for human civilization as it is today.
“Science tells us that there is one path for us to be able to have a stable planet and a safe stable economy, and that is to get onto a below 2 degree path -- that is fundamental,” Christiana Figueres, executive secretary of the United Nations Framework Convention on Climate Change, said in a statement last week.
That’s why a strong deal in Paris is needed to accelerate the shift to a low-carbon economy, powered by renewables such as solar, wind and water.
As it is, the movement to make that transition has gained steam. Big banks are slashing lending to coal mining companies. The number of companies putting a price on their own carbon emissions, thereby creating a financial incentive to wean off fossil fuels, has tripled since last year. An unlikely coalition of corporate giants -- including Goldman Sachs, Johnson & Johnson, Starbucks and Walmart -- signed a commitment to transition 100 percent to renewable energy, with several setting a goal of under a decade.
The clock is ticking.
- What You Need To Know About The Paris Climate Summit
- After Years Of Lukewarm Climate Talks, Paris Cranks Up The Heat
- How To Talk To A Climate Change Denier
- Watch How Rising Sea Levels Could Swallow Coastal Cities
- Why Some Conservatives Still Won't Accept Climate Change Is Real
- The Devastating Consequences Of A 'Small' Rise In Global Temperatures
- Mayors Take On Crucial Roles Fighting Climate Change
- Why This Goal To Curb Climate Change 'Is Not Ideal'
- Here's All The Nonsense 2016 Republicans Have Spouted About Climate Change
- How Tech Is Pulling Ahead Of Politics In The Fight For Our Future
- These Will Be The Biggest Losers If We Don’t Properly Address Climate Change
- 3 Strategies To Make Cities Stronger Against Climate Change
Also on HuffPost: