Analyst sees opportunity for more clean energy alternatives as prices for oil and gas plummet
The impact of the new coronavirus on the global economy has caused prices for fossil fuels to plummet. As everything has slowed down, demand has shrunk to just a fraction of what it was before governments told people to stay home to slow the spread of disease.
On Monday, crude oil prices dipped nearly $40 below zero. This is completely unprecedented territory, says Eric de Place, an energy analyst with the Sightline Institute in Seattle.
“So that industry, which was already struggling, is just a flaming wreckage,” he said. And de Place says that could spell the end of several controversial energy infrastructure projects in the region.
Even before the coronavirus hit, he says renewable energy alternatives were eating away at market share. A price war between Russia and Saudi Arabia had driven prices down. And energy companies were having trouble getting financing from Wall Street. De Place believes the price shock brought on by the coronavirus will put the nail in the coffin for several big projects in the region.
“I think the Jordan Cove (liquefied natural gas) project in Oregon will collapse under the weight of bad finances," he said. "I think the Kalama methanol project in Washington will also collapse under the weight of bad finances.
“(And) the Trans Mountain oil pipeline in British Columbia is in serious jeopardy.”
That pipeline expansion project would triple the amount of crude traversing the Salish Sea and Puget Sound as it heads to export markets in Asia. The project has caused Washington state to expand its oil spill response plans, while many activists, the British Columbia government and tribes have sought to stop the project through street protests and lawsuits.
De Place points out that the expansion of the pipeline, which was purchased from the American oil firm Kinder Morgan in a bailout transaction in 2018, depends heavily on Canadian taxpayer dollars. As government budgets everywhere contract, it remains to be seen how much financial support will still go to this kind of project.
Likewise, he says Puget Sound Energy, the utility that is constructing Tacoma’s controversial liquefied natural gas facility, may find itself making some tough choices.
EARTH DAY MESSAGE
The 50th anniversary of Earth Day takes place Wednesday. The original protests in 1970 filled streets across the country, with as many as 1 in 10 Americans protesting against environmental destruction from unbridled industry and growth. The movement ultimately led to the nation’s landmark environmental laws, such as the Clean Water Act and the Clean Air Act, and federal laws on occupational safety, endangered species and controlling toxics.
People in the Northwest are marking the big anniversary online, through teach-ins and special school curriculum. Many people are considering the impact of the coronavirus on local ecosystems. Some have noticed more birdsong in their neighborhoods or other wildlife benefitting from fewer people outdoors. Local air quality monitoring shows pollution has dropped, because of the drop in traffic under stay-at-home orders.
And, de Place says, although the big street demonstrations originally planned to commemorate Earth Day have been canceled, the climate could ultimately benefit from all that’s going on, because of the disruption caused by the virus.
“When we come out the other side, I think there’s a reasonable chance that things will be a lot better, from a climate perspective than they are now," he said. "So, my hope is that we can see — in this crisis, we can find the opportunity.”
He says the clean energy sector — things such as solar and wind power or energy efficiency — could be a very good place for governments to invest in job creation, as the country faces a big recession and looks to rebuild.