Less than a month after the world’s leaders signed a comprehensive agreement to cut carbon emissions, the global commitment to sustainable energy has encountered the first major challenge: a sharp drop in oil prices.
Driven by low oil prices, Americans are largely reluctant to use electric vehicles, preferring fuel-efficient trucks and off-road vehicles. However, the Obama administration is still unswervingly pursuing new standards, requiring automakers to nearly double the fuel economy of their vehicles by 2025.
In China, government officials are working hard to ensure that oil prices that have recently fallen below $30 a barrel are not detrimental to their energy-saving projects. At the beginning of this month, China’s top government responsible for economic planning introduced a new measure that was effective immediately to curb fuel consumption.
In order for a climate agreement to work, governments must resist the temptation of cheap fossil fuels and adopt policies that encourage and even require the use of zero-emission energy. However, these policies may be extremely costly and politically unpopular, especially when traditional fuels become cheaper.
“This will be a touchstone for testing governments to see if they are taking seriously the results of the Paris Climate Conference,†said Fatih Birol, Director of the International Energy Agency.
So far, the United States and China have not shown any signs of faltering as the world's two largest energy consumers. Although the current signing of the climate agreement has not been long, but when the two countries adhere to the forward, the supporters of the climate agreement are still optimistic, I believe this momentum is unstoppable. Moreover, despite the recent volatility in the energy market, the sustainable energy industry is still booming.
“Driven by technology and technology advances, the momentum for using a higher percentage of low-carbon energy will continue,†said Jason Bordoff, director of the Center on Global Energy Policy at Columbia University. Said. He was a senior aide to President Obama. He also said that although fuel costs are lower, "technical replacement and policy-driven, still ineffective in reducing the demand for fossil fuels."
A few days ago, the US Department of Energy predicted that its total renewable energy consumption this year will rise by 9.5%. In the long run, the outlook is also quite bright. First, the cost of new energy continues to decline. Second, in December last year, Congress decided to extend the tax credit for wind and solar projects.
According to the Department of Energy, by 2017, the amount of solar power generated by the grid alone will increase by 45%. Officials of the Obama administration showed ambition and decided to use wind energy to meet more than one-third of the US's power supply needs by 2050.
As the world's largest emitter of greenhouse gases, the Chinese government has issued a new regulation requiring domestic gasoline and diesel prices to remain at the international oil price of $40 a barrel, regardless of the drop in international crude oil prices. The move was to prevent the Chinese from blindly consuming fossil fuels when gasoline and diesel prices went down.
In addition, most of China's refining industry is dominated by state-owned enterprises, and they are not allowed to retain the extra profits they receive – they come from low-cost purchases of crude oil but still sell gasoline and diesel at a price of $40 a barrel. The Chinese government will invest this extra profit in a special fund for energy protection and pollution control.
However, looking at the world, the prospects for zero-emissions technology are not bright.
Nuclear power plants emit almost no greenhouse gases. However, in recent years, the United States has shut down a number of nuclear power plants, and few are under construction, in part because of competition from cheap natural gas.
Low oil prices also undermine the development of alternative fuels in the transportation and industrial sectors, including advanced biofuels that once seemed promising. The low oil price has also depressed the price of diesel, which is a major competitor to renewable energy in the process of popularizing electricity in Africa's and Southeast Asia's poor rural areas.
In addition, once the government's support is weakened, the alternative fuel industry may be hit hard.
In Spain, developments in this area have almost stagnated since the government began to reduce support for renewable energy in 2009 due to the economic downturn. In the UK, analysts warn that the wind and solar industries may collapse as the government gradually phased out subsidies for renewable energy; two international wind energy developers have recently cancelled projects in the UK. In the United States, when an important tax credit policy expired in 2013, the installation of new wind farms almost stopped, and the installed capacity fell 92%.
In the end, those who support climate agreements say that low oil prices may have advantages and disadvantages for moving to renewable energy.
“This is a double-edged sword,†said Amy Myers Jaffe, executive director of the Energy and Sustainability Program at the University of California, Davis. She pointed out that low oil prices have reduced investment in the drilling sector, which means that the number of wells and the greenhouse effect of methane gas emissions have declined, and "obviously it has not slowed the transition to renewable energy."
However, Jaffe also said that at the same time, low oil prices make driving more attractive, as well as for larger vehicles.
“This has caused a heavy blow to electric cars,†she said. "The reason why you would consider buying an electric car is because the price of the oil is too high. It is too painful to fill the car with oil."
Keith Bradsher and Bill Vlasic contributed to this article.
Translation: Hu Bei (internship), Huang Wei
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