Counting own goals: High-level assessment of the economic relationship between the ICT and the Oil and Gas sectors and its environmental implications

TL;DR

This paper assesses the economic and environmental impacts of the ICT sector's relationship with the Oil and Gas industry over 20 years, highlighting significant financial flows and potential emissions from digitalization.

Contribution

It introduces a high-level assessment of ICT-O&G economic links, classifies digital activities in O&G, and explores the environmental implications of digitalization and AI growth.

Findings

On average, 2% of ICT financial flows go to O&G.

In 2022, over $4 are spent on O&G for every dollar on renewables.

Case studies estimate potential emissions from digitalization of oil activities.

Abstract

The ICT sector has been one of the most successful and fastest-growing industry in history. While the environmental issue in this sector has mainly been addressed by assessing its footprint and, to a lesser extent, its avoided emissions or net impacts, the additional emissions from the digitalization of carbon-intensive activities, such as the Oil and Gas (O&G) sector, have rarely been discussed. By doing so, we have forgotten to count the own goals conceded over more than 20 years in the troubled relationship between the ICT and the O&G sector. Using input-output analysis and economic data ranging from 2000 to 2022, we observe that on average 2% of the annual financial flows from the ICT sector are directed towards the Oil and Gas sector. Considering the significant growth of the ICT sector during this time, O&G companies now spends a massive amount on ICT products in absolute terms. It also appears that in 2022, for each dollar going from the ICT sector to the renewable and nuclear energy industry, more than $4 go to the O&G industry. In addition, we also provide a classification of digital activities in the O&G sector to facilitate environmental assessments and present two case studies estimating potential added emissions from the digitalization of oil activities. Finally, looking at the immense growth in generative AI, we provide an exploration of causal links between the current success of GPU technology and its intricate early relationship with the O&G sector. This article lays the groundwork for defining the nature of the relationship between ICT and O&G, which predates the current hype surrounding generative AI. We provide the analytical elements needed to begin estimating the added emissions from the digitalisation of O&G.