On March 28th, Marie Toussaint proposed an unprecedented measure: the public takeover of the main European oil companies. The head of the Green Party for the European elections wants a European fund to buy the majority of shares of TotalEnergies, Eni, and others, to align their strategies with the rapid decarbonization of the economy. The main goal is to redirect the activities of oil companies towards investing in renewable energies instead of new drilling or paying dividends to shareholders. This takeover would also allow for the retraining and redirecting of employees towards future-proof jobs, utilizing their skills in offshore construction and drilling for projects such as offshore wind and geothermal energy.
While such a shift would indeed support the transition towards renewable energy, there are concerns that its contribution may be limited. The opening of new oil wells is primarily driven by global demand for oil, which could potentially be only delayed by the nationalization – or rather, “Europeanization” – of European companies, as other oil companies could step in to take their place. These foreign companies could gain market share and poach employees from European companies, potentially undermining the intended impact of the takeover.
Another stated goal is to leave certain oil reserves in the ground, a practice known as “stranding assets” in economic jargon. By reducing the global supply of oil in this way, the price of oil would increase, leading to a decrease in demand. Through this mechanism, Europeanization could help reduce CO2 emissions. However, it is important to note that these emission reductions would mainly occur outside of the European Union (EU), as 80% of the EU’s CO2 emissions will already be capped by 2027 through the European carbon markets. This means that emissions regulated by the EU will remain unaffected by oil price fluctuations.
Despite the benefits of stranding assets, it does come with a cost to European taxpayers. While this approach addresses the current focus of European decarbonization policies on reducing demand, it does not address the issue of competition in the global oil market. A reduction in global oil demand due to decarbonization efforts in the EU and other regions could lower oil prices, leading to increased demand in other regions. Without addressing these factors, some of the emission reductions in Europe could be offset by increased emissions in other parts of the world. This highlights the complexities and challenges of effectively addressing emissions reduction on a global scale.
