Fossil fuel prices are likely to stay "low for long." Notwithstanding important recent progress in
developing renewable fuel sources, low fossil fuel prices could discourage further innovation in,
and adoption of, cleaner energy technologies. The result would be higher emissions of carbon dioxide
and other greenhouse gases.
Policymakers should not allow low energy prices to derail the clean energy transition. Action to
restore appropriate price incentives, notably through corrective carbon pricing, is urgently needed
to lower the risk of irreversible and potentially devastating effects of climate change. That
approachalso offers fiscal benefits.
Oil prices have dropped by over 60% since June 2014. A commonly held view in the oil industry is
that"the best cure for low oil prices is low oil prices."The reasoning behind this saying is that
low oilprices discourage investment in new production capacity, eventually shifting the oil supply
curve backward and bringing prices back up as existing oil