Whenever oil prices drop, there's some chatter about renewable energy and clean tech getting less competitive. Indeed, in the United States, there has been a slight dip in the sales of fuel efficient and electric vehicles as oil prices have dropped. But that's not the case in many other parts of the world. Plug-in car sales grew 94 percent in the United Kingdom last year and, according to Cleantechnica, electric car sales tripled in China. Meanwhile use of coal in China continues to decline.
Perhaps the most interesting examples, however, comes from oil-producing nations. Suzanne Goldenberg over at The Guardian reports that as revenues from oil exports fall due to unexpectedly low international oil prices, many oil-producing nations are rushing to slash domestic consumption to save their output for sales abroad. These moves are particularly striking because many governments had previously subsidized oil, gas and water heavily, but now they're being forced to cut back on these subsidies to make up for lost revenue.
You can see examples from all over the world:
Saudi Arabia cuts oil subsidies, embraces solar power
Even before the recent slump in oil prices, Saudi Arabia had announced ambitious plans to scale up solar power. Now, with oil hovering around $30 a barrel and the Saudi government's finances feeling the pinch of a $98 billion budget deficit, there's good reason to assume that these efforts will be ramped up.
Because the Middle East is one of the few places where oil makes up a significant fuel source for electricity use, much of the focus has been on cutting consumption. Goldenberg reports that the Saudi government is aiming for an 8 percent cut in electricity demand by 2021. Meanwhile Bloomberg reports that cuts to oil subsidies could cause a 50 percent rise in retail gasoline prices — which will inevitably result in a reduction in demand. And similar moves are being seen across the Middle East and North Africa from Kuwait and Qatar to Egypt. Iran is also getting in on the game, creating new energy conservation targets and incentives for renewables in a bid to make more oil available for exports as international sanctions lift.
Russia scales back its space program, pursues renewables
The Russian economy is also being squeezed by reduced revenues from oil and gas production, and that pressure is being compounded by international sanctions related to conflict in the Ukraine. The government has just announced a scale back of its money- and energy-hungry space program, and is looking at ways to increase energy sales abroad. One manifestation of this effort, Goldenberg says, is that Russia is planning on meeting 10 percent of its electricity needs from renewables within the next 20 years.
Norway embraces the electric car
Norwegians have been ahead of this curve for some time. The country is responsible for a large amount of greenhouse gases through the export of oil. Yet Norway's electricity supply is almost 100 percent renewable thanks to an abundance of hydroelectric power, and it has long had one of the most advanced electric vehicle markets in the world. And because so much of its wealth comes from oil, Norwegians are painfully aware of the need to diversify. While it did stop short of abandoning all fossil fuel investments, Norway recently committed to divesting its sovereign wealth fund from many of the highest-emitting industries including coal producers, tar sands operations and cement manufacturing.
Reduced consumption means more to sell. But who will they sell to?
All of this bodes well for anyone gunning for a low-carbon economy. But it's worth remembering that oil producing nations are not necessarily motivated by a desire to cut emissions. After all, the rationale behind cutting consumption at home appears to be largely fueled by a desire to sell more abroad. Here too, however, there are encouraging signs because the number of countries making serious moves to cut their consumption appears to be growing by the minute.
Morocco, for example, while not a major oil or energy producer itself, is aiming for nearly 50 percent renewable electricity as early as 2020 and has also pledged to slash oil subsidies. Sweden is aiming to ditch fossil fuels entirely. Solar is taking off in Sub-Saharan Africa. And there's a general feeling that fossil fuels may be entering a permanent decline.
Yes, oil producers may be smart in minimizing consumption and maximizing sales. But I can't help feeling that they're fighting for a larger part of an inevitably shrinking pie. And by engaging in that fight, ironically enough, they give a boost to the technologies that will help to shrink it further.