The Covid-19 pandemic is prompting energy companies world-wide to shed jobs and cut costs, and will have a fundamental impact on the pace and direction of global energy transition, the World Energy Council (WEC) said, pointing to the latest findings of its global surveys.
“The Covid-19 crisis is triggering the greatest financial capital re-allocation in history. No-one can predict the future,” the council’s secretary general, Angela Wilkinson, said.
“Only by convening informed and diverse viewpoints can the energy world help avoid a next global crisis and better prepare for the new normal. Now is the moment to shape a future of better energy for everyone and the environment."
According to 222 responses across 66 countries received during May 2020, a third of energy companies plan to shed jobs, putting 350,000 jobs at risk across G7 economies, WEC said - without differentiating between different types of energy companies such as renewables companies or oil & gas firms.
A third of energy companies plan to shut one or more business units in response to the conditions caused by the pandemic, the council said.
Also, four out of five energy businesses plan drastic cost reductions. Four in ten energy organisations report cutting operational expenses by more than 10%.
An estimated reduction of $200-400bn in capital expenditure (CAPEX) is expected based on pre-Covid estimates of a total energy CAPEX of $1.8 trillion and the council’s survey findings.
Eighty percent of organisations are making significant reallocation in investments towards digitalisation, R&D programmes and environmental, social and governance (ESG) activities, WEC added.
A third of the companies polled expect a slight increase, and another 8% a significant increase in sustainability and environmental activities, while 44% see no change, and 15% expect a decrease.
Very similar percentages are noted for companies expecting R&D into transformational new businesses to rise.
Almost a quarter (22%) of organisations are accelerating their climate protection programmes, by adopting stricter climate targets or shortening the time horizon for climate targets, while another 25% is delaying climate change programmes to prioritise maintaining cash flow.