Updated Mar 11, 2020 - Energy & Environment

What the oil market's collapse means for the climate

Illustration: Aïda Amer/Axios

Convulsions in global oil markets are creating new wildcards for efforts to rein in carbon dioxide emissions and boost climate-friendly energy.

The state of play: In the abstract, cheaper energy makes cutting consumption more difficult, something to watch if low prices outlast the coronavirus outbreak. Lower revenues could also potentially hinder oil giants' investments in low-carbon tech and startups.

  • This price collapse is coinciding with a public health emergency that's wreaking economic havoc, which could cut nations' bandwidth to focus on the various climate goals set in recent years.
  • The economic fallout is also slashing CO2 emissions over the near-term, but for tragic reasons nobody should want replicated.

But, but, but: There's also reason to think the price crash could be irrelevant or even supportive of clean energy, in part because it's part of a wider economic shock.

  • Consider that it shrinks oil majors' gap between returns on oil production vs. renewable energy projects, which are less lucrative but more stable.
  • On the "irrelevant" side, consider that the relationship between driving levels and gasoline prices in the U.S. is actually not especially strong.
  • Also, lower prices make it easier to reform fossil fuel subsidies, which are quite large globally and climbed in 2016–2018 after years of declines.

What they're saying: The oil price collapse "will definitely put downward pressure on the appetite for a cleaner energy transition," International Energy Agency head Fatih Birol tells the FT.

  • Bloomberg columnist David Fickling calls the effects of the oil crash "nuanced" but adds that overall they're "positive for decarbonization" — and he doesn't think emissions will be set to bounce back again after this downturn the way they have in the past.

Go deeper: OPEC-Russia oil price war escalates as Saudi Aramco announces supply increase

Go deeper

10 ways coronavirus is changing energy and climate change

Illustration: Aïda Amer/Axios

The novel coronavirus, upending our world as we know it, is also changing how we consume energy and address climate change.

Driving the news: The various impacts are occurring both now and into the future. Most changes don’t bode well for acting on climate change and transitioning to cleaner energy.

Trump to buy oil for nation’s strategic reserves

President Trump. Photo: The Washington Post / Contributor

President Trump will direct the Energy Department to buy oil for the nation’s strategic stockpile to boost prices and help the oil industry reeling after the market’s historic collapse this week.

The big picture: America’s Strategic Petroleum Reserve was created in the 1970s to ensure the U.S. has oil in case of an emergency. Today, Trump is buying oil for the reserve because of an emergency.

Coronavirus crisis tests Trump’s love for cheap oil

Illustration: Eniola Odetunde/Axios

President Trump is working to help an oil industry imploding as the coronavirus crisis chokes demand, but listen closely and you’ll hear his enduring love for cheap prices.

Why it matters: He’s like most Americans, who worry about energy only when it’s expensive or gone. As president, Trump has been slow and uneven in responding to the sector’s turmoil because of his inclination to cheer rock-bottom prices.