Governments around the globe are expected to spend trillions of dollars in stimulus following the COVID-19 crisis, that is going to be a lifeline for infrastructure, renewables, and other project-cargo generating activities, perhaps none more so than the ailing energy sector.

The energy cycle now playing out is anything but normal. it couldn’t be envisioned the oil & gas sector — worth trillions of dollars and essential to modern transport and  energy generation will dissolve, but competition from shale, global climate change, and now the consequences of COVID-19 seems to be altering the worldwide energy equation and accelerating change in ways we are just starting to understand.

The oil majors, assuming lower oil prices and extended demand destruction because of the pandemic, are cutting their capital spending plans and writing down asset values by billions of dollars.

For breakbulk logistics providers, capital spending cutbacks within the hydrocarbon sector foreshadow a painful lack of oil- and gas-related project cargo down the road, underlining the importance of diversification.

So-called rich-world countries are expected to spend $17 trillion in creating a stimulus to keep off a worldwide economic depression within the wake of the COVID-19 crisis, consistent with the Organization for Economic Cooperation and Development (OECD). Early indications are that an outsized portion of these trillions of dollars is going to be spent in ways which would stimulate the economy.

According to a July 6 2020 report from DNV/GL, COVID-19 stimulus packages won't have an instantaneous impact on the worldwide energy mix, as money will attend both fuel and low-carbon projects.

At an equivalent time, the Denmark-based registrar and classification society said it expects the COVID-19 pandemic to trigger lasting behavioral changes which will affect long-term energy demand: working from home, concomitant cuts to commuter transportation spending and car purchases, and a long-term and painful impact on aviation. DNV/GL predicts transport energy use will never reach 2019 levels. Iron ore production, a crucial industrial use of hydrocarbons, will also stay below pre-COVID-19 levels, suffering from lower demand for commercial construction, among other things.

Consistent with a report released by the International Energy Association (IEA) June 18, 2020 many of the governments planning massive stimulus programs have requested the IEA’s help to style sustainable recovery spending. The IEA is recommending that they spend across several sustainable sectors, including low-carbon electricity generation — i.e., wind and solar; clean transport; sustainable production and use of fuels; and support for innovations in new technology, like low-carbon hydrogen production and modular nuclear reactors.

DNV/GL expects gas to become the world’s largest source of energy during the approaching decade, but it notes that a lot of investors, wary of the eternal volatility of hydrocarbon prices, may even see renewables, with their low operating costs, as a far better choice. Government policies and tax regimes also will drive decision-making.

Halfway through 2020, the thought of “future-proofing” feels more hubristic than ever. DNV/GL predicts that the pandemic will “take the wind out of the sails of the planet economy for several years.” Although the worldwide economy will still double in size by 2050, the society predicts energy demand is going to be about an equivalent size it is now, because of the changes caused by the COVID-19 pandemic and continued improvements in energy efficiency.