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Energy stocks are crashing. According to the International Energy Association, oil demand is projected to drop for the first time in more than a decade due to the effects of the pandemic, which is halting economic activity and restricting travel worldwide. And last month, the Financial Times reported that US crude oil prices fell below $20 a barrel, “close to their lowest level in 18 years.” If all the talk of fossil fuels becoming “stranded assets” and the inevitable burst of a “carbon bubble” as we progress toward a decarbonized economy wasn’t enough of a sign for investors, maybe the novel coronavirus is the wake-up call they need.
Just this week, oil-producing nations agreed to the largest production cut ever negotiated: about 10 percent in the coming months. Unless people are back on the roads and back in business sooner than it seems fair to expect, this pandemic may run small oil companies into the ground.
It should come as no shock that fossil fuels are a risky investment. With over $14 trillion worth of fossil fuel holdings already divested, the failing strategy these companies promote was known well before the pandemic hit. And for those who think the move away from fossil fuels has been confined to left-wing activists and environmental die-hards, it’s time to think again.
The world’s largest asset investor, BlackRock, anticipates a “fundamental reshaping of finance” in light of growing climate risk. The European Investment Bank is phasing out its financing of fossil fuel projects. Major financial players are recognizing how the times have changed and signaling for peer institutions to follow their lead.
Fossil fuel companies themselves know their clock is ticking: It’s why Shell has cited divestment as a material risk to its model of business. And it’s why right now, in the middle of a pandemic, Big Oil is working to push through pipelines and secure “regulatory relief” from the federal government. Meanwhile, conservative legislators in several states have used the cover provided by Covid-19 to pass laws criminalizing anti–fossil fuel protests—seeking to safeguard infrastructure already heading toward extinction.
But if fossil fuel companies and their financial backers are scared now, then they should be terrified of what’s to come.
Covid-19 has made it more apparent than ever that we live in a globalized world where one country’s actions may inevitably impact people who live oceans away. As a “threat multiplier,” climate change will only increase the risks posed to people’s health, and do so disproportionately for marginalized communities. Adrienne Hollis, senior climate justice and health analyst at the Union of Concerned Scientists, puts it clearly when she writes, “There can be no discussion about climate change without a meaningful conversation about public health.”
Already, there is evidence that climate change may fuel the spread of infectious diseases (the Zika Virus outbreak a few years ago raised new concerns around this possibility), not to mention the fact that air pollution from fossil fuel emissions contributes to respiratory and cardiovascular conditions. These are only a few among the whole host of effects that climate change is having and will continue to have on our physical and mental well-being. There is no panacea to save us from this inevitability, but there is a powerful first step we can take to protect our health long-term: ditching fossil fuels to slow the climate crisis.
Plus, while some have lauded the downward trend we’re seeing in carbon dioxide emissions due to Covid-19, there’s no guarantee that it will stick around in the long term. On the contrary, there’s good reason to think that it will not. Unless we radically change our economic model, more shocks of the kind investors are now experiencing are bound to come as our planet warms and energy resources deplete. If our “emergency” mentality dissipates with the pandemic, we can only expect a harsher return.
For our economy and energy system to rebound and for us to put people back to work after a surge in unemployment—The Washington Post recently reported that with a 13-percent unemployment rate, the United States is now facing “the worst level of joblessness the nation has seen since the Great Depression”—we have to keep long-term sustainability, equity, and justice in mind. We must recover and rebuild by investing in the jobs of the future: clean energy development and technology jobs that will ensure the resiliency of our communities and our environment. And the same goes for our health: we need a health care system that provides coverage to everyone, including our most vulnerable communities, without question.
What a post-Covid-19 world looks like is up to us. Will we fight to protect and empower our local communities, to stop our federal government from bailing out Big Oil, and to demand well-paying green jobs as working people? Health experts are telling us that “the next pandemic is only a matter of time.” That means we need to start preparing for it now. Instead of reviving the same systems that make us vulnerable, we need to build more equitable and sustainable ones from the ground up.
Investing in fossil fuels has been a bad strategy for a long time. Now, in the midst of a global pandemic, it’s an even worse one. Covid-19 is only making clear what has now been known for nearly a decade as the call for fossil fuel divestment has grown: With crises like this one only more likely to proliferate as climate change accelerates, it’s more than time to move our money.