- Global energy demand to see record drop, predicts IEA
- Renewables more resilient than fossil fuels
- CO2 emissions to decline 8% to 2010 level
The International Energy Agency released a new report today that said energy demand will fall 6% in 2020. It's the largest decline in 70 years in percentage terms, the largest ever decline in absolute terms, and seven times the decline after the 2008 global financial crisis. It's equal to energy demand from India, the world’s third largest consumer, vanishing. The projections are based on the assumption that the lockdowns are progressively eased in most countries in the coming months, accompanied by a gradual economic recovery.
The impact is said to be the worst in advanced economies with demand falling 9% in the U.S. and 11% in the European Union. Electricity demand is set to decline by 5%, the largest drop since the Great Depression. Coal demand is set to fall 8%, the largest decline since the Second World War. Oil demand is expected to drop by 9% and natural gas by 5%.
The one exception to the declines is renewable energy, which is slated for a 1% increase in demand and is proving more resilient. This is because more projects are coming online and it's given priority over other sources either due to regulations or cheaper operating costs.
"Nature is healing," as the internet meme says, but it's impossible to celebrate considering the human cost. As a result of this historic plunge in fossil fuel demand, global energy-related CO2 emissions are set to fall by almost 8% this year, or almost 2.6 gigatonnes, reaching their lowest level since 2010. This would be the largest decrease in emissions ever recorded. For comparison, the financial crisis saw a drop of 400 million tonnes in 2009. However, the IEA warns that emissions will rebound once things return to normal and suggests governments design economic stimulus packages to steer the system onto a more sustainable path.
The organization is also concerned about energy security as investment in the battered sector drops and shut-ins prevent quick ramping up when demand recovers. According to new analysis from Rystad Energy, global oil and gas exploration and production (E&P) revenues will fall by about $1 trillion this year, a drop of 40% to $1.47 trillion from last year’s $2.47 trillion. "This drop not only undermines the companies’ solidity and reduces money available for investments and dividends, but also significantly cuts government tax revenue. It will be challenging for petro-states such as Russia and many Middle Eastern countries to sustain their budgets," says Rystad Energy’s upstream analyst Olga Savenkova.