The Covid-19 pandemic will have a lasting effect on global energy demand

Posted on Oct 13, 2020 at 6:00 a.m.

We knew that the pandemic was affecting global energy consumption in unprecedented ways. The International Energy Agency (IEA) adds on Tuesday that the demand for oil, gas or coal will be permanently affected. Before the crisis, the IEA predicted energy consumption to increase by 12% between 2019 and 2030. It now forecasts growth limited to 9%, she announces in its “World Energy Outlook”: “The pandemic has caused more upheaval for the energy sector than any other event in recent history, leaving impacts that will be felt for years to come ”. We would have to wait until 2023 to return to the level of consumption before the crisis.

The year 2020 is unprecedented since World War II: energy consumption will have fallen by 5% compared to last year. Fossil energies are the most affected: -3% for gas, -7% for coal, -8% for oil. Electricity is less affected (-2%), while renewable energies show very slight growth.

Oil: the peak in ten years

Over the next decade, coal consumption would never return to its pre-crisis level, predicts the Agency in its central scenario. As for oil demand, its growth would come to an end “within ten years”, according to the IEA, but it is “too early to predict a rapid decline” beyond that date. In other words, the consumption of black gold would remain stable or in slight decline after reaching its peak. Rising incomes in emerging countries will continue to support travel needs, as will the consumption of petrochemical plastics, which will offset the decline in rich countries.

All the growth in energy demand will come from emerging countries, led by India, because consumption was already “on a declining trend” in the most advanced economies. The impact on commodity prices is not obvious. On the one hand, sluggish demand could pull them down. On the other hand, the crisis is also causing investment in oil and gas projects to fall: -18% in 2020. Ultimately, this means lower production, and therefore, on the contrary, upward pressure on prices.

CO2 and methane

This year of energy reduction logically translates into a drop in CO2 emissions. They would drop by 7% this year, falling back to their level ten years ago. For methane emissions, a much more powerful greenhouse gas than CO2, initial estimates suggest that the decline would not be as significant, according to the IEA. The agency predicts a resumption of the rise in CO2 emissions from 2021. The impact of the crisis will not be sufficient to bring the planet in line with the objectives of the Paris Agreement, underlines the report.

The slowdown will in any case have a significant impact in sub-Saharan Africa. For the first time in seven years, the number of Africans without access to electricity – some 580 million people – will increase. African states have focused their resources on fighting the pandemic this year, to the detriment of other priorities such as energy. The impoverishment of the population caused by the crisis also risks forcing some households to cancel their electricity subscription.

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