The fossil fuel industry is weaker than ever! There’s been many reasons this month for hope, starting with the Vatican, where the pope faced down a conference full of oil industry executives. There’s reason to believe that the basic trajectory of the world is firmly moving away from coal and gas and oil.

So, why do we think the world is ditching the dirty fossil fuel and embracing clean, renewable sources of energy? Here are three things that have been happening that indicate the weakness of fossil fuel industry:

 

1. Research says fossil fuel industry is “weaker than it has been in decades”

The market perceptions haven’t really changed; even in the age of Trump, the fossil fuel industry, which once used to be a sure bet, has now become a very challenging enterprise. A research at the Institute for Energy Economics and Financial Analysis (IEEFA) stated: “In the past several years, oil industry financial statements have revealed significant signs of strain: Profits have dropped, cash flow is down, balance sheets are deteriorating and capital spending is falling. The stock market has recognized the sector’s overall weakness, punishing oil and gas shares over the past five years even as the market as a whole has soared.” The IEEFA report called the fossil fuel industry “weaker than it has been in decades” and explained its basic weak points.

 

2. The Sudden Rise of Competition

We’re talking about renewable sources of energy. The rise of a competitor that is able to deliver the same product (energy!) with cheaper, cleaner, better technologies has really hurt the fossil fuel industry. The big company that comes to mind is Tesla. But also, Volkswagen has come clean about the dirtiness of diesel, and is going to spend $84bn on electric drivetrains. On the other hand, China seems intent on converting its entire bus fleet to electric power. An article in the Guardian says:

“Every week seems to bring a new record-low price for clean energy: the most recent being a Nevada solar plant clocking in at 2.3 cents per kilowatt hour, even with Trump’s tariffs on Chinese panels.”

 

3. The Climate Movement aka The Green Revolution

According to IEEFA, the third big problem that the fossil fuel industry is facing is the climate movement — which is causing a material financial risk. “In addition to traditional lobbying and direct-action campaigns, climate activists have joined with an increasingly diverse set of allies – particularly the indigenous-rights movement – to put financial pressure on oil and gas companies through divestment campaigns, corporate accountability efforts, and targeting of banks and financial institutions. These campaigns threaten not only to undercut financing for particular projects, but also to raise financing costs for oil and gas companies across the board.”

The best part of the IEEFA report, for activists, is a series of recommendations for exactly how to hurt the industry the most. This includes creating delays that “turn a marginal project into a cancelled one” and “strategic litigation” and “changing the narrative”. IEEFA report’s authors write:

“The financial world is just beginning to understand the fundamental weakness of the fossil fuel sector, and barely acknowledges the global climate movement’s growing power and reach. This has created a powerful opportunity to develop and foster a new storyline on Wall Street: that the oil and gas industry is an unstable financial partner just as it faces its greatest test.”