By David Callaway, Callaway Climate Insights

SAN FRANCISCO (Callaway Climate Insights) — “You’ve been given a rare gift George,” said Clarence the angel in It’s a Wonderful Life. “The opportunity to see what life is like without you.”

This quote leaped to mind as the price of oil slipped into unprecedented negative territory Monday for the May futures contract. While that won’t help any of us at the gas pump this summer, the collapse of oil during the Covid-19 crisis is more than just a devastating comeuppance for the fossil fuel industry.

It’s a rare opportunity to view what the world would be like without oil, and the riches that come with it. Obviously, oil prices will come back once industry starts up again in a month or two. The June futures contract, for example, closed at $21.16 a barrel Monday, down 15% but still worth something.

Prices might never threaten $100 again, though. Which means oil companies and oil-producing nations no longer have the luxury of stalling for the Godot-like “peak oil” moment when global production reaches its maximum rate. That may already be over, with billions of barrels still left in the earth.

Instead, promises by energy companies such as BP Plc earlier this year, and by Royal Dutch Shell just last week, that they will be carbon neutral in the next 10 to 30 years will become increasingly important for investors to see bear fruit.

The oil giants, and the banks who finance them, have always been denigrated by the environmental community — and for good reason, as they are responsible for more than 75% of global greenhouse emissions.

But one of the reasons the banks have been reluctant to give up these giants as clients is because of the potential that they will be the ones who come up with the renewable strategies and initiatives that will help the world achieve carbon neutrality. Indeed, Reuters reported that the six global energy firms who collectively make up “Big Oil” only spent only 1% of their budgets on renewable energy in 2018.

That will certainly increase now that renewables are suddenly the place where growth can be found. French oil giant Total, for example, will maintain investment in its new energies division despite capital budget cuts due to weak prices, according to Fortune. Others will follow, and estimates on what Big Oil might spend this year on renewables range more in the upper single digits to low teens.

For years, energy investors have wondered what Big Oil will do once it begins to run out of oil in the ground. Because of the global withdrawal of demand spurred by the coronavirus, we are now about to find out.

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