The year 2020 started on a negative for many industries. It has shattered the backbone of the oil industry in particular. The world’s biggest oil producing and consuming countries have led to the downfall of WTI crude oil.

Current Scenario for Oil

After a month of price war between Russia and Saudi Arabia, a deal was reached on 1st April between OPEC+ to reduce production starting from May 2020 which led to a rebound in oil prices reaching $28 from $20. But clearly the delay in reaching a deal had already flooded the markets, causing major storage problems in the biggest storage facility of West Texas oil in Oklahoma US.

Image: Business Insider

But this is not the end for troubles in the oil industry according to the Goldman Sachs, who think this will continue till mid-May 2020. The chances for demand recovery are not in sight, the IMF has revised global growth rates with positive recovery in second quarter in 2021.

Future of Energy Industry

Global energy demand is rising and so is the negative impact of emissions from fossil fuel that have harmed the Earth tremendously. The pre-COVID world was waking up to the sustainable dreams of turning their businesses around. With only a decade left in reaching the Paris Climate agreement, governments and private sectors are ramping up their efforts to containing the global temperature to 1.5 Celsius. Many reports have found that reaching the goal wouldn’t be that easy. World Economic Forum’s Future of Energy estimates that our energy mix is 81% fossil fuel which hasn’t changed for 30 years.

The energy sector is one of the biggest polluters and being so influential in the policy making circle, it was difficult to hold them accountable to a large extant.

The Guardian’s recent study shows that energy companies such as Exxon Mobil, BP, and Shell will have to reduce oil production by 35% for us to reach the target of 1.5C global temperature. This is a call for increasing investment in renewable energy. The Asian Development Bank reports that the investment towards renewable energy has declined due to the continuous reliance on fossil fuels.

According to the ADB’s Green Finance handbook, the finance industry will have to come up with innovative ways of financing the green energy projects such as “green bonds, green banks, carbon market instruments, fiscal policy, green central banking, fintech, and community-based green funds.”

Peak Demand Theory

Experts have been predicting oil demand to peak at a certain point in time that will also be the time when our energy mix will largely include of renewables. According to the BP’s Energy Outlook, our liquid fuels consumption will increase exponentially and peak in the 2030s.

COVID-19 Lockdown’s Impact on Environment

With humans under lockdown, nature is thriving. The air quality index has improved tremendously around the world, China saw a 40% decrease in NO2 emissions, UK had 60% decrease while pollution over New York and other major USA cities was 30% in March 2020.

According to the WHO, around ‘3 million people die each year’ to illnesses caused by air pollution. China produces 50% of air pollution in Asia and with 40% reduction, this is a positive sign of what is achievable when vehicles are turned electric .

NO2 reduction in China Image: ESA/NASA

This is time for policies and investments to go towards sustainable means such as renewables energy, EVs and recycling to continue the process of fixing the Earth that has been started by nature.