PARIS – Global energy demand is set to drop 5% and carbon dioxide emissions by 7% in 2020 as a consequence of the COVID-19 pandemic, which has presented a chance to accelerate the transition to renewables, the International Energy Agency said on Tuesday.
The agency compared four hypothetical scenarios for the sector over the next decade in its flagship World Energy Outlook report.
The publication this year acknowledged the disruptive effects of COVID-19 on energy demand.
In its immediate outlook for 2020 the IEA forecast that investment in the energy sector would plummet 18%. Oil demand is expected to drop 8% and coal 7% while renewable energy sources are set to pick up slightly.
“The era of global oil demand growth will come to an end in the next decade,” said Fatih Birol, the IEA’s executive director. “But without a large shift in government policies, there is no sign of a rapid decline. Based on today’s policy settings, a global economic rebound would soon push oil demand back to pre-crisis levels.”
The decrease in fossil fuel this year is expected to bring carbon emissions down with it by 2.4 gigatons, to levels last seen a decade ago, but output of methane, another greenhouse gas, did follow suit, according to initial studies.
“Despite a record drop in global emissions this year, the world is far from doing enough to put them into decisive decline,” Birol said.
“The economic downturn has temporarily suppressed emissions, but low economic growth is not a low-emissions strategy – it is a strategy that would only serve to further impoverish the world’s most vulnerable populations.
“Governments have the capacity and the responsibility to take decisive actions to accelerate clean energy transitions and put the world on a path to reaching our climate goals, including net-zero emissions.”
Before the COVID-19 pandemic swept the globe, the IEA had predicted a 12% increase in energy demand between 2019-2030. That has now been revised down to 9%, should the global economy recover to pre-crisis levels by 2021, or 4% if the economy does not recover until 2023.
Renewable energy sources are set to grow in all four of the IEA’s scenarios.
In its first framework, called Stated Policies Scenario, or STEPS, which hypothesizes what would happen should the economy recover next year with current energy policies in place, renewable energy would meet 80% of the growth in demand for electricity.
Much of the emphasis would be placed on solar power, which is now often cheaper than coal and oil production.
“I see solar becoming the new king of the world’s electricity markets. Based on today’s policy settings, it is on track to set new records for deployment every year after 2022,” Birol said. “If governments and investors step up their clean energy efforts in line with our Sustainable Development Scenario, the growth of both solar and wind would be even more spectacular – and hugely encouraging for overcoming the world’s climate challenge.”
On the opposite end of the graph is coal, which is set to see its share of the global energy mix shrink to below 20% by 2040 for the first time since the Industrial Revolution.
By 2025, coal production is predicted to fall by 100 gigawatts in the United States and 75 in the European Union amid a rising renewables market and competition from natural gas.
While coal production in developing nations in Asia continues to grow, it is not enough to offset a drop in demand elsewhere, the IEA report said.
The report highlighted the uncertainty looming over the world’s oil market, given the unpredictability of a potential surge in demand amid increased mobility in developing nations, which could counteract any reductions elsewhere in the world.