For the past hundred years, fossil fuels have dominated the energy industry creating a juggernaut in Big Oil. However, the increased popularity of renewable energy indicates that if fossil fuel companies want to keep their grip on the market, investments in renewable energy are needed.
As valuable and powerful as Big Oil is, it isn’t invincible from evolving energy trends. Increased investment in electric cars, and solar and wind power shows that the future of energy doesn’t lie in fossil fuels but instead renewable energy.
In 2016, there were two million electric cars globally, according to a 2017 report from the International Energy Agency. By 2025, it is predicted that 1 in 6 cars purchased will be electric, according to a 2017 survey from UBS, an investment bank. As Big Oil become more cost competitive with conventional gas cars, the overall sales of electric cars may increase.
Tesla, specifically, has been unable to meet the high demands for its electric car, Model 3. With the trend of electric cars becoming cheaper, it may not be too long before other brands of electric cars sell out like Tesla’s Model 3.
The growing increase in electric car production takes away from part of Big Oil’s business. Forty-five percent of crude oil in America is used for passenger cars, and the increased number of electric cars will adversely affect Big Oil’s bottom line, according to CNN.
But, electric cars aren’t the only product that could disrupt Big Oil’s control of the energy industry. The emergence of solar and wind power is providing consumers with a viable alternative energy source.
Wind power is another form of renewable energy that is becoming more readily available. From 2018 to 2027, the wind power capacity is expected to increase by 65 gigawatts a year due to emerging markets, offshore wind and U.S. tax subsidies, according to Green Tech Media, a news source that provides information on energy sources.
Aside from established markets in Europe and North America, the markets in Latin America, the Middle East and Africa will also see significant wind power increases. Africa and the Middle East alone will see their annual wind power capacity tripling from 2018 to 2027, according to Green Tech Media.
Fossil fuels like oil are a cheap source of energy, but the growing capacity for wind and solar power is another indication that energy needs are increasingly being met through renewable methods, not nonrenewable ones.
The year 2016 may not have been an outlier from previous years as countries that are part of the Paris Agreement are beginning to see change.
One such country spearheading renewable energy movements in the Paris Agreement is China. In just 2016 alone, China contributed to a fifth of all electricity investment, according to Bloomberg Markets.
Though Big Oil may not have an incentive to rethink its business model in the United States under President Donald Trump’s administration, it would be an oversight to focus on short-term profit instead of long-term success.
If the Paris Agreement indicates anything, it’s that the global attitude toward renewable energy is now more of a concern than ever, with or without the United States. Countries remain focused on how to best maximize renewable energy sources and slowly wean off of fossil fuels.
By the year 2040, renewable energy will make up 86 percent of the $10.2 trillion invested in energy, according to Michael Liebreich, founder of Bloomberg New Energy Finance.
The fossil fuel giants may lose their grip on the energy industry, but if they wish to continue to be financially successful, an adaption to renewable energy must be made.