Reduced oil prices lead to higher carbon dioxide emission, according to Spanish researchers. They say that a one percent increase in oil prices will reduce carbon dioxide emissions up to 0.4 percent while a one percent decrease will increase carbon dioxide emissions by also up to 0.4 percent, worsening climate change.
The researchers explain that low oil prices result in higher energy consumption. This reinforces other views about how cheap prices make people waste more oil. Moreover, cheap oil also dissuades the development of energy efficient infrastructure. Drivers will tend to buy less environment-friendly vehicles, making manufacturers less likely to focus on producing cars.
Nevertheless, the researchers say that CO2 emissions can be toned down by imposing taxes on oil. They suggest that policymakers should consider creating new energy taxes that would decrease energy consumption and encourage cleaner energy use.
However, some have pointed out that cheap oil can actually help the environment. This holds back investment in fossil fuel extraction, leaving the remaining fossil fuels where they are. A study published in 2015 in the journal Nature added that keeping fossil fuels in the ground can ward off climate change. Still, this does not stop others from extracting oil for profit.
In fact, Australia’s largest banks namely Australia and New Zealand Banking Group, National Australia Bank, the Commonwealth Bank and Westpac, continue to fund fossil fuel projects. Overall, these banks offered loans worth AU$5.5 billion in 2015 to finance such projects.
While experts have warned that low oil prices increase CO2 emissions which will exacerbate climate change, Duke University and NASA scientists note that global warming has stabilised. After studying climate data of the past 15 years, they concluded that global temperature did not rise or fall dramatically.
The Spanish researchers’ solution that will lower CO2 emission instead of completely removing it is supported by a study conducted by an environmental scientist at the University of East Anglia. Phil Williamson insists that cutting down carbon emissions is a cheaper and more effective way to alleviate global warming.