At the end of 2014, E.on the German Utiility company took the bold move to seperate off fossil fuel generation assets into a new company, leaving the German energy giant to focus on renewables, distribution networks, and energy efficiency services. The move will immediately establish E.ON as one of the largest green infrastructure companies in Europe, primarily focused on renewables, distribution networks, and energy efficiency services for the company’s 33 million customers.
Now, prompted by the dramatic fall in oil prices recently, Jeremy Legget believes that other global oil producers may follow suit.
“One of the oil companies will break ranks and this time it is going to stick,” he said. “The industry is facing plunging commodity prices and soaring costs at risky projects in the Arctic, deepwater Brazil and elsewhere.
“Oil companies are also realising it is no longer morally defensible to ignore the consequences of climate change.”
There are many oil production projects, such as shale gas and arctic drilling that would be commerically unviable at the current price per barrel – which it appears is OPEC’s objective. Combined with the rapidly growing divesment movement, which last year saw Glasgow University becoming the first University in Europe to divest from fossil fuels, as result of the Fossil Free Uk campaign, the oil industry may be finally losing its reputation as a cash cow investment.
When goverment policies, such as the infrastructure bill appear to be contradicting themselves in thier objectives, there sometimes seems little hope for climate talks and emissions targets. A paper published by Nature last week, suggests that, globally, a third of oil reserves, half of gas reserves and over 80 per cent of current coal reserves should remain unused from 2010 to 2050 in order to meet the target of 2 °C.
Historically the fossil fuel industry has been succesful in undermining any attempts to really combat emissions and reduce reliance on fossil fuels. Predictions vary on the recovery price of oil this year, but perhaps the industry will remain unsettled enough to have a more succesful outcome at the global climate change talks in Paris later this year.