Global Energy Review-2020

• 06 May 2020

• On 1^st May, 2020, the International Energy Agency (IEA) released a report Global Energy Review, detailing the impact of Covid-19 on global energy demands and CO2 emissions.

Key Findings

Global Energy Scenario

Coal

• Global coal demand was hit the hardest, falling by almost 8% compared with the first quarter of 2019.
• Three reasons converged to explain this drop. China – a coal-based economy – was the country the hardest hit by Covid19; cheap gas and continued growth in renewables elsewhere challenged coal; and mild weather also capped coal use.

Oil

• As a consequence of global lockdown measures,
• Road transport in regions mobility – 57% of global oil demand – has declined at an unprecedented scale.with lockdowns in place has dropped between 50% and 75%, with global average road transport activity almost falling to 50% of the 2019 level by the end of March 2020.

Natural Gas

• The impact of the pandemic on gas demand was more moderate, at around 2%, as gas-based economies were not strongly affected in the first quarter of 2020.

Renewable Energy

• Renewable energy has so far been the energy source most resilient to Covid19 lockdown measures
• Renewable electricity has been largely unaffected while demand has fallen for other uses of renewable energy and the total global use of renewable energy is expected to rise by 1 per cent by 2020.

Electricity

• Lockdown measures have significantly reduced electricity demand, affecting in turn the power mix.
• Increases in residential demand were far outweighed by reductions in commercial and industrial operations.
• Demand reductions have lifted the share of renewables in electricity supply, as their output is largely unaffected by demand. Demand fell for all other sources of electricity, including coal, gas and nuclear power.

Nuclear

• Global nuclear power generation fell by about 3% in Q1 2020 compared with Q1 2019, pulled down by electricity demand reductions.
• For 2020, it is estimated that nuclear power declines by 2.5% from 2019 due to lower demand and delays for planned maintenance and construction of several projects.

Carbon Dioxide Emission

• Carbon emissions were five percent lower than during the same time in 2019.
• This year saw an 8 percent decline in coal emissions, 4.5 percent from oil and 2.3 per cent from natural gas.
• Emissions declined the most in regions which were impacted the highest by the disease.
• Overall, the emissions decline in 2020 could be 8 percent lower than in 2019, which would be the lowest level of emissions since 2010 and the largest level of emission reduction — six times larger than what was witnessed during the 2009 financial crisis, and twice as large as the combined total of all reductions witnessed since World War II.

Indian Energy Scenario

• India, which is one of the IEA association countries, has seen a reduction in its energy demands by over 30 percent as a result of the nation-wide lockdown.
• Moreover, in India, where “economic growth and power production are slowing significantly”, the demand for coal will decline steeply.

Implications

• The energy industry is feeling the financial impact throughout value chains, with most energy companies losing substantial revenues.
• In effect, they are being hit twice, first by lower demand for their products – including oil, gas, coal and electricity – and again by lower prices for these products.
• The smallest impact is on coal: as the supply chain is less affected by logistical constraints than oil and natural gas.
• Low prices and low demand in all subsectors will leave energy companies with weakened financial positions and often strained balance sheets.
• Business lines that are insulated to a degree from market signals, including those with renewable electricity projects, will emerge in the best financial position.
• Across the energy sector, the Covid19 crisis will have a significant impact on investment. This could raise concerns about energy security because investment is necessary even if global energy demand takes a long time to return to the pre-crisis trajectory.
• The Covid‑19 crisis is also influencing the path for clean energy transitions.

Suggestions for Policy Makers

• Policymakers and regulators need to ensure that operational, maintenance and safety expenditures are prioritised and appropriately maintained.
• Governments will play a major role in shaping the energy sector’s recovery from the Covid‑19 crisis, just as they have long been in the driving seat in orienting energy investment.
• In particular, the design of economic stimulus packages presents a major opportunity for governments to link economic recovery efforts with clean energy transitions – and steer the energy system onto a more sustainable path.
• While the clean energy transitions and stimulus discussions are gathering momentum, a co-ordinated policy effort will be needed to harvest its opportunities and lead to a more modern, cleaner and more resilient energy sector for all.