Nafeez Ahmed writes that the coronavirus may be the death knell of the fossil fuel business:
Policy-makers are still in denial as to how long this demand slump will last. But if it takes at least 18 months, and most likely several years, for a vaccine to be developed, this will keep demand far too low for the global fossil fuel industry as we know it to survive.
The pandemic has thus ground the global oil industry to a halt. Storage is about to breach saturation point. Oil service firms that supply the industry are shutting down. Petrol stations are being forced to close as fuel sales dry up, endangering transport networks and critical supply chains.
The writing was on the wall long before the pandemic hit. The EROI -- Energy Return On Investment -- has been falling for years. EROI refers to "how much energy is needed to extract energy from a particular resource. What’s left is known as surplus “net energy,” which we can use to support goods and services in the economy outside the energy system:"
In the early 20 century, the EROI of fossil fuels was sometimes as high as 100:1. But this has dramatically reduced. Between 1960 and 1980, the world average value EROI for fossil fuels declined by more than half, from about 35:1 to 15:1. It’s still declining.
This has acted as a background “brake” on the rate of economic growth for the world’s advanced industrial economies, which has simultaneously declined since the 1970s.
Now the demand for oil has cratered. Oil companies are losing mountains of money. Governments should not bail out the fossil fuel industry. They should build bridges between fossil fuel energy and green energy:
Amidst this unprecedented crisis, we face an unprecedented opportunity to speed the transition to new energy system that no longer breaches environmental boundaries in ways that make pandemics like this inevitable.
As Abhi Rajendran of Columbia University’s Center on Global Energy Policy has warned, a bailout cannot resolve the industry’s problems. Any support to the industry must be to hone it down it to protect immediate supply chains, and rehabilitate it to supply petrochemicals and other key industrial services in a post-carbon age.
Instead, urgent focus is required on building a new decentralized, renewable energy system, and transforming major industrial sectors to create a vibrant new sustainable infrastructure across agriculture and manufacturing.
As the traditional petrol supply infrastructure breaks down due to plummeting fuel sales, there are alternative bridge fuels that could be urgently scaled up. One potential source of clean biofuels for this purpose is Malaysia, where the government has created mandatory national regulation to support a transition to 100 per cent deforestation-free sustainable palm oil.
There is a way forward. What matters is whether or not we see it -- and whether or not we take it.
Image: New York Times
