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Fossil Fuels: G7 nations meeting in Bavaria pledged to rid the global economy of fossil fuels by end 21st Century.

The Group of 7 (G7) nations met in Bavaria on June 8, and pledged to rid the global economy of fossil fuels by the end of the 21st Century. “We are committed to the fact that during the course of the century we want to see the decarbonalization of the world economy,” German Chancellor and G7 Summit host Angela Merkel told reporters. The joint declaration has no teeth behind it, and amounts to just words on paper, but it is the first time that the industrialized world has officially called for an end of fossil fuels in their entirety. The statement also was intended to add momentum to the international climate change negotiations set to take place in Paris at the end of 2015.

While the long-term outlook for oil and gas remains strong, if uncertain, the speed with which the international community – both private and governmental – has turned away from coal is breathtaking. The global divestment campaign is picking up pace, and while the budding movement has claimed some victories against fossil fuels in general, coal has felt the damage more acutely. In a recent example on June 5, the Norwegian parliament
finalized a plan to largely divest its $890 billion sovereign wealth fund from coal assets. 

Even the oil majors are now trumpeting their use of natural gas as an alternative to coal. Put another way, the growing political urgency to deal with climate change has pitted disparate fossil fuel interests against each other, and coal appears almost certainly to be the loser. The jury is out on whether or not politicians will have the strength to take on oil and gas, however.

The G7 summit also renewed its sanctions on Russia over the latter’s role in fomenting violence in Ukraine. There had been questions over whether or not the European Union would have the stomach to keep up the sanctions regime on Russia. The New York Times
analyzed how Russia has used political influence and financial assistance to peel off support in Europe, by injecting cash into both right and left wing parties. 

Following OPEC’s decision not to cut production at its June 5, 2015 meeting in Vienna, oil prices should likely continue their descent that began in early May (Figure 1). Prices may fall into the $50+ per barrel range since there is no tangible reason for their rise from January’s $46 low.


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