Energy Demand to Plunge, Giving Boost to Renewables, IEA Says

The coronavirus crisis and cratering energy consumption will wipe out demand for fossil fuels and leave energy systems more reliant on renewable power, the International Energy Association has predicted.

The IEA is forecasting that the COVID-19 outbreak and resulting economic turmoil could push global energy demand down by 6%—its steepest fall since the second world war and a slump seven times greater than the dip in consumption caused by the Great Recession a decade ago. The crash in demand will be the equivalent of taking the entire country of India offline.

The collapse in demand will hit oil, coal and gas most heavily, while renewables—cheaper and favoured by government policy in many countries—will make up a larger and larger percentage of the world’s fuel mix.

Dr Fatih Birol, executive director at the IEA, said: “The plunge in demand for nearly all major fuels is staggering, especially for coal, oil and gas. Only renewables are holding up during the previously unheard of slump in electricity use.”

Renewable energy, including wind and solar power, is expected to grow by 5% this year, and make up 30% of the world’s shrinking electricity demand. Renewables are the cheapest source of energy for two-thirds of the world’s population and thus prioritised by grids when demand dips.

As renewables take new prominence in the global energy system, carbon emissions will fall by a projected 8% this year, the largest annual fall ever recorded. That unprecedented dip would mean the world is meeting the UN Environment Programme’s schedule for keeping global heating to 1.5 degrees Celsius—which will require the world reduce its emissions by 7.6% every year of the decade.

However, the decrease in emissions isn’t likely to last beyond the economic contraction, unless governments take action, Birol suggested.

“Resulting from premature deaths and economic trauma around the world, the historic decline in global emissions is absolutely nothing to cheer. And if the aftermath of the 2008 financial crisis is anything to go by, we are likely to soon see a sharp rebound in emissions as economic conditions improve,” she said.

She urged governments to centre clean power in their recovery strategies and stimulus packages.

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