Budget reduction responding to the various challenges resulting from COVID-19 that include low demand and reduced oil prices indicates that the gas and oil sector globally would probably disburse fewer resources on renewable energy henceforth.
However, a report by Wood Mackenzie, a consultant, states that this may not affect the overall investment put into renewables as fossil fuel participants were not designating many resources into the project anyway.
Valentina Kretzschmar at Wood Mackenzie remarked that with the market price of oil set at US$60 for each barrel, the majority of the companies were accruing enough income thus could afford to deliberate on indulging in strategies to enhance carbon mitigation. But, with all discretionary expense assessment, including additional budget allotted for carbon alleviation, companies that had not involved themselves in carbon mitigation methods are less likely to do so now.
Various companies have opted to cut down their budget allocated for renewables. Suncor Energy Inc. in Calgary announced that it would lower its financial expenditure for the year 2020 by 26 percent that is $1.5 billion to reduce international oil prices resulting from price competition between Russia and Saudi Arabia.
Two of the previously endorsed projects encountered adjournment for two years. The project included a $300-million installation of a wind power plant in southern Alberta and also situated at its Oil Sands Base Plant found in northern Alberta, a $1.4-billion scheme to put in place two cogeneration units that would lower production of greenhouse gases. However, the company emphasizes its intention to accomplish its environmental goals.
Suncor spokeswoman emphasized that they are devoted to their 2030 aim to curb the GHG intensity resulting from their operations by 30 percent and added that the cogen project faced earlier planning to be in effect by 2023.
Cenovus Energy Inc. has also reduced its capital expenditure plan by 32 percent for the year 2020. The spokeswoman Sonja Franklin affirmed that they would remain dedicated to its goal of achieving net-zero GHG emissions by the year 2050 and a decrease in the production of carbon per barrel by 2030 by 30 percent.
The current decrease in oil prices as a result of low oil demand is a preview of the expectation to occur in years to come as individuals embrace the use of electric vehicles, wind and solar power that is relatively cheap.
Wood Mackenzie’s stated that even in the past plunge of oil prices, the installation of wind and solar energy increased despite the lack of significant investments on renewable sources of energy coming from the gas and oil industry.
In conclusion, with the oil price reduced to an average of US$35 per barrel, renewable sources of energy now have an equal opportunity to compete in the economic field.