The COVID-19 pandemic represents the biggest shock to the global energy system in more than seven decades, with the drop in demand this year set to dwarf the impact of the 2008 financial crisis and result in a record annual decline in carbon emissions of almost eight per cent
A new report released by the International Energy Agency provides an almost real-time view of the COVID-19 pandemic’s extraordinary impact across all major fuels.
Based on an analysis of more than 100 days of real data so far this year, the IEA’s Global Energy Review includes estimates for how energy consumption and carbon dioxide (CO2) emissions trends are likely to evolve over the rest of 2020.
“This is a historic shock to the entire energy world. Amid the unparalleled health and economic crises, the plunge in demand for nearly all major fuels is staggering, especially for coal, oil and gas. Only renewables are holding up during the previously unheard-of slump in electricity use,” said Dr Fatih Birol, the IEA executive director. “It is still too early to determine the longer-term impacts, but the energy industry that emerges from this crisis will be significantly different from the one that came before.”
The Global Energy Review’s projections of energy demand and energy-related emissions for 2020 are based on assumptions that the lockdowns implemented around the world in response to the pandemic are progressively eased in most countries in the coming months, accompanied by a gradual economic recovery.
The report projects that energy demand will fall six per cent in 2020 – seven times the decline after the 2008 global financial crisis. In absolute terms, the decline is unprecedented – the equivalent of losing the entire energy demand of India, the world’s third largest energy consumer.
Advanced economies are expected to see the biggest declines, with demand set to fall by nine per cent in the US and by 11 per cent in the European Union. The impact of the crisis on energy demand is heavily dependent on the duration and stringency of measures to curb the spread of the virus. For instance, the IEA found that each month of worldwide lockdown at the levels seen in early April reduces annual global energy demand by about 1.5 per cent.
After 10 years of uninterrupted growth, natural gas demand is on track to decline five per cent in 2020. This would be the largest recorded y-o-y drop in consumption since natural gas demand developed at scale during the second half of the 20th century.