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The Covid-19 pandemic represents the biggest shock to the global energy system in more than seven decades, the International Energy Agency (IEA) has said.

The drop in energy demand this year set to dwarf the impact of the 2008 financial crisis and is expected to result in a record annual decline in carbon emissions of almost 8%.

A Global Energy Review released by IEA on 30 April provides an almost realtime view of the Covid-19 pandemic's impact across all major fuels.

The report, which is based on an analysis of more than 100 days of real data, estimates how energy consumption and carbon dioxide emissions are likely to evolve in 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," said Dr Fatih Birol, the IEA executive director. "Only renewables are holding up during the previously unheard-of slump in electricity use."

Birol noted that while it is still too early to determine the longer-term impacts, the energy industry that emerges from this crisis will be "significantly different" from the one that came before.

The review's projections of energy demand and energy-related emissions for 2020 assumes that the global lockdowns implemented in response to the pandemic are progressive eased in most countries in the coming months, and will be accompanied by a gradual economic recovery.

The report projects that energy demand will fall 6% in 2020 – seven times the decline after the 2008 global financial crisis. In absolute terms, the drop 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 most significant declines, with demand set to fall by 9% in the USA and by 11% in the European Union (EU). However, 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.

Changes to electricity use during lockdowns have resulted in significant declines in overall electricity demand, IEA said, noting that consumption levels and patterns on weekdays were looking like those of a pre-crisis Sunday. Full lockdowns reduced electricity demand by 20% or more, with lesser impacts from partial lockdowns. Electricity demand is set to decline by 5% in 2020, representing the most significant drop since the Great Depression in the 1930s.

At the same time, lockdown measures are driving a significant shift towards low-carbon sources of electricity, including wind, solar PV, hydropower and nuclear. After overtaking coal for the first time in 2019, low-carbon sources are expected to reach 40% of global electricity generation this year. Electricity generation from wind and solar power continues to increase in 2020, lifted by new projects completed in 2019 and early 2020.

Renewables are expected to be the only energy source that will grow in 2020. Despite supply chain disruptions that have paused or delayed deployment in several regions, solar PV and wind are on track to help lift renewable electricity generation by 5% in 2020, aided by increased output from hydropower.

The report said nuclear power has "not been immune" to the impacts of the Covid-19 crisis, though in most cases reactors have continued to produce electricity.

Nuclear generation down 3% year-on-year

Global nuclear energy generation fell by about 3% in the first quarter of 2020 compared with Q1 in 2019. Overall in 2020, IEA expects nuclear generation to decline by 2.5% from 2019, due to lower demand as well as delays in planned maintenance and construction of several projects.

If the recovery from the crisis is faster, electricity demand would be higher, and some new reactors would be completed in 2020, leading to a reduction in nuclear power in 2020 of just over 1%.

The European Union saw the largest reduction in nuclear electricity generation in Q1 2020. Lower demand led to nuclear output reductions in several countries, most notably France, where nuclear generation was down by 11TWh (10%) in Q1 2020. Adjustments to planned maintenance, several reactors being taken offline as demand fell, and the permanent closure of Fessenheim 2 in February contributed to the reductions in France.

In Germany, output fell by 3TWh, or 17%, as steps are taken towards a complete nuclear power phaseout by the end of 2022.

In the USA, nuclear output in Q1 2020 was down 4TWh, or 2%, due in part to lower electricity demand linked to mild weather.

China was one of the few regions with nuclear power growth, with a 1% increase in output between Q1 2019 and Q1 2020. Two large reactors (Taishan 2 and Yangjiang 6) came online in China in mid-2019. Operations at these additional facilities more than compensated for the impact of depressed electricity demand, IEA said.

IEA estimates that for 2020, lockdowns will reduce worldwide nuclear power output by 3% from 2019 levels, less than the impact on total electricity demand. However, this decline would be the largest not associated with a natural disaster, and 40% as large as the reduction in 2011 following the Fukushima Daiichi accident in Japan.

The coronavirus lockdown measures have also slowed nuclear power plant construction activity. The completion of several projects is likely to be delayed by a few months to 2021, the IEA said. This includes completion of two reactors in China and Olkiluoto 3 in Finland, where a delay has already been announced. Other construction delays are likely for projects in France (Flamanville 3), the UK (Hinkley Point C) and the USA (Vogtle 3&4). Some refuelling outages have been postponed to 2021, particularly in countries with large reactor fleets such as France.

A faster recovery would help nuclear power output in 2020 to decline by just over 1% compared with the 2019 total, IEA said. Reactors that are in service could operate at higher load factors to meet the rebound in electricity demand.

In addition, a return to construction activities could bring reactors online in late 2020 in China.

However, a slower recovery would lead to lower electricity demand and further reduce nuclear power output (beyond a 2.5% decline) in 2020.

Crisis offers opportunity for clean-energy investment

"This crisis has underlined the deep reliance of modern societies on reliable electricity supplies for supporting healthcare systems, businesses and the basic amenities of daily life," said Birol. "But nobody should take any of this for granted – greater investments and smarter policies are needed to keep electricity supplies secure."

As a result of all these developments, global energy-related CO2 emissions are set to fall by almost 8% in 2020, reaching their lowest level since 2010. This would be the most substantial decrease in emissions ever recorded – nearly six times larger than the previous record drop of 400 million tonnes in 2009 that resulted from the global financial crisis.

"Resulting from premature deaths and economic trauma around the world the historic decline in global emissions is absolutely nothing to cheer," noted Birol. "And if the aftermath of the 2008 financial crisis is anything to go by, we are likely to soon see a sharp rebound in emissions as economic conditions improve."

Birol reiterated the opportunity for governments to invest in clean energy technologies – renewables, efficiency, batteries, hydrogen and carbon capture as they plan for economic recovery following the coronavirus crisis.

"Investing in those areas can create jobs, make economies more competitive and steer the world towards a more resilient and cleaner energy future," he said.

Date: Wednesday, 20 May 2020
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