European oil stocks continue to drop as the world shifts to renewables

The market value of European oil has plummeted by €360 billion in 2020 as renewable companies continue to go from strength to strength.

Investors are moving away from fossil fuels in favour of their eco-friendly counterparts owing to the undeniable threat of climate change, the general unsustainability of oil and gas in the face of economic crisis and the reduction in demand owing to the coronavirus pandemic.

Europe is hardly the only oil market struggling. The price of oil in the US dropped below zero earlier this year for the first time in history owing to significantly reduced demand as all sector ground to a halt during the lockdown.

Several European companies have begun selling shares or turning to renewable energy in order to recuperate losses as the price of oil continues to slump.

Furthermore, strikes in Norway have forced the closure of several prominent North Sea oilfields as the corporations that run them seek resolutions to the crisis.

The 16 oil and gas groups on the European stock market have seen a 53% drop in market value, according to data by Bloomberg.

BP, Shell, Repsol and Eni have lost around 60% each this year when converted to local currencies with Total having sustained a roughly 50% decrease in market value.

New pledges from global governments, such as the EU's pledge to become carbon-neutral by 2050 as a part of the European Green Deal - its proposed green economic recoveries from the coronavirus pandemic - have also led to a slump in oil demand and a general distrust of fossil fuels.

The UK has also placed renewable energy at the forefront of its economic recovery, such as when they announced their intention to have wind energy power all UK homes by 2030, in a bid to reduce the country's reliance on fossil fuels.

In contrast to the oil and gas industry, companies championing more renewable energy sources have noticed spikes in market value.

Dutch energy company Alfen has reported a 230% jump, causing it to top the European Stoxx 600 leaderboard while UK-based ITM Power, who specialise in green hydrogen have had a 220% increase in market value.

In a recent market report, analysts at Citi said the EU’s new climate targets together with new goals from countries ranging from Japan to Australia “all point to a global watershed moment”.

They added: “After over one hundred years of false starts, government policy is now firmly supportive of hydrogen as an enabler of CO2 reduction targets."

A study from EnAppSys found that negative energy prices swept across Europe during the lockdown, with most of it being generated by renewable sources. Wind power accounted for the largest net contribution to energy generation during this period.

This further hints at a desolate future for the world of traditional energy.

Back to Homepage

Back to Energy & Utilities