It dawned on Thomas Edison that sunshine could drive both his inventions and his friend Henry Ford’s horseless carriages.
“I’d put my money on the sun and solar energy,” he told Ford and Harvey Firestone, another enterprising inventor. “What a source of power! I hope we don’t have to wait until oil and coal run out before we tackle that.”
It’s starting to look like Edison’s wish could come true.
The world emitted 32.3 billion tons of climate-warping carbon dioxide last year — the same amount humanity collectively spewed in 2013, the International Energy Agency found to its “surprise” the other day. Emissions hadn’t flatlined amid an expanding economy in four decades.
What gives? People and industries are consuming less oil, gas, and coal and tapping more solar and wind power, according to the Energy Information Administration’s latest update.
Thanks to supply outpacing demand, oil prices have drooped to 6-year lows. Yet due to the sustained uptick in U.S. fracking, global production keeps rising. That’s forcing dirty-energy companies to cut back.
All told, the oil industry is poised to cancel $1 trillion in spending worldwide on new fields and rigs, as well as research, development, and training, said Amin Nasser, a senior Saudi official.
Traders and producers believe prices will rise pretty soon. So they’re stashing record quantities of crude anywhere they can to see if it will sell for higher prices later. They’re even pouring it into offshore tankers.
At some point, the hoarders will saturate every available nook and cranny. Even more excess oil will flood the market.
“It’s impossible to call a bottom point,” Citigroup’s top commodities researcher Ed Morse remarked. He made waves by saying that once the industry saturates its hoarding space, prices could plunge into the “$20 range.”
As long as prices hover around $50 a barrel or less — down from more than $100 last June — big companies will respond to financial distress by operating fewer rigs and spending less on new fields. Production will eventually decline, and that could make prices bounce back.
It could take years to restore the equilibrium Big Oil banked on just a year ago. In the meantime, disruptive energy innovations will keep reducing and displacing demand for fossil fuels, and governments will step up green-energy mandates to stick with the promises they’re making in global climate talks.
The coal industry is reeling from waning demand and plunging prices, too. Arch Coal, for example, just shelved plans to mine 1 billion tons of coal in Wyoming. The company’s stock, which peaked at $75 in 2008, epitomizes coal’s bleak future. Buying one share will set you back less than a buck.
What changed the big energy picture?
For starters: China. Emissions from the world’s leading carbon polluter edged down 0.7 percent as coal consumption fell at an even faster clip last year, even as the country’s economy expanded. Beijing also poured $90 billion into renewable energy.
Another thing: Renewable energy gained ground. The solar industry surged 30 percent in the United States and 67 percent in China in 2014. Wind power, already fueling 4.5 percent of U.S. electricity, is likely to more than double that market share by 2020.
All told, worldwide spending on clean energy surged to $310 billion in 2014 — a 16-percent boost from the prior 12 months, according to Bloomberg New Energy Finance.
Ultimately, those protracted oil and coal price slumps may buy time for the solar-powered future Edison envisioned to sprout.