The World Bank released a statement to end the financial support for oil and gas exploration, these industries are facing staggering threats which not only undermine its production, but also question the longevity of these industries altogether. Likewise, new competition is emerging in the form of US shale production and greater investment in renewables.
In a statement that delighted campaigners opposed to fossil fuels, the World Bank used a conference in Paris to announce that it “will no longer finance upstream oil and gas” after 2019. In addition, an upstream support from major corporations such as Apple, Microsoft, Amazon and Google to increase the pursuit of renewable projects is encouraging an alternative to fossil fuels. Major multinationals and energy companies are calling for greater EU policy ambition to unlock the potential of renewables in Europe’s energy mix. The declaration was signed by members of RE100, the World Business Council for Sustainable Development, Solar Power Europe and WindEurope.
The rising tensions of the OPEC deal to cut oil production seems to be ongoing – at least until the end of next year. The political and economic implications will be far-reaching. To give a little background, the agreement promises to drive up oil prices as it attempts to curb the current oversupply of oil. Recent releases, promising a balanced 2018 oil market seem unrealistic. It unlikely that the deal will be respected given that OPEC lacks tools for effective supervision. Russia, in an attempt to stabilise the strength of the oil market, has agreed to curb production. However, the country is facing ongoing sanctions imposed which have already negatively impacted its economy; oil production may thus be necessary. A recent meeting between OPEC members has also highlighted that Russia can cut the agreement short if necessary.
Although at it’s premature stages, the unpopularity of the oil and gas sectors is growing. Their finite nature, costly extraction and harmful consequences have all aggregated. New generations are fully aware of the consequences climate change – together with global warming – are causing. Partly responsible, corporations and individuals are attempting to revert their impact. Technological advances within the renewable energy sector are creating advances which will benefit corporations from a financial and a Corporate Governance perspective.
Just as the coal industry crumbled, oil and gas are not invincible.
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