, Financial Times

The Big Drop: Cheap oil burns green energy

Tumbling oil prices have long been seen as kryptonite for clean energy companies — and share prices of some of the world’s best known renewable power groups have slumped in the wake of the latest slide in crude.

Shares in Denmark’s Vestas, the world’s largest wind turbine supplier, dived after the oil producers’ cartel Opec decided not to cut production in late November and prices are still down 11 per cent, noticeably below the broader market.

[...] “Much policy in recent years has been justified on the basis of scarce hydrocarbons and continually rising prices of said hydrocarbons,” said Ian Temperton of Climate Change Capital, a green investment specialist owned by Bunge, the global agribusiness.

This argument may have to be adjusted even if the latest oil-price rout eases, he says, because if governments end up taking tougher action on global warming, such as the international climate deal to be sealed in Paris next year, it may dampen fossil fuel use.

“Policy makers will have to come to terms with the fact that if the plan is to stop using hydrocarbons before we run out of them, then they will go into oversupply and their price will fall in the long term,” said Mr Temperton.

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