Bad news for fossil fuels and a step forward for renewable energy. This is the article that our Project Manager & Analyst, Duncan Gibb, recommends this week; ‘Gas and oil firms reclassified under non-renewables on LSE’, from the British newspaper The Guardian. Oil and gas companies listed in the London Stock Exchange have been classified as non-renewable energy in an attempt to differentiate between polluting companies and green energy producers.
“These steps may seem small, but changes like this are crucial to change perceptions and instigate the rapid transition to renewable energy that is so urgently needed”, pointed out Gibb while discussing the relevance of the article for the energy future.
The new ‘non-renewable’ classification includes coal companies as well, formerly known as “basic materials/mining”. Green energy companies have also been reclassified as renewable energy instead of ‘alternative’.
Many people in the energy community know already about the distinction between them, as Gibb explains, “but it is encouraging to see actors in the finance world take a strong stance”. The index provider FTSE Russel claimed the reclassification aimed to “give greater visibility to other forms of energy such as renewables”, as quoted in the British newspaper.
By classifying oil and gas as “non-renewable” and unambiguously labeling renewable energy, financial indexes and major players can send clear signals as to what will be a sustainable investment that is profitable in the long-term. Measures to reclassify fossil fuels companies on stock markets are fundamental but any effective response to the climate crisis means urgent divestment from fossil fuels and a huge increase in investment in renewables, says Gibb.
According to the Renewables 2019 Global Status Report, global subsidies for fossil fuel use increased 11% from 2017 to 2018, and fossil fuel companies continued to spend upwards of USD 200 million on lobbying to delay, control or block climate change policies and on advertisement to influence public opinion.
The key issue is the price of non-renewable energy and policy support for it, as Gibb highlights; “whether supported by subsidies or not, low fossil fuel prices encourage further demand for fossil fuels and challenge renewable energy markets, especially in the heating and transport sectors”.