Coal set for largest decline since World War II, says IEA

In a historic shock amid COVID-19 pandemic, coal is set for the largest decline since World War II alongside sharp reductions for oil and gas, the International Energy Agency (IEA) said in a report

Photo courtesy- social media
Photo courtesy- social media


In a historic shock amid COVID-19 pandemic, coal is set for the largest decline since World War II alongside sharp reductions for oil and gas, the International Energy Agency (IEA) said on Thursday in a report.

Nuclear power is less affected, while renewables are the only energy source on the rise in 2020, thanks to priority access to grids and low operating costs.

The COVID-19 pandemic represents the biggest shock to the global energy system in more than seven decades, with the drop in demand this year set to dwarf the impact of the 2008 financial crisis and result in a record annual decline in carbon emissions of almost eight per cent.

The report provides an almost real-time view of the COVID-19 pandemic's extraordinary impact across all major fuels.

Based on an analysis of more than 100 days of real data so far this year, the IEA's Global Energy Review includes estimates for how energy consumption and carbon dioxide (CO2) emissions trends are likely to evolve over the rest of 2020.

"This is a historic shock to the entire energy world. Amid today's unparalleled health and economic crises, 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," said IEA Executive Director Fatih Birol said.

"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."

The Global Energy Review's projections of energy demand and energy-related emissions for 2020 are based on assumptions that the lockdowns implemented around the world in response to the pandemic are progressively eased in most countries in the coming months, accompanied by a gradual economic recovery.

The report projects that energy demand will fall six per cent in 2020 -- seven times the decline after the 2008 global financial crisis.

In absolute terms, the decline is unprecedented -- the equivalent of losing the entire energy demand of India, the world's third largest energy consumer.

Advanced economies are expected to see the biggest declines, with demand set to fall by nine per cent in the US and by 11 per cent in the European Union.

The impact of the crisis on energy demand is heavily dependent on the duration and stringency of measures to curb the spread of the virus.

For instance, the IEA found that each month of worldwide lockdown at the levels seen in early April reduces annual global energy demand by about 1.5 per cent.

Changes to electricity use during lockdowns have resulted in significant declines in overall electricity demand, with consumption levels and patterns on weekdays looking like those of a pre-crisis Sunday.

Full lockdowns have pushed down electricity demand by 20 per cent or more, with lesser impacts from partial lockdowns.

Electricity demand is set to decline by five per cent in 2020, the largest drop since the Great Depression in the 1930s.

At the same time, lockdown measures are driving a major shift towards low-carbon sources of electricity including wind, solar PV, hydropower and nuclear.

After overtaking coal for the first time ever in 2019, low-carbon sources are set to extend their lead this year to reach 40 per cent of global electricity generation - six percentage points ahead of coal.

Electricity generation from wind and solar PV continues to increase in 2020, lifted by new projects that were completed in 2019 and early 2020.

This trend is affecting demand for electricity from coal and natural gas, which are finding themselves increasingly squeezed between low overall power demand and increasing output from renewables.

As a result, the combined share of gas and coal in the global power mix is set to drop by three percentage points in 2020 to a level not seen since 2001.

Coal is particularly hard hit, with global demand projected to fall by eight per cent in 2020, the largest decline since the Second World War.

Following its 2018 peak, coal-fired power generation is set to fall by more than 10 per cent this year.

After 10 years of uninterrupted growth, natural gas demand is on track to decline five per cent in 2020.

This would be the largest recorded year-on-year drop in consumption since natural gas demand developed at scale during the second half of the 20th century.

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