Health crisis and climate emergency: an opportunity to accelerate the diversification of oil companies' activities?

Health crisis and climate emergency: an opportunity to accelerate the diversification of oil companies’ activities?

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The years preceding the health crisis linked to the Covid-19 pandemic, marked in particular by the oil counter-shock of 2014 and the signing of the Paris Climate Agreement of 2015, saw the emergence of (weak) signals of diversification of the activity and investment of certain oil companies—essentially the European majors—towards low-carbon energies.1 While these announcements could have a knock-on effect on the sector, they are still very insufficient in view of the effort required to initiate a rapid and profound transition of the sector towards decarbonisation,2 and are contested by several civil society actors.3 Faced with the major consequences of the health crisis on the energy market, the oil majors are at a crossroads: will they resume their traditional activities once the health crisis is over or will they intensify the diversification of their activities towards clean energy?

The oil and gas sector is currently operating in an uncertain environment. Like all economic sectors, the oil and gas players must first of all deal with the health crisis which, through recent containment measures, has slowed down the on-site activity of these industrial groups, mainly their supply chains, and postpones the resumption of operations to an imprecise horizon. The sector then faces a crisis in the oil market which materialises by a dizzying drop in the price of a barrel, from 70 dollars at the beginning of January to around 20-30 dollars in recent months. This sharp decrease is explained by the drop in world oil demand of almost a third, as a direct consequence of the containment measures and the almost total shutdown of the transport sector, but also by the recent tensions between the main hydrocarbon-producing states (Russia, Saudi Arabia and the United States), which led to a significant increase in oil supply at the beginning of March. These countries have since managed, albeit painfully, to limit hydrocarbon production to 9.7 million barrels per day4 as of May 1, 2020, with a limited upward effect on the market price of oil for the time being.5 But beyond these unprecedented but by nature cyclical changes, the sector is above all facing a systemic challenge related to the fight against climate change. The need for a rapid and deep decarbonisation of the economy calls into question the activity of extracting fossil fuels. Such a challenge could be reinforced in the context of recovery plans following the health crisis, such as the European Union’s plan, based in particular on the Green Deal.6


  1. BP, for example, is committed to achieving carbon neutrality by 2050 (; Total wants to become a “major player in renewable energies” and recently announced that its European activities will be carbon neutral by 2050 (; Equinor is presenting a five-billion-euro investment plan to reduce its emissions (
  2. For example, while Shell has announced that it will spend $4 billion a year on renewable energy starting in 2020, it is spending $25 billion a year on its oil and gas operations at the same time. Similarly, in its recent announcement of carbon neutrality, Total says nothing about its operations outside the European Union, which make up a large part of its business.
  3. or
  6. See IDDRI’s blogpost on this topic:



Read the full blog here.

This blog first appeared on the IDDRI site. 

Author: Romain Schumm, Nicolas Berghmans, IDDRI. 

Image courtesy of Carbon Visuals via Flickr.

The views are those of the author and not necessarily those of ETTG.

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