The Energy Transition in a Scenario of Sustained Low Fossil Fuel Prices Insight_e Hot Energy Topic #19, November 2016
This HET report assesses the impact of sustained low fossil fuel prices on the transition to a low carbon energy system.
After a four-year period during which crude oil was trading at an average of $115/bl (Baffes et al, 2015), prices started to plummet in June 2014, raising immediate concerns about the resilience of energy transition processes. At that time, some argued that the expansion of clean energy solutions would not be derailed, referring inter alia to the cyclical nature of oil prices; because a swift rebound seemed highly likely, they considered that reducing the oil dependence remained the only valid strategy from an economic perspective. This argument may have lost some of its appeal now that a “lower for longer” price scenario has gained credibility.