Because of low demand, fossil fuel profits are declining by 25 trillion dollars

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Decreased demand and high investment risks in the oil sector will likely decrease the value of oil, gas and coal reserves by $ 25 trillion, which will cause shock waves across the global economy, which will hit companies, financial markets, and countries that depend mainly on oil exports and fossil fuels, and that According to a new report by Carbon Tracker, an independent financial research institution.

According to Carbon Tracker: “The Fossil Fuel Demand and Weakness Report warns that the fossil fuel industry is nearing a final decline due to competition from clean energy technologies and stricter government policies to achieve climate targets and increase international energy security.”

The report also emphasized that the global coronary coronavirus virus outbreak has accelerated this decrease in demand for oil and fossil fuels by 9% since the beginning of this year, as the International Energy Agency expected this to happen.

The report added that the World Bank estimated future profits for the oil, coal and gas sector at $ 39 trillion in 2018, explaining that “if global demand for fossil fuels decreases by 2% annually in line with the Paris Agreement, and rates of decline rise in line with increased risks, then future profits It will drop by about two thirds to only $ 14 trillion, which will be considered an unprecedented record decrease of more than $ 25 trillion. “

Globally, fossil fuel companies are worth $ 129 trillion, but the report indicated that the fossil fuel industry is now very vulnerable to disruption.

“Even before the Corona Virus pandemic crisis, the growth in demand for fossil fuels was less than 1% per year, as modern technology and clean energy technologies are now meeting an increasing share of global energy demand,” the report added.

The report also warned that a decline in the fossil fuel market along with a decline in the infrastructure of material supply and demand of $ 32 trillion could cause shock waves in the global economy.

He said: “We are witnessing a sharp decline and fall in the fossil fuel industry sector. Technology innovation and driving policies for clean alternative energy are driving down the demand for fossil fuels from sector to sector. World oil shortly before, which was followed by global cuts in the oil industry.

Renewable energy is the cheapest and cleanest energy

Currently, many companies will be forced to write off assets, cancel investments or even collapse while companies that are still profitable will earn much less money than before, according to the Carbon Tracker report.

As the increasing demand for fossil fuels and stricter climate policies along with the rise of clean technologies will put some companies that do not exceed $ 6 trillion in a very weak position, because they operate in sectors that expand the fossil fuel industry, starting with builders of LNG facilities and lines Oil pipelines to conventional car engine manufacturers.

This decline could also threaten the stability of countries whose economies depend heavily on oil export income such as Saudi Arabia, Russia, Iraq and Iran, in addition to Venezuela, Ecuador, Libya, Algeria, Nigeria and Angola.

The report also found that renewables are already the cheapest form of energy production in more than 85% of the world, while electric car batteries are comparable to the cost of conventional car engines.

According to the Carbon Tracker report: “Electricity companies are rapidly converting to renewable energy sources, while automakers are converting production to electric cars. This is important because electricity consumes more than a third of global fossil fuel production, and the auto and transportation sector has the largest percentage of demand On the fossil fuel sector. ”

In addition, the report revealed that governments support the development of clean technology to achieve the climate goals of the Paris Treaty, and to address air pollution from fossil fuels that actually kill 4.5 million people annually.

Renaissance News

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