Energy demand could fall as much as 6% for the entire year due to shutdowns in response to the novel coronavirus pandemic, according to a new report from the International Energy Agency (IEA).
The Paris-based intergovernmental agency’s latest Global Energy Review was released today (April 30). The report highlights how international measures to control Covid-19, especially during March, have resulted in significant shifts in short and long-term demand for coal, oil, and renewable energy.
“The decline is unprecedented – the equivalent of losing the entire energy demand of India, the world’s third largest energy consumer,” the IEA said in a press release. Global CO2 emissions would also fall by 8%, or nearly 2.6 gigatonnes, six times larger than the reduction caused by caused by the global financial crisis of 2008.
Global energy demand fell by 4% in the first quarter of this year, with demand for coal experiencing the largest decline of almost 8% compared to the same period last year, according to the report. The biggest reasons were a drop in demand from China, a coal-based economy that was hardest hit by the pandemic, as well as mild weather and the increased availability of cheap gas and renewables.
Global oil demand also fell by nearly 5% in the first quarter due to significant shifts in the aviation and transportation industries. ”By the end of March, global road transport activity was almost 50% below the 2019 average and aviation 60% below,” the report said.
Any upticks in the demand for electricity among residential users have been “far outweighed by reductions in commercial and industrial operations,” resulting in a reduction in demand by “by 20% or more during periods of full lockdown in several countries”.
After analyzing several weeks of daily data from 30 countries, the IEA says a recovery from the countries undergoing partial or full lockdowns will be gradual and “accompanied by a substantial permanent loss in economic activity, despite macroeconomic policy efforts.” It also estimates the long-term impact of Covid-19 on global energy demand for the year to be “the largest in 70 years in percentage terms and the largest ever in absolute terms” and even greater in countries like the US and regions like the European Union.
The decline which would be “more than seven times larger than the impact of the 2008 financial crisis,” will be amplified if lockdowns among major countries were extended for several months. The IEA’s data analysis showed that “for each month of worldwide lockdown at the levels seen in early April reduces annual global energy demand by about 1.5%.”