Four years ago, the world looked poised to transition from dirty energy like gas and oil to clean energy like wind and solar. During that time, oil companies rushed to invest in clean energy and made promises about decreasing their oil production and polluting activities. But now those promises are being abandoned, and The New York Times has offered an analysis of why.
What's happening?
According to the Times, the oil industry was suffering four years ago. Demand was down and oil company losses were hitting more than $100 billion, according to the energy consulting firm Wood Mackenzie.
In those times, the modest but steady return on investment in clean energy — often around 2% — looked like the oil industry's best bet. Many companies started diversifying to clean energy projects like solar and wind farms.
But now, the Times revealed, the market has changed. Demand for and profit from oil is up, with a median return of 11%, for the biggest investor-owned companies.
"If you look at the relative shareholder returns, the market's been sending a very clear signal that it wants energy companies to focus on their core competencies," said Mark Viviano, a managing partner at energy investment firm Kimmeridge, per the Times.
Viviano went on to say that there would still be a transition to clean energy, but judging by the way oil companies are abandoning their clean energy investments, there's no clear timeline for that transition any longer.
Why are oil companies' investment choices important?
Our world is getting steadily hotter. The excess heat threatens human health, safety, livelihoods, and irreplaceable aspects of our environment.
In this climate, oil companies are choosing between profits that will protect the world from a climate disaster over the next few decades or greater profits in the next few months or years at the cost of damaging the planet. As they have continuously done, they are choosing the latter, throwing all of humanity under the bus in the process.
What's being done about the rising temperature?
"If we want to combat climate change, we need to make it in the firms' and consumers' self-interest to produce and buy the low-carbon alternatives," said Christopher Knittel, an MIT professor of energy economics, per the Times.
On an individual level, that means avoiding supporting polluting oil companies — maybe by switching to an electric car or updating your home's HVAC system to a heat pump.
But beyond that, we need major policy changes, and that will only happen if we vote for them.
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