The Strategist

IEA: Global demand for energy will collapse in 2020

05/01/2020 - 02:45

The global energy demand amid the pandemic will decline by 6% in 2020. It will be the strongest decline in consumption over the past 70 years, follows from a new forecast by the International Energy Agency (IEA). Demand for oil may fall by 9%, for coal - by 8%, for gas - by 5%. Simultaneously, carbon dioxide emissions will significantly decrease this year in the world.

The COVID-19 pandemic has become the biggest shock to energy markets since World War II, according to a study by the International Energy Agency. According to its calculations, the demand for energy in 2020 in the world will decrease by 6%. The fall is seven times greater than it was during the 2008 crisis.

In absolute terms, the decline will be equal to the annual consumption of India, and this is the third largest market in the world.
In the first quarter of 2020, energy demand has already decreased by 3.8%, including coal - by 8%, oil - by 5% (this was caused by restrictions on transport, which provides 60% of demand: by the end of March, the intensity traffic on roads decreased by 50%, aviation traffic - by 60%), gas - by 2%. By the end of the year, oil demand, according to the IEA forecast, will fall by 9% (or 9.3 million barrels per day). The main decline will be noted in April, May and June, there will be no positive dynamics in any month.

The largest decline in demand will be noted in developed countries: it is expected that in the USA it will fall by 9%, in the European Union - by 11%. The IEA calculated that every month the quarantine — self-isolation of the population — is reducing global energy demand by 1.5%. Due to quarantine measures, the demand for electricity sharply decreased (minus 2.6% in the first quarter, minus 5% for the whole year).

Simultaneously with all this, carbon dioxide emissions will be reduced in the world (minus 8%, in the first quarter the decline was already 5%). Demand in the renewable energy segment will increase (though by less than 1%). All the changes will affect the structure of electricity generation - the share of low-carbon energy (wind, solar, hydro and nuclear energy) in 2020 can grow up to 40% against the background of a decrease in coal and gas consumption. According to the results of the first quarter, renewable sources (without nuclear energy) already accounted for 28% of generation (26% in the first quarter of 2019).