Is oil era over?

20 October 2016 14:51 (UTC+04:00)

By Nigar Abbasova

Hydrocarbon resources have long ago established their position of the predominant source of energy, constituting a lion’s share of the global energy mix.

The recent developments in the black gold market, including more than a twofold drop in oil prices strengthened the assumption that the era of hydrocarbons is nearing its end, further adding to the idea that hydrocarbon-dependent world is a thing of the past.

A combination of volatility in the oil market, long-term price pressures, environmental concerns, and rapid technical advances is among the main factors contributing to the growing appeal of renewable energy sources (RES).

However, views on possible end of oil era and switch to alternative energy sources, as well as on whether energy sources may be efficient and profitable enough to replace hydrocarbons, and will they ever be able to replace traditional sources by 100 percent are very controversial.

Russian President Vladimir Putin earlier said that there is no real reason for talking about the decline of the era of hydrocarbons, mentioning that there is no real basis for making such far-reaching conclusions, at least for now. Citing International energy Agency, he noted that in 20-30 years “the world will remain the same hydrocarbon, and the demand for oil and gas will continue to grow”, although not as rapidly as before.

Putin, however, mentioned that the mankind is moving to the "green energy" and this is definitely the main and proper development path. 

RES includes solar and wind generation, bioenergy, geothermal energy and tidal energy. One of the main pluses of the use of such sources is that they are renewable so they will never run out. Moreover, environmental advantages of utilizing the alternative and renewable forms of energy can not be overestimated. 

Policy Analyst at European Policy Centre Marco Giuli told Azernews that RES sources are already plentiful, and upfront costs are going down to the point that discourse is now shifting from how to support deployment to remuneration in an oversupplied environment. Giuli also said that unfortunately, hydrocarbons are plentiful as well and their low cost poses a fundamental threat to a cost-effective deployment of RES.

The main problem with renewable energy is that it often relies on the weather for its source of power, therefore, it has a seasonal character. In addition, the cost of obtaining renewable energy is by far in excess as compared to traditional energy generation. 

However, most experts agree that RES will inevitably increase its share in the overall energy balance due to environmental doctrines and technical progress.

Guili mentioned that climate policies, with their large sets of instruments including targets, carbon pricing, support schemes may act as an accelerator but at some point in history a shift will be unavoidable anyway as hydrocarbons are an exhaustible resource.

The United Nations Climate Change Conference (COP21), held in Paris in December 2015, established a new framework on the reduction of emissions, which became an additional sign that the end of fossil fuel may be near.

Renewable energy is considered to be a vital component in a bid to move the energy sphere towards the low-carbon future envisioned in the Paris agreement.

Co-director of the Institute for the Analysis of Global Security (IAGS) Gal Luft told Azernews that the talk of the imminent end of an era of hydrocarbons is unrealistic.

He said that the global transportation system is more than 90 percent dependent on oil and power generation is still vastly dominated by coal and gas. Most renewable sources are intermittent and therefore require backup of gas fired turbines. While non-fossil energy is growing by leaps and bounds RES is starting from a low base and it will take decades before significant penetration can occur. 

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Nigar Abbasova is AzerNews’ staff journalist, follow her on Twitter: @nigyar_abbasova

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