Opinion / From the Press

Oil price decline is a harsh test for new energy industry

By Li Yang (Chinadaily.com.cn) Updated: 2014-12-04 10:32

The continuous fall of oil and coal prices not only affects individual energy enterprises, but also the whole structure of the energy industry, including the new energy sector, says an article in the 21st Century Business Herald. Excerpts:

Cutting carbon emissions and using new energy have already become a global consensus, as the threats of global warming mount up.

Solar power, hybrid vehicles and wind power are all thought to be promising emerging industries. But the low oil and coal prices make the new energy more expensive than before.

Germany is adjusting its policies on new energy industries, and cutting government subsidies and preferential policies, so as to let the new energy industries operate according to market rules.

A new reality now is if the price of traditional energy, such as oil, coal and natural gas, continues to decline, developing new energy will become a very luxurious action, given the large number of infrastructures to be built to generate and use the new energy.

The fact is the modern industries and living environments are built on the base of traditional energies. New energy’s biggest strength is its increasingly lower prices compared to the soaring prices of traditional energy. The lowering of oil prices will necessarily squeeze the profit space of new energy, and force investors and governments to slow their new energy actions.

If the government cuts its subsidy to new energy industries, the price of new energy will soar by a large margin. The new energy enterprises will rely more on themselves. The green energy industry is experiencing a harsh test.

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