Global energy demand on track to fall 5% in 2020

Oscar Williams-Grut
·Senior City Correspondent, Yahoo Finance UK
·2 mins read
oil pump
A pump jack operates in an oil field in Midland, Texas, US. Photo: Tony Gutierrez/AP

The COVID-19 pandemic has left global energy demand on track to decline by 5% this year, according to an in-depth report written by one of the most highly-regarded bodies in the sector.

The International Energy Agency (IEA), a global inter-governmental body that covers the energy market, on Monday said global energy demand was unlikely to rebound to pre-pandemic levels until 2023.

COVID-19 has grounded planes around the world and left cars parked in garages as people are forced to work from home rather than commute. Demand for fuel has collapsed as a result.

The IEA said energy-related CO2 emissions are expected to decline by 7% this year as a result and energy investment should fall by 18%. The market is expected to gradually pick-up over the next few years.

Coal usage is never likely to return to pre-pandemic levels, the IEA. Coal is forecast to fall below 20% of the global energy mix by 2040 for the first time since the Industrial Revolution.

The forecasts came in the IEA’s flagship World Energy Outlook, an annual report compiled by the Paris-based agency and published on Tuesday.

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The IEA said a prolonged pandemic could lead to “a decade with the lowest rate of energy demand growth since the 1930s.” This scenario would require a delay to vaccine development, air travel remaining rare, and a continuation of work from home.

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Despite the decline in emissions and energy usage this year, the IEA said the world was still not on track to hit climate goals set out in the 2015 Paris Agreement.

The agency urged governments around the world to use the pandemic as an opportunity to adopt ambitious energy policies that could help avert climate catastrophe.

“The era of global oil demand growth will come to an end in the next decade,” said Fatih Birol, executive director of the IEA. “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.

“Only faster structural changes to the way we produce and consume energy can break the emissions trend for good. 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.”

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