Global Energy Review notes that renewables will be the only energy source to expand in 2020 despite a dramatic nosedive in energy demand worldwide caused by Covid-19's shutdown of economic and public life.
Global carbon emissions are set to drop a record eight per cent this year, with lockdowns on public and economic life introduced to tackle the coronavirus pandemic delivering an unprecedented blow to fossil fuel demand, according to the International Energy Agency (IEA).
Projections published today by the agency suggest emissions are set to drop to their lowest level in 10 years, delivering a fall in annual emissions that is six times larger than the previous record set in the wake of the global financial crisis.
IEA executive director Fatih Birol said the coronavirus crisis marked a watershed moment for the global energy industry. "This is a historic shock to the entire energy world," he said. "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. 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."
The report notes that renewables are the only energy source expected to grow against a backdrop of overall reduced electricity demand. Global electricity demand is set to decline by five per cent, marking the largest drop since the Great Depression in the 1930s, with electricity consumption patterns on weekdays during the crisis resembling pre-crisis Sundays.
Thanks to their priority access to grids and low operating costs, low-carbon sources of energy are on track to deliver a record-breaking 40 per cent of the global electricity market in 2020, the report notes.
Meanwhile, despite supply chain disruptions in several key regions, new solar PV and wind generation is expected to provide a further boost to overall clean electricity generation, which expected to rise five per cent.
In contrast, coal power generation is expected to witness a steep eight per cent decline, the largest drop since the Second World War, and natural gas is poised to see a five per cent decline, marking a major U-turn following 10 years of uninterrupted growth.
The stark predictions for coal and natural gas come one week after prices for future US oil contracts briefly crashed into negative territory. They also follow the IEA noting in its April Oil Market Report that it expected global oil demand to fall by 9.3 million barrels a day in 2020, "erasing almost a decade of growth".
The agency expects overall global energy demand to fall by six per cent in 2020, roughly the equivalent of losing the entire energy demand of India, the world's third-largest energy consumer. Every month of worldwide lockdown reduces annual global energy demand by roughly 1.5 per cent, the report said.
The projections in the IEA's Global Energy Review report were based on more than 100 days of data and calculated based on assumptions that worldwide lockdowns currently in place would be progressively eased in the months to come. Further delays to lockdowns or a second spike in infections could therefore lead to an even sharper fall in annual energy demand and emissions.
Many European countries, including Spain, France and Belgium are currently eyeing a gradual end to coronavirus lockdowns enforced in early March as death rates and infection rates start to slow.
Echoing calls from world leaders and environment ministers earlier this week, Birol urged governments to double down on carbon reduction efforts despite the historic decrease in emissions, warning carbon emissions were expected to ramp up as soon as economies rebooted.
"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 economics improve," he said. "But governments can learn from that experience by putting clean energy technologies - renewables, efficiency, batteries, hydrogen and carbon capture - at the heart of their plans for economic recovery. Investing in those areas can create jobs, make economies more competitive and steer the world towards a more resilient and cleaner energy future."
A recent analysis by Carbon Brief noted that emissions have to fall 7.6 per cent every year throughout this decade to put the world on a path for less than 1.5C of warming.
Commenting on today's report, Richard Black, director of the non-profit think tank the Energy and Climate Intelligence Unit, said it contained "shocking evidence of the impact that coronavirus is having across the world". He added that its findings raised questions about how short-term Covid-19-related impacts would translate "to real-economy signals in the longer-term."
"Coal, for example is already in long-term decline in many developed countries, oil basins like the North Sea are mature and approaching the end of their lives, and sectors like US shale are already carrying unsustainable debt levels," Black said. "All may struggle to emerge intact as the world recovers from the pandemic - but conversely, unlike previous crises like the 2008 financial crash, in the power sector renewables are now the cheapest option and as the report finds, they are squeezing out conventional forms of generation like coal and natural gas even during national lockdowns."
Black called on national leaders to stick to their promises to develop post-coronavirus stimulus packages that accelerate the clean energy transition. "If these pledges come good, and states do develop concrete recovery policies to drive the low-carbon transition, then the crisis could come to be seen as a genuine turning point for world energy markets," he said
The IEA report comes just days after senior Ministers from around the world signalled their support for green recovery packages at the Petersberg Climate Dialogue conference, with co-hosts the UK and Germany both committing to integrating climate considerations into their economic recovery plans.
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