The viability of and interest in renewable resources has been on an increasing trend recently, due somewhat to worries about profitability in the oil industry. With oil prices at extreme lows, both individuals and companies are starting to recognize the need for a more stable, productive energy source. Renewable resources are currently the new attractive energy investment, with money flowing in from many different sources.
According to Wood Mackenzie Ltd, about $380 billion of upstream oil investment projects have been delayed due to concerns about losing money on such investments. Due to the current oil price, the more expensive oil projects, such as deep water drilling projects, are simply not offering the necessary ROI in order to reap a profit. Additionally, the Energy Information Administration expects that the oversupply of oil will persist well into next year, further decreasing any potential investment in such projects.
Compare the $380 billion of delayed investments in the oil industry to the $329 billion that flooded into renewable resource development last year. Productive government subsidies are encouraging the use of renewable resources in part to curb the damage done to the environment by traditional energy sources like fossil fuels. However, renewables are still expensive to harvest and, therefore, the critical focus of these growing investments will be finding ways to bring down costs of development in order to compete with other energy sources such as oil. Many countries contributed to the grand total investment of $329 billion: China was on top with $110.5 billion going into renewable resources, while the US contributed about $56 billion. India had a total of $10.9 billion of investments in renewables.
Article written by HEI contributor Timothy McNally.