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Global energy’s historic plunge equivalent to losing entire energy demand of India

Global energy’s historic plunge equivalent to losing entire energy demand of India
The Covid-19 pandemic is the biggest shock to global energy in more than seven decades, according to the International Energy Agency (IEA). The fall in demand in 2020 is set to dwarf the impact of the 2008 crisis, it said.

In its new report, the IEA predicts that demand will fall by six percent. “In absolute terms, the decline is unprecedented – the equivalent of losing the entire energy demand of India, the world’s third-largest energy consumer,” it said.

Advanced economies are expected to see the biggest declines, with demand forecast to fall by nine percent in the United States and by 11 percent in the European Union. According to IEA, 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. It found that each month of worldwide lockdown at the levels seen in early April reduces annual global energy demand by about 1.5 percent.

“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. “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.”

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The IEA expects global oil demand to be a record 9.3 million barrels a day (mb/d) lower in 2020 than in 2019. “The impact of containment measures in 187 countries and territories has almost brought global mobility to a halt,” it said. Demand in April is estimated to be 29 mb/d lower than a year ago, falling to a level last seen in 1995. For the second quarter of this year, demand is forecast to be 23.1 mb/d below 2019 levels. The recovery in the second half of 2020 is projected to be gradual, as economies come out of containment and activity levels rise. “Nonetheless, demand is not expected to reach pre-crisis levels before the end of the year, with December demand projected to be down 2.7 mb/d from December 2019 levels.”

The report also said that after 10 years of uninterrupted growth, natural gas demand is on track to decline five percent in 2020. That 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.

For more stories on economy & finance visit RT's business section

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