New York — Global energy demand is set to fall by 6% in 2020, the largest in 70 years, due to the coronavirus pandemic, an expert with the International Energy Agency said June 24, though S&P Global Platts Analytics expects a more moderate impact
Source: S&P Global Platts, by Aastha Agnihotri & Jared Anderson
There could be a 6% reduction in total global energy demand in 2020 compared to 2019 as a result of coronavirus-related lockdowns, Peter Fraser, head of gas, coal and power markets at IEA, said during a webcast seminar hosted by IEA and non-profit Electric Power Research Institute.
But not every fuel is going to be affected in the same way, Fraser said, with fossil fuels impacted more than non-fossil fuels.
The international energy market watchdog estimates there will be a significant decline in coal demand because of impacts on developing economies and relatively low natural gas prices in more advanced economies, Fraser said.
“The combination of those two factors are really hitting coal very hard,” he said.
In the case of natural gas, the impact will be somewhat more modest, with global demand for the fuel falling 4% in 2020 followed by a rebound in 2021 where it makes up all the lost ground, Fraser said.
This is because gas is taking away business from coal in the power sector amid low prices, he said.
The agency expects an 8% reduction in 2020 oil demand year-over-year, but a small reduction in nuclear demand, while renewables remain relatively unaffected.
In terms of global power demand, the IEA is seeing a 5% reduction in 2020, which would be the largest since the US Great Depression in the 1930s, Fraser said, adding the US is largely in line with that estimate.
However, Platts Analytics estimates the US will see a more moderate power demand impact from the pandemic in 2020.
“US [Lower-48] loads have recovered and are close to the loads we would expect with current weather in the absence of the pandemic,” Manan Ahuja, manager of North American power analytics and modelling, said in an email.
Even with the mild winter, we had at start of the year, overall 2020 loads in the US will likely end up being about 2% lower year-over-year, Ahuja said, adding that assumes we have a normal summer and large-scale lockdowns do not happen again from a second wave of the coronavirus pandemic.
Platts Analytics expects power demand will shrink by 1.2% on the year in 2020 across the major markets globally, also assuming normal weather and no significant second waves of infections, Bruno Brunetti, head of global power planning, said in an email.
Emissions, other impacts
Fraser said the IEA expects global energy-related carbon dioxide emissions to fall nearly 8% in 2020, the lowest level in a decade with reduced coal use contributing most, but experience suggests that a large rebound is likely post crisis.
Other experts on the panel agreed.
Tom Wilson, principal technical executive at EPRI, pointed out that world wars and earlier pandemics have not stopped greenhouse gas emissions growth.
He asked, how many people have destroyed their cars because they have been using them less frequently?
“Human suffering and economic collapse are not the way to reduce emissions,” Wilson said.
He has been researching broad societal themes and lasting impacts from the pandemic over the past few months and said the over-riding theme is the lasting impacts are likely things that already existed, but may be accelerated due to the pandemic.
Examples include digitalization, the demise of brick and mortar retail and rising nationalism. Slowing trends include urbanization, shared economy and travel, Wilson said.
One interesting behavioral change is increased working from home. Companies have been surprised at how effectively it is working, he said, with many finding themselves more nimble.
However, it is less clear how working from home more might impact GHG emissions levels.
“It’s not a slam dunk that less commuting will reduce emissions,” Wilson said.
With regard to the financial sector, Morgan Scott, principal project manager for sustainability at EPRI, said her group has seen extensive growth in money flowing into ESG funds.
EPRI is not sure exactly why there has been significant growth in those funds during a time of economic downturn, but something is happening around ESG performance, Scott said.