International bank BNP Paribas has labelled the economics of producing electricity from renewables as irrestible.
Writing in the Financial Times, head of sustainability research at BNP Paribas Asset Management, Mark Lewis says renewables can no longer be framed an an ethical issue.
The reason: renewables have a short term marginal cost of zero.
Lewis said: “In other words, when the wind blows and the sun shines, the energy itself arrives for free.”
“Oil and gas…sectors will eventually have to recognise that the economics of renewables are becoming irresistible.”
Lewis says the returns from upstream oil projects will inevitably decline as oil is forced to compete with an energy source that produces energy at a much lower cost over the lifetime of a project.
“The oil industry today enjoys massive scale advantages over wind and solar. But this advantage is now one only of incumbency and time limited.
“Oil companies should think very carefully about investing in new long-term projects that have break-even costs much above $20 a barrel.”
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