Economy

Extended Covid-19 pandemic can usher slowest energy demand growth since 1930s: IEA

Our Bureau New Delhi | Updated on October 13, 2020 Published on October 13, 2020

Rise in poverty levels may have made basic electricity services unaffordable for over 100 mn people worldwide, who earlier had electricity connections

The Covid-19 crisis has caused more disruptions than any other event in recent history, according to the International Energy Agency (IEA).

In its flagship publication, The World Energy Outlook 2020, IEA has said that global energy demand is set to drop 5 per cent in 2020, energy-related CO2 emissions by 7 per cent, and energy investment by 18 per cent.

According to the IEA, if the global economy returns to its pre-crisis size only in 2023, the Covid-19 pandemic would usher in a decade with the lowest rate of energy demand growth since the 1930s.

In the Stated Policies Scenario, which reflects today’s announced policy intentions and targets, global energy demand rebounds to its pre-crisis level in early 2023. However, this does not happen until 2025 in the event of a prolonged pandemic and deeper slump, as shown in the Delayed Recovery Scenario. Slower demand growth lowers the outlook for oil and gas prices compared with pre-crisis trends. But large falls in investment increase the risk of future market volatility, the IEA said.

Also read: Power demand crosses pre-Covid-19 levels, begin outpacing previous fiscal levels

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

The worst effects of the crisis are felt among the most vulnerable. The pandemic has reversed several years of declines in the number of people in Sub-Saharan Africa without access to electricity. And a rise in poverty levels may have made basic electricity services unaffordable for more than 100 million people worldwide who had electricity connections, the IEA said.

According to the IEA, renewables take starring roles in all scenarios, with solar centre stage.

Also read: Empowering consumers in power sector

“Supportive policies and maturing technologies are enabling very cheap access to capital in leading markets. Solar photovoltaic is now consistently cheaper than new coal- or gas-fired power plants in most countries, and solar projects now offer some of the lowest-cost electricity ever seen. In the Stated Policies Scenario, renewables will meet 80 per cent of global electricity demand growth over the next decade. Hydropower remains the largest renewable source, but solar is the main source of growth, followed by onshore and offshore wind,” the IEA said.

“I see solar becoming the new king of the world’s electricity markets. Based on today’s policy settings, it is on track to set new records for deployment every year after 2022,” Birol said.

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Published on October 13, 2020
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