Cheaper oil: A turning point in Paris climate talk?

The 2015 Paris climate conference is designed to achieve a legally binding agreement on climate change for the first time in over 20 years; however, the participants face a much tougher task in striking a new deal after the disappointing preparatory climate change talks in Lima. However, falling oil prices have created more room to maneuver for the forthcoming global climate talks than previously thought. Average global oil prices have plunged from USD 110 per barrel in June 2014 to approximately USD 60 per barrel in May 2015. With the sharply falling oil prices and the downward pressure on gas and coal prices, both the removal of fossil fuel subsidies (FFS) and the implementation of a carbon tax could be conducted without raising energy costs. A growing body of research suggests that removing FFS and implementing a carbon tax could significantly reduce carbon emissions. Thus, the approximately 50% drop in oil prices has provided a window of opportunity to reduce carbon emissions by removing FFS and internalizing climatic externalities worldwide. As this window will not last forever, both these measures should be implemented quickly and be considered central to the Paris climate change conference. Compared with the lack of success in the previous two decades of climate diplomacy, these two measures constitute technical and economic factors that will make a difference in the 2015 UN climate change conference.