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The coronavirus outbreak has caused a “staggering” drop in global energy demand, equivalent to India’s total annual consumption, according to a new analysis that identified the pandemic as the biggest impact on the energy system since World War II.
World energy demand could drop 6 percent in 2020, the International Energy Agency said in an annual review released Thursday. “We see a staggering decline in all fuels: oil, gas, coal, electricity, except for renewable energy,” Fatih Birol, executive director of the IEA, told the Financial Times.
The drop will reduce global carbon dioxide emissions to levels not seen since 2010, with an unprecedented 8 percent drop in 2020, according to the report.
“This year’s decrease in emissions will erase the growth of global emissions in the last 10 years,” Birol said. However, he warned that the decrease in emissions could be temporary without continued government support for green initiatives. “If the right policies are not implemented, we could well see a significant rebound in emissions next year,” he said.
Renewable energy is the only energy source that will experience growth this year, according to the report, which is based on data from the first 100 days of the year and includes new forecasts for 2020.
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The findings highlight the unprecedented impact of the virus pandemic, which has caused energy demand to plummet as countries go into shutdown, with the greatest impacts on the world’s largest economy.
While global demand for global energy will fall by 6%, the expected decline in the US. USA This year it is 9%, and an 11% drop is expected in the EU. Electricity use will experience its biggest decline since the Great Depression of the 1930s, the IEA said. “The Covid-19 pandemic represents the biggest shock to the global energy system in seven decades,” the report said.
The drop in energy demand this year will be far greater than the impact of the financial crisis, leading to a destruction of demand seven times greater, according to the report, which means that the blocking restrictions will be eased in the coming months. .
“There is still a downside risk for our numbers this year, and also next year,” said Birol. “We don’t know what the economic recovery will be like.”
World oil demand would decrease by a record 9.3 million barrels per day this year, the IEA estimated, while consumption in April alone was 29 million barrels per day less than a year ago.
The collapse in demand has caused confusion in the oil market, with Brent crude prices last week falling to the lowest level in 18 years and the US oil marker West Texas Intermediate falling into negative territory.
Birol was part of the discussions between world producers and the G20 nations on how to support oil prices. But the biggest production cuts, to take effect on May 1, have so far failed to support a free-falling oil market.
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Meanwhile, demand for coal will drop 8 percent this year, with natural gas 5 percent, according to the new forecast.
General electricity consumption will also decrease, but renewable energy is expected to increase, mainly due to new wind projects that are online in the United States. Because renewable energy has priority access to the grid, its share of energy production will also increase, and the IEA estimates that low-carbon sources could account for 40 percent of electricity generation this year.
“The energy industry emerging from this crisis will be significantly different from the one that came before it,” Birol said.
While the finances of oil companies have already taken a massive hit in the first quarter, with vast swaths of unprofitable production, clean energy companies have weathered the crisis much more easily.
“Business plans that are isolated to some extent from market signals, including renewable electricity projects, will emerge in the best financial position,” added Birol.
