• Toby Irwin

Countering Climate Change: Trust in the Market

Currently the world is using 96.5 million barrels of oil a day*. A growing global population, particularly in countries which are undergoing rapid industrialisation, has prompted many analysts to note that oil demand is going to continue to increase. The OECD also notes that in recent years we are still continuing to see a rise in oil demand.** Clearly it is an issue, but the answer may not be as straightforward as capping greenhouse emissions. By strangling the industrial capacity of developing nations then economic growth is also limited. It is this economic growth that potentially will be able to control and reduce the aforementioned reliance on fossil fuels.

Source: Wikimedia Commons
Oil rig off the coast of Southern California

In developing nations, it is essential for economies to flourish to the necessary point in which alternate methods of energy production become both feasible and economical. This will coincide with other methods of oil production restrictions including global emissions targets and, perhaps most importantly, gains in the efficiency of new technologies.

The best and most effective example is cars. Electric vehicles have become more popular in developed nations recently, but still only make up less than 1% of the global car market. Fundamentally, change must come from below, from the average person: the consumer. To control and limit the purchase of traditional (internal combustion engine Petrol and Diesel) cars should not come from governmental controls and restrictions, as this would be inherently illiberal and invasive, but from the market. Should technology advance so far as to make electric vehicles more efficient and cost-effective than traditional cars then the market will naturally filter out the previous designs.

Other ways to reduce the impact and demand on oil are things like biofuels and hydrogen cells. If the technology improves sufficiently, then the economic incentive should be enough to naturally move humans beyond a reliance on traditional fuels. This is a feasible solution considering that, in 2018, 40% of all oil demand comes from trucks, buses and cars.

Evidently however, these switches remain the privilege of developed nations which have the market flexibility and individual expendable income to enforce a noticeable difference. Developing nations will require this economic boom to allow change to be enacted when it becomes possible. It is an unfortunate paradox wherein further use of fossil fuels is necessary in the short term to facilitate long term cut backs. To sum up, the reduction in oil demand will come to rely increasingly on economic growth, the presence of free market capitalism and, crucially, innovation.

Time is of course working against innovation. The Paris Agreement in 2015 set targets to minimise the rise in global average temperatures, with various policies beginning from 2020. Changes in the market however, take a long time to take effect. For example, even if the sale of traditional cars ceases within the next 25 years, these vehicles are going to remain on the road and in private possession for as long as they remain functional and economical. Considering some people keep their cars for up to twenty years, or more, and additionally the impact of unofficial, de-regulated re-selling, it could take these suggested trends half a century to come into realised effect.


** OECD: https://data.oecd.org/energy/crude-oil-production.htm

At the time of writing, Toby Irwin is a second year student at the University of St Andrews. He is studying Modern History and International Relations. Areas that interest him the most are UK defence strategy and foreign policy.