In 2014, when the price of oil last collapsed, governments around the world did not yet have an agreement to combat climate change. The following year, the leaders signed the Paris Climate Agreement.

Since then, green investment has increased significantly. About 1.2 trillion USD has been poured in renewable energy projects, with global sales of electric vehicles reaching 2 million units last year. Bloomberg NEF expects a total of 10 trillion USD to be invested in renewable energy by 2050.

The Paris Climate Agreement pushed for the creation of regulations that shape climate policy on several continents. Representing this “green revolution”, Greta Thunberg and founder of Tesla, Еlon Musk, has become one of the most popular figures in the world.

So when Saudi Arabia and Russia launched a price war this week that caused turmoil in global markets, one way or the other affected by the coronavirus, it looked like major oil-producing nations were reaffirming their dominance in the short term. On the other hand, this could be another step in the long-term trend towards ending oil supremacy.

The price of a barrel of oil remains an important economic indicator. But the idea of ​​dumping fossil fuels suggests that the geopolitical impact of the feedstock is likely to be less than in the past.

“The impact of oil prices on broader economic growth has been declining since the 1980s”, said Shane Tomlinson, deputy chief executive of E3G. “We can see exceptional movements in the price of oil over the next few months, but I don’t think that changes the fundamental need to deal with climate change”, added he.

The fall in oil prices to about 35 USD per barrel from 55 USD per barrel has major implications for tackling climate change. Low prices stimulate oil consumption. The trend, on the other hand, shrinks the budgets of oil companies, questioning a number of clean energy projects and some governments are under pressure to support the fight against oil companies.

However, if these prices are kept low now, there can be great positives for combating climate change.

Renewable energy is a more mature industry five years ago. As it becomes a less risky investment and attracts large investors. At the same time, exploration for new oil sites is becoming less viable, with the risk that even those projects that continue to function may no longer provide good returns.

“It makes no sense now to reduce your investment in renewable energy (RES) if the price of oil goes down”, said Mark Lewis, head of sustainability at BNP Paribas Asset Management. “It makes more sense to reduce your investment in oil”, he adds.

This reality shows the wider change in investor sentiment since the 2015 Paris Climate Agreement, which affects both companies and governments. A number of big investors have joined groups like Climate Action 100+ to ask companies to put sustainability at the heart of their business models.

US electric car maker Tesla has effectively become an example of how the green economy is viewed by investors. Elon Musk demonstrates that the mass-market electric vehicle is viable, prompting all major car manufacturers to follow in its footsteps.

For governments around the world, the pressure to take political action is mounting, as the problem is increasingly becoming the focus of the public, partly due to direct action and media campaigns supported by Greta Thunberg.

Low oil prices offer a reason to pay attention to this appeal, as it is an opportune time to end fossil fuel subsidies or raise taxes on fossil fuel consumption. Such a move could also help to avoid a number of destabilizing anti-government protests seen in France, Iran, and Ecuador when energy price increases were proposed.

During the last recession cycle, between 2014 and 2016, when the oil price briefly dipped below 30 USD per barrel, India reduced its annual fossil fuel subsidies from 29 billion USD to 8 billion USD and even raise taxes on consumption. Part of the money raised has been diverted to renewable energy subsidies after the country set an ambitious target of up to 175 GW of mainly solar and wind power by 2022 – about twice the UK’s energy production capacity.

Since 2014, large part of the market share of the 14 OPEC countries has been taken by US shale production.

The non-cartel US has once again become the exporter of oil thanks to its shale revolution, outpacing Russia and Saudi Arabia in 2018 to regain its status as the world’s largest oil producer.

The collapse in oil prices, however, is weakening the shale industry’s ability to register profits and even push some producers into bankruptcy, adding further uncertainty to economic prospects alongside a coronavirus that could hinder Trump’s re-election as president later this year.

In Brussels, meanwhile, the President of the European Commission (EC), Ursula von der Leyen, has stepped up plans for European Union (EU) to achieve climate neutrality by 2050, despite the emergence of a so-called “climate change”.

“Today, it is no longer a question of whether there will be a European Green Deal or whether the EU will become climate neutral, but the question is how we go forward and how far the transition will be”, said Ursula von der Leyen.

This position is understandable given that EU citizens say they want the bloc to focus on climate change and environmental protection as its number one priority, a recent Eurobarometer survey of the European Parliament shows.