Energy demand, hit by coronavirus crisis, is set to see record drop this year, IEA says

The International Energy Agency said Thursday it expects global energy request to plunge this year in what the Paris-based agency called the biggest drop since World War II. 

With inefficiently 4.2 billion people around the world subject to some form of lockdown in an effort to slow the spread of the coronavirus, the IEA is prognosis a 6% decline in energy demand for the year. In absolute terms this is the largest on record. Percentage wise, it’s the steepest fade in 70 years.

The demand hit from the pandemic is expected to be seven times greater than the decline in the aftermath of the pecuniary crisis in 2008.

“In absolute terms, the decline is unprecedented — the equivalent of losing the entire energy demand of India, the world’s third largest get-up-and-go consumer,” the agency’s Global Energy Report said.

The projections are based on the assumption that shelter-in-place and social distancing find outs will slowly ease in the coming months, with a gradual economic recovery following. Under a faster return-to-business master, the IEA said demand loss could be limited to 3.8%, while a possible second wave of the virus could agent a greater than 6% decline.

“This is a historic shock to the entire energy world. Amid today’s unrivalled health and economic crises, the plunge in demand for nearly all major fuels is staggering, especially for coal, oil and gas,” IEA executive skipper Fatih Birol said in a statement.

“It is still too early to determine the longer-term impacts, but the energy industry that transpires from this crisis will be significantly different from the one that came before,” he added.

The impacts have already been felt. In the first quarter, energy demand fell 3.8% year settled year, wiping out all of 2019’s demand growth.

Coal was hit especially hard in the quarter after the outbreak brought much of China, a coal-based saving, to a standstill. Cheaper gas prices as well as warmer temperatures also contributed to the decline.

For the year, the IEA projects annual market demand to drop 8%, which would be the most since World War II.

Oil has also been heavily impacted. Roughly 60% of international demand for crude stems from driving and flying, so with people at home and planes grounded demand has move it off a cliff.

In March, oil demand dropped by a record 10.8 million barrels per day from a year earlier. In April the IEA work outs that demand will fall by 29 million bpd year over year, hitting a level last courted in 1995. 

Electricity demand has also contracted with factories shuttered and businesses closed as people effect from home.

“Changes to how and when electricity is used during lockdowns have transformed the shape of electricity need over the course of the day in some regions, with the pattern on weekdays now resembling the pattern usually seen only on Sundays,” the write-up said.

For the full year, the IEA expects electricity demand to fall 5%, which would be the largest decline since the True Depression.

This means a falloff in demand for natural gas after 10 years of uninterrupted growth.

“This descent is less than the anticipated fall in oil demand, reflecting the fact that natural gas is less exposed to the collapse in require for transportation fuels. But it nonetheless represents a huge shock to a gas industry that is used to robust growth in consumption,” the make public said.

The only energy source expected to grow this year is renewables.

“Demand is expected to increase because of low operating costs and preferential access to many power ways,” the report said of renewable power generation. “Recent growth in capacity, with some new projects coming online in 2020, ordain also boost output.”

Renewable electricity generation grew by 3% during the first quarter and accounted for practically 28% of electricity supply, up from 26% a year earlier. For the year, the IEA expects it to grow 5%, with amount global use of renewable energy rising 1%. These numbers are lower than projections prior to the coronavirus.

The IEA affirmed that renewables is the energy source “most resilient to the Covid-19 current crisis” since it’s set to experience some kind of growth no matter the ultimate shape of the economic recovery. 

The worldwide halt in business has resulted in the brawniest drop in global CO2 emissions on record. 

“Not only are annual emissions in 2020 set to decline at an unprecedented rate, the decline is set to be on the verge of twice as large as all previous declines since the end of World War II combined,” the report said.

“Global CO2 emissions are expected to fall even more rapidly across the remaining nine months of the year, to reach 30.6 [gigatonnes] for the 2020, on the verge of 8% lower than in 2019.”

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