A new report by the International Energy Agency (IEA) has two important revelations about the impact of Covid-19 on energy demand.
It said that all fuels, except renewables, will record a decline in demand in the coming decades. The agency also said that global carbon dioxide (CO2) emissions this year are set for record fall, six times larger than the fall recorded after the 2008 financial crisis and twice as large as all previous reductions since World War II.
The record fall in CO2 emissions is not a good sign as it is a clear indicator of a massive economic shock and the fall may be temporary followed by more investments in dirty fuel, experts who drafted “Global Energy Review 2020” released on Thursday said.
“Resulting from premature deaths and economic trauma around the world, the historic decline in global emissions is absolutely nothing to cheer,” IEA Executive Director Fatih Birol said in a statement. “And if the aftermath of the 2008 financial crisis is anything to go by, we are likely to soon see a sharp rebound in emissions as economic conditions improve. But governments can learn from that experience by putting clean energy…” he added.
The report projects that energy demand will fall six per cent in 2020 – seven times the decline after the 2008 financial crisis. The IEA said, “The decline is unprecedented – the equivalent of losing the entire energy demand of India, the world’s third largest energy consumer.”
Depending on the duration of restrictive measures, developed countries are expected to see the biggest fall in energy demand – by nine per cent in the US and by 11 per cent in European Union.
The IEA said that renewables receive priority in the grid and are not asked to adjust their output based on demand which insulates them from the impacts of lower energy demand. This resulted in renewables grabbing a higher share in the energy mix with record-high hourly shares in Belgium, Italy, Germany, Hungary and eastern parts of the United States. The IEA also stated that demand for renewables this year and in coming years will increase due to low operating costs.
As a result of these trends in fall in oil and coal demand, global energy-related CO2 emissions are set to fall by almost eight per cent in 2020, a record drop. It will be six times larger than the one recorded in 2009. “The coronavirus pandemic has triggered a macroeconomic shock that is unprecedented in peacetime… these restrictions (lockdown) represent a challenging combination of a supply and a demand shock,” the report concluded.