Falling oil prices should not weaken investment in green energy, according to two University of Stirling academics.
Despite fears that falling oil prices could lead to declining investment in green energy projects, Professor Frans de Vries and Dr Isaac Tabner of Stirling Management School recommend taking a long-term approach towards investment in the renewable energy sector.
Writing in The Conversation, Professor de Vries and Dr Tabner said: “In the short run cheap oil may be a deterrent to investment and innovation in renewable energy. But this also applies to investment in conventional energy.
“A more useful question from the point of view of a long-term investor, such as a pension fund, is: should we continue investing in renewable energy projects and should governments continue to encourage this investment? The simple answer is yes.”
In the face of uncertainty around the future supply and price of fossil fuels, the academics argue that continued investment in green products and technology is a sensible long-term approach.
Professor de Vries, Chair of Economics, and Dr Tabner, Finance Lecturer, said: “If the only thing we can say with certainty is that the future price and availability of different energy sources are uncertain, investment theory tells us that the best strategy for protecting against such uncertainty is to avoid putting all our eggs in one basket.
“Instead, diversifying energy supplies and the energy-related stocks in our investment portfolios should be the main objective.”
Professor de Vries and Dr Tabner also stress that future legislation around climate change is also likely to lead to “a more continuous and sustained incentive for investment in renewable energy.”
In the article, the academics consider the effects of variations in energy prices from the 1970s onwards, such as the rise in renewable energy consumption during the 1970s and 2000s during times of increased energy costs.
The full article is available on The Conversation website: “Why falling oil prices should not undermine investment in green energy”.
Professor de Vries and Dr Tabner are both based in Stirling Management School at the University of Stirling. In the Research Excellence Framework (REF) 2014, the School was ranked within the UK’s top 25 institutions for Business and Management. Over 90 per cent of its research impact is rated either world-leading or internationally excellent.
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