Renewables are the only winners of the historic decline in energy demand

К : | Bloomberg.

Published : 30. April 2020 at 12:03:16

Renewable energy sources are the only ones benefiting from the historic decline in energy demand

Wind turbines are located in the North Sea near the London Array offshore wind farm, a partner of Dong Energy A/S, E.ON AG, in Abu Dhabi Masdara, in the Thames Estuary, United Kingdom. (photographer: Simon Dawson)

The blockade of the corona virus will lead to the biggest drop in energy demand ever, and only renewable energy sources will be able to increase production in times of crisis.

As people around the world use less oil, gas and coal, wind and solar energy will continue to flow, leading to an unprecedented 8 percent reduction in global carbon dioxide emissions this year, according to an International Energy Agency (IEA) report.

The energy industry that will emerge from this crisis will be very different from before, said IEA Executive Director Fatih Birol in a statement released Thursday at the organization’s headquarters in Paris.

Until the 29th. By April, the pandemic had infected at least 3 million people worldwide and killed more than 200,000 people. Since no Covid-19 and no vaccine is expected before the end of the year, reducing interactions between infected individuals is the only effective way to contain the spread.

However, these measures have a serious impact on economic growth and energy demand. Each month, bottlenecks in the order of what is available in the month reduce annual energy demand by 1.5%, according to IEA estimates.

The institution, which advises governments on energy policy issues, says demand is expected to fall by 6% in 2020, seven times more than during the 2008 financial crisis. In absolute terms, it is as if the demand for energy in India is decreasing. Rich countries will experience a more marked decline: The United States fell by 9% and the European Union by 11%.

At a time when all energy sources – oil, coal, natural gas and even nuclear energy – are scarce, renewable energy should be a beacon of hope. And while emissions will fall sharply, the IEA expects a dramatic recovery without government policies aimed at restoring green technologies. These are the strengths of the IEA report:

Oil saturation

World demand for oil will fall by 9 million barrels a day, or around 9%, to its lowest level since 2012. By the end of March, global road transport had fallen by about 50%, while air transport in some European countries had fallen by more than 90%. With the continuation of the blockades in April, the sharpest decline will take place, with fuel consumption falling by almost a third to its lowest level since 1995.

If demand is in free fall, even the enormous efforts of the OPEC cartel and its allies to stabilise the markets will not be enough to save the global oil industry from chaos, the agency warns. Some producing regions will suffer a disorderly closure, he says.


Global demand for coal has fallen rapidly since the Second World War, by around 8%, as the pandemic further threatens the burning of the most filthy fossil fuel. The share of fuels in the structure of the electricity industry has declined in China, India, Europe and parts of the United States. These four regions have large and diverse electricity markets, yet coal is the main victim of the fall in demand.

The burning of coal for electricity generation has become unprofitable and socially unsustainable in a number of European countries – supplanted by cheap gas and the spread of renewable energy sources and by powerful environmental movements. The pandemic only precipitated his death.

Gas shock

In the first quarter, natural gas consumption in Europe fell even before the Covida 19 pandemic, mainly due to the mild winters in the northern hemisphere. Global demand is expected to fall 5% this year – the first annual fall in consumption since 2009 and a major shock for a sector accustomed to steady growth.

Electricity will account for a significant part of this decline as the increasing transition to renewable energy sources and low overall demand for electricity replaces the role of natural gas in generation. In Europe, a 7% decline is expected, while in North America the decline will be less pronounced and will be supported by extremely low prices.

Improvement of renewable energy sources

Although overall demand for renewable energy is decreasing in many countries, priority is given to feeding electricity into the grid. This means that producers of solar, wind and hydropower can sell all the electricity they produce, even if the fossil fuel generators are shut down or completely shut down to avoid overloading the system. Solar and wind power plants also benefit from the fact that in some places the weather is windier and sunnier than normal.

In 2019, for the first time in history, low-carbon sources included coal in addition to nuclear energy. With the growth of renewables this year, the leading role will be extended, with low-carbon sources accounting for 40% of global electricity production.

Not everything is positive for the sector. Like much of the global economy, the coronavirus has disrupted the supply chain of wind and solar power plants. According to BloombergNEF, this week about 11% of the world’s wind turbines were shut down because of the virus. Work on the new wind farms has also been interrupted by workers’ constraints and delays in regulatory procedures. This could lead to a delay of new renewable energy projects coming onto the market this year.


Since the use of fossil fuels is so successful, it is not surprising that emissions are decreasing. This reduction is 8% higher than most original estimates and exceeds the most ambitious scenario to curb global warming. However, according to the IEA, this decrease cannot be sufficient to curb further increases in the earth’s temperature or the growth of greenhouse gases that have accumulated in the atmosphere.

The more ambitious objective of the Paris Climate Convention – to keep the temperature increase below 1.5 degrees Celsius – requires global annual emissions to be halved by 2030 and net emissions to be reduced to zero by the middle of the century. In the absence of major structural changes, emissions are expected to increase again as the economy recovers.

Governments can learn from this experience by putting clean energy technologies – renewable energy, energy efficiency, batteries, hydrogen and carbon capture – at the heart of their incentive plans, says Birol. Investment in these areas can create jobs, make the economy more competitive and lead the world towards a more sustainable and cleaner energy future.

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