One of the greatest dilemmas in the history of the human civilization has been that of the fossil-fuel-powered economy. While on the one hand, we are confronted with rapid depletion of finite reserves of fossil-fuel, on the other hand we are on the brink of experiencing potential catastrophic climatic events endangering the very sustenance of the human civilization, brought about by burning of fossil fuel. 

Understanding the economic, environmental and geo-political realities of the world today, which has continued to be increasingly fossil-fuel-powered for the last one and a half centuries, is fundamental to identifying the way around the issue.  Incidentally, we are discussing this issue at a time when national economies around world are heaving a sigh of relief in the wake of reduction in global fuel prices which have remained substantially low for a considerable period.  The reasons why that benefit was not passed on to the people of this country until such time the key state institutions in the power and energy sector, including the CEB and CEYPETCO were brought under the present ministry, relieving them from undue political manipulation, with the regime-change that occurred in January 2015, are too well-known and it is not our intention to deal with such facts in this article.

However, so far as the current global price levels of petroleum are concerned, there are a multitude of factors that have forced the current temporary slide of the global oil and gas prices from their peak levels a couple of years ago.  One important contribution came from technology – a recent development in natural gas extraction technologies, known as hydro-fracking.The economic edge provided by this technology enabled North America to extract natural gas at substantially lower prices. Moreover, that also marked substantial realization of a goal that Barak Obama set for US to be self-sufficient in energy.  The United States has simply been the largest consumer of energy for so many decades, with their present consumption standing around one fifth of the global total. Under such conditions, any substantial reduction in petroleum imports by the United States in the wake of increased domestic production, which has become relatively more economical due to recently developed efficient extraction technologies, is obviously bound to create a significant decrease in demand for oil and gas in the global market, thereby exerting a downward pressure on the prices.



Another important factor that has contributed to the sustenance of a low-price regime for oil and gas for a prolonged period is the heightened political tension between the West and Russia.  The US and their EU allies have been trying to artificially maintain low prices for oil and gas in a bid to weaken the oil-and-gas-export dependent Russia, particularly after the Ukraine crisis.  Thirdly, recovery of the US economy caused a large volume of investments in oil and gas to be divested, and the same funds to be invested in US dollar bonds at higher rates of return.  Fourthly, popularization of green energy has also decreased the demand for petroleum.

However, expecting this low-price regime to continue for a prolonged period is not rational: One decisive factor which could drive the oil prices up is the ISIS terrorism that has engulfed the Middle East.  In addition, any changes that would occur in the other contributing factors analysed above will drive the prices up.  The group of seven industrialized nations, G7, has recently declared that they would cease to use petroleum by year 2050. This, at best is mere, redundant political rhetoric, as the real challenge on the ground is the extinction of all reserves identified as ‘feasible-to-extract’ by 2040.  In the meantime, on the environmental front, impending catastrophic extreme climate events associated with global warming increasingly continue to threaten the very life on the planet.

During the history of life on Earth, there have been five great extinctions, caused by naturally occurring climatic events, resulting in extinction of a major proportion of the living species that existed at the time. Humankind would be certainly approaching a sixth great extinction, caused by human activity for the first time, unless adequate measures are effectively and immediately implemented to contain the burning of fossil-fuels.

Historically, there have been three main reasons that have been impeding the process of popularisation of renewable energy, namely constraints in ‘energy-dispatching’, ‘inability’ to use in the transport sector, and relatively high cost.However, all three impediments are being gradually and progressively overcome thanks to the extensive quantum of R&D work being undertaken on the subject the world over.  The techniques used for energy-storage in the form of “pumped water storage”, “compressed air”, or “generation of hydrogen fuel by electrolysis of water” are becoming increasingly efficient, and hence, economically feasible, thus circumventing the issue of ‘dispatching’. In the area of wind energy, smart wind-generators capable of controlling active and reactive power as well as frequency have emerged improving the overall usability of wind power. Advanced techniques have emerged for accurate assessment of wind power potential as well. On the transport front, emergence of highly efficient battery technologies such as Tesla, which has enabled an electric car to run for 500 km at a stretch upon being once charged, has effectively eliminated the barriers for use of renewable energy in the transport sector. Indeed, the gas and petrol stations are destined to be replaced or converted into electric-vehicle charging stations. 

The world is destined to witness a great transformation in the energy sector, namely from fossil-fuel to renewable energy, stemming from the fundamental need to survive and sustain not only the economy but also the very civilization of mankind. A main characteristic of this transformation will be the gradual reduction in dependence on a national or a central electricity-grid by households and as well as progressively increasing settlement units such as villages, towns or regions, which in turn will become increasingly reliant on locally generated renewable energy. Perhaps, such a transformation could be identified as a reversal of the trend that commenced with commercial production and popularization of petroleum as the primary source of energy that was spearheaded by John D. Rockefeller’s ‘Standard Oil’ in 1860s.Sri Lanka is blessed with adequate potential for renewable energy, as well as the requisite expertise and human resources and, given the present context, is certainly possessing the potential to be a global leader in that transformation process.