The biggest global energy shock in 70 years triggered by the Covid-19 crisis will wipe out demand for fossil fuels, and renewable electricity will be the only resilient source to withstand this shock, says the world’s energy watchdog, IEA.
The outbreak of the coronavirus pandemic would wipe out fossil fuel demand by prompting a collapse in energy demand, which is seven times greater than the slump caused due to the global financial crisis, the International Energy Agency said.
Since the Second World War, the most severe plunge in energy demand would cause the world’s consumption of oil, gas, and coal, multi-decade lows, the IEA said in a report, adding that renewable energy would continue to grow.
This year, the role of clean electricity will be the largest ever in the global energy system and would aid in erasing a decade’s growth of global carbon emissions. Renewable energy’s steady rise, combined with the collapse in demand for fossil fuels, is the evidence.
Fatih Birol, the IEA’s executive director, 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 the slump in electricity use.”
The expected growth of renewable energy is by 5% this year to make up the world’s shrinking demand for electricity by almost 30%. Despite a global crisis, the growth of renewables could be a stimulus for fossil fuel companies to generate more clean energy for achieving their goals, according to Birol. However, governments should also include clean energy, most importantly, in the economic stimulus packages to ensure a green recovery.
“It is still too early to determine the longer-term impacts,” said Birol. “But the energy industry that emerges from this crisis will be significantly different from the one that came before.”
Covid-19 impacts have given rise to a crisis for fossil fuel commodities, including the collapse of oil market prices, that turned negative for the first time in the US earlier this month.
Global efforts to restrain the spread of Covid-19 have led to severe restrictions on travel as well as the worldwide economy to cause the biggest drop in global oil demand in 25 years.
After a decade long uninterrupted growth, demand for gas is expected to fall by 5%. As an energy source, it is the steepest drop since gas became widely used in the latter half of the previous century.
Coal demand would face its largest decline since the end of the Second World War and is forecast to fall by 8% compared with 2019 figures.