The International Energy Agency said Thursday it expects global energy demand to plunge this year in what the Paris-based agency called the biggest drop since World War II.
With roughly 4.2 billion people around the world subject to some form of lockdown in an effort to slow the spread of the coronavirus, the IEA is forecasting a 6% decline in energy demand for the year. In absolute terms this is the largest on record. Percentage wise, it's the steepest decline in 70 years.
The demand hit from the pandemic is expected to be seven times greater than the decline in the aftermath of the financial crisis in 2008.
"In absolute terms, the decline is unprecedented — the equivalent of losing the entire energy demand of India, the world's third largest energy consumer," the agency's Global Energy Report said.
The projections are based on the assumption that shelter-in-place and social distancing measures will slowly ease in the coming months, with a gradual economic recovery following. Under a faster return-to-business scenario, the IEA said demand loss could be limited to 3.8%, while a possible second wave of the virus could cause a greater than 6% decline.
"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," IEA executive director Fatih Birol said in a statement.
"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," he added.
The impacts have already been felt. In the first quarter, energy demand fell 3.8% year over year, wiping out all of 2019's demand growth.
Coal was hit especially hard in the quarter after the outbreak brought much of China, a coal-based economy, to a standstill. Cheaper gas prices as well as warmer temperatures also contributed to the decline.
For the year, the IEA projects annual demand to drop 8%, which would be the most since World War II.
Oil has also been heavily impacted. Roughly 60% of global demand for crude stems from driving and flying, so with people at home and planes grounded demand has fallen off a cliff.
In March, oil demand dropped by a record 10.8 million barrels per day from a year earlier. In April the IEA estimates that demand will fall by 29 million bpd year over year, hitting a level last seen in 1995.
Electricity demand has also contracted with factories shuttered and businesses closed as people work from home.
"Changes to how and when electricity is used during lockdowns have transformed the shape of electricity demand over the course of the day in some regions, with the pattern on weekdays now resembling the pattern usually seen only on Sundays," the report said.
For the full year, the IEA expects electricity demand to fall 5%, which would be the largest decline since the Great Depression.
This means a falloff in demand for natural gas after 10 years of uninterrupted growth.
"This decline is less than the anticipated fall in oil demand, reflecting the fact that natural gas is less exposed to the collapse in demand for transportation fuels. But it nonetheless represents a huge shock to a gas industry that is used to robust growth in consumption," the report said.
The only energy source expected to grow this year is renewables.
"Demand is expected to increase because of low operating costs and preferential access to many power systems," the report said of renewable power generation. "Recent growth in capacity, with some new projects coming online in 2020, will also boost output."
Renewable electricity generation grew by 3% during the first quarter and accounted for nearly 28% of electricity supply, up from 26% a year earlier. For the year, the IEA expects it to grow 5%, with total global use of renewable energy rising 1%. These numbers are lower than projections prior to the coronavirus.
The IEA said that renewables is the energy source "most resilient to the Covid-19 current crisis" since it's set to experience some sort of growth no matter the ultimate shape of the economic recovery.
The worldwide halt in business has resulted in the largest drop in global CO2 emissions on record.
"Not only are annual emissions in 2020 set to decline at an unprecedented rate, the decline is set to be almost twice as large as all previous declines since the end of World War II combined," the report said.
"Global CO2 emissions are expected to decline even more rapidly across the remaining nine months of the year, to reach 30.6 [gigatonnes] for the 2020, almost 8% lower than in 2019."
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