2015 proved to be an interesting year for energy and climate issues both globally and in the UK. Will 2016 hold more of the same?
Forecasting is a dangerous business, but here are six predictions you should keep an eye on.
1) The showdown on oil prices between Saudi Arabia and the US will intensify, and the Saudis will eventually break.
It looks like oil and gas prices are going to remain low for the foreseeable future, panicking both the oil industry in Saudi Arabia and the shale gas industry in the US.
The big question is whether Saudi Arabia can keep production high and prices low long enough to bankrupt enough of the American shale industry. The answer may come by the end of 2016 and several factors point to the Saudis breaking first.
For one, despite losses for the oil industry, low oil prices benefit many sectors in the US, especially as consumers now have more spending money in their pockets. However for Saudi Arabia, an oil-dependent economy, low prices are a clear loser.
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4) Hybrid sales will fall; electric vehicle sales will boom and become the hot energy news item of 2016.
More so than renewables, low-carbon vehicles are an area where you might expect low oil prices to present a difficulty as they will encourage more people to stick with their regular car.
Sales of hybrid vehicles, which many people do compare to standard combustion vehicles in purchasing decisions, will likely fall. Conversely, electric vehicle purchases tend to be made by consumers who are less sensitive to price changes, evidenced by increased EV sales in 2015 despite low oil prices. In addition, a significant portion of EV sales are in industrial, commercial and public sectors where EV mandates play a strong role.
This prediction, like most others included here, differs significantly from OPEC’s delusional World Oil Outlook. On EVs it forecasts only a moderate increase in sales all the way out to 2040. OPEC dismisses EVs as a threat because it says it will take until 2040 for battery costs to fall by 30-50%, enough to make them viable options. It’s a particularly bold prediction as battery costs have fallen by about 50% in last five years alone.
Expect to see media interest in head-to-head races between the silent rockets and a lot of interest in three big 2016 releases: the Chevy Volt, the Nissan LEAF and the Tesla Model X.
Read more: New Economics