Clean energy and international oil

Marianne Haug

Oxford Review of Economic Policy, 2011, vol. 27, issue 1, 92-116

Abstract: Oil has been the world's dominant fuel for more than 50 years. Substitution of oil for power generation and heating has progressed since the 1970s, but substitution of oil in transport remains elusive. This paper examines the progress of clean energy and compares the unfolding co-evolution of technologies, markets and institutions with what we know about substitution of oil and technological paradigm shifts. While the rhetoric in favour of clean energy is strong, technologies, policies, and supportive infrastructure investments are still in a formative stage. The transformative process will evolve over the next 10--20 years and change irreversibly the demand dynamics for oil. Although decline in the demand for oil is not imminent, the impact of the clean energy transition on international oil is evident, even now. High oil prices accelerate commitment, policies, and market prospects for clean energy options and speed up the market-readiness of substitutes for oil. While 20 years appears a long time for the development and scale-up of alternatives to oil, it is a short period in the context of the required paradigm shift. For international oil, it is well within the time frame for resource rent optimization, strategic planning, and investment decisions. High-cost resource developers need to be aware. Copyright 2011, Oxford University Press.

Date: 2011
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