Several dozen academics, diplomats, and energy researchers gathered earlier this year in Berlin to embark on a fascinating thought experiment. They began with the assumption that a worldwide transition from fossil fuels to renewables is all but inevitable—a future that is not guaranteed, but hardly implausible either, despite the current domination of oil and gas. Then they imagined what that future would look like, not just in terms of the energy economy but in terms of society as a whole. Oil, coal, and gas have shaped and structured our political and economic system for well over a century. If the fossil fuel empire were to collapse, participants wondered, what would follow?
It’s tempting to dismiss this scenario as wishful thinking. The fossil fuel industry is currently worth nearly $5 trillion. Its political influence in the Trump era is climbing to unprecedented highs. But the global supremacy of oil, coal, and gas may actually be shakier than it appears. The International Energy Agency not long ago calculated that two-thirds of the power added to the planet’s energy grid in 2016 was from renewables. And David Sandalow, a former Obama administration official who was at the Berlin meeting and co-authored a report on its findings, told me that energy modelers consistently misjudge the growth of renewables: “I find it amazing how much some of the forecasts have been wrong.”
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Even small changes in the global energy supply can wreak havoc on the fossil fuel business model. Oil prices crashed from $115 to $30 a barrel in 2015 because of a relatively modest drop in worldwide demand. Further drops in oil demand triggered by electric vehicles could have “very significant implications in places like the Canadian oil sands,” where many projects require an oil price of $80 just to break even, explained Sandalow, who’s now the inaugural fellow at Columbia University’s Center on Global Energy Policy. Low oil prices have already caused companies like Chevron, ConocoPhillips, Shell, Statoil, and BP to sell off their oil sands investments.
More damage to their business model could be on the way. Groups like Carbon Tracker argue that a 10 percent loss of market share to electric cars and other technologies within the next decade could be “crippling” to the oil industry. It could strand $2.3 trillion worth of oil investments. Exxon would be slammed hardest of all the major companies, given its large investments in high-cost oil reserves. We’ll still continue to burn oil, but only from the cheapest possible places. “Production will be concentrated in low-cost regions of the world, most notably the Middle East,” Sandalow’s report predicts.
A sustained fossil fuel decline would likely have political implications. Pipelines, refineries, and power plants operate on a top-down chain of command. They rely on massive government subsidies. A society run by solar panels on people’s roofs is in some ways the exact opposite. It’s like moving from centralized TV networks such as NBC to the decentralized model of YouTube. This future may “become increasingly regionalized and localized,” predicts the report. “Citizens who provide for their own energy and have increased access to education, health and wealth independently of government programs may feel emboldened to ask for more political participation or in some extreme cases, even promote secessionist tendencies.”
Society becoming more democratic and socialist at the same time renewable energy replaces fossil fuels sounds like a utopian dream. Yet the world might just be swapping one set of global overlords for another. The raw materials, technology, and political sway needed to deploy renewables at a scale large enough to destroy the fossil fuel industry could end up being concentrated in authoritarian countries like China. The shift may also be led by just a few massive corporations. They could be fossil incumbents like Statoil that transition rapidly to clean energy, a new generation of renewable energy giants, or Silicon Valley tech behemoths like Google, Apple, Tesla, and Amazon.
“It’s going to be complicated,” Sandalow explained. “It’s really hard to say exactly how it’s going to play out.”
The political fault lines of this future may already be emerging in places like Washington, DC. On the surface, the oil and gas industry seems more powerful than ever, with a host of allied Republican politicians being appointed to top positions by Donald Trump. Companies such as Exxon, Chevron, ConocoPhillips, and Koch Industries have together spent more than $64 million lobbying Congress this year. Their spending on Capitol Hill is rivaled only by industries like pharmaceuticals, insurance and electronics manufacturing. “Generally speaking [oil and gas companies] are a big player, they have been for a long time,” said Sarah Bryner, research director at OpenSecrets.org, a watchdog organization that follows money in US politics.
But industries that look invincible can quickly decline. In the mid 2000s, nobody imagined anything but growth for the coal industry. Global demand surged from 4,600 million tons in 2000 to 7,876 million tons in 2013. But the rise of cheaper alternatives like natural gas and renewables pummeled the industry. Dozens of planned coal plants in Europe were left unbuilt, and major producers are going bankrupt across the US. In Washington, political spending from the coal mining industry plummeted from a high of $18.5 million in 2012 to $2.1 million this year. “I would speculate that the decline [in spending] reflects the greater decline in the importance of coal to the US energy market,” Bryner said.
If the oil and gas industry suffered a similarly precipitous decline there would be profound political consequences. Nearly 90 percent of the $103.2 million that oil companies like Exxon spent during the 2016 election cycle went to Republicans. Such contributions are a key factor in the GOP’s continuing denial of climate science. A collapse in fossil fuel spending wouldn’t necessarily damage the Republican Party, but it could open up its leaders to new political influences.
The tech industry is one obvious contender. A decade ago, few Silicon Valley firms had much interest in Washington. “But then very recently you see huge increases in the amount of political spending,” Bryner explained. Facebook, Google, Microsoft, Apple, and Amazon combined spent $49 million on lobbying last year alone. Their industry is increasingly interested in transportation and energy. Google, for instance, is developing self-driving electric cars and technologies for storing renewable energy—two things that could rapidly kill off the fossil fuel business model. “If we do start solving [climate change], there are trillions and trillions of dollars in market opportunity,” a company director recently told Fortune.
There’d also be trillions of dollars in avoided damage. Destruction caused by Hurricanes Harvey, Irma and Maria alone could cost as much as $262 billion to repair. Scientists think those astronomically high price tags are linked to climate change, and hence to the carbon emissions of fossil fuel producers. Just 90 major greenhouse gas emitters caused about half of the increase in global temperatures since 1880, a paper in the academic journal Climatic Change recently calculated. “We can put a number on just how much sea level rise has resulted from emissions traced to Exxon or BP or Shell,” Peter Frumhoff, a co-author on the study and the director of Science and Policy at the Union of Concerned Scientists, told me.
But there’s a tantalizing flipside to his calculations. If the fossil fuel empire collapses due to competition from renewable energy and electric cars, it could mean “a major decline in carbon emissions,” he said. Carbon Tracker predicts that this “could be seen as giving a reasonable chance of a 2°C outcome,” the global temperature threshold we need to avoid crossing in order to avoid the most catastrophic impacts of climate change.
Frumhoff isn’t convinced that the market strength of low-carbon technologies alone can cause this transition. He points to a recent study in Nature Energy suggesting that nearly half of new oil investments would not be profitable without subsidies from state and federal governments. Market forces can only achieve so much without policies that stop privileging fossil fuels. “I don’t think we can rely on exponential growth [in renewables] without political commitments to ensure that’s the path we follow,” he argued.
Those commitments are severely lacking. President Trump’s decision in October to repeal the Clean Power Plan—which is facing legal challenges—is a handout to the fossil fuel industry. He’s seemingly doing everything he can to ensure the industry’s supremacy. But Sandalow doesn’t think the actions of a “backwards-looking” administration are the best predictor of the global changes awaiting us. “There are reasons to believe that at least in the long term, a global energy system dominated by renewable energy will be more stable, peaceful and just than one dominated by fossil fuels and nuclear technology,” his paper reads. “The geopolitical path towards this end state is, however, unknown.”
Geoff Dembicki is author of Are We Screwed? How a New Generation Is Fighting to Survive Climate Change . Follow him on Twitter.
