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Wednesday, March 03, 2021

Explained: How Covid-19 lockdowns have impacted the global energy sector

Coronavirus (COVID-19): India has seen a reduction in its energy demands by over 30 per cent as a result of the nation-wide lockdown.

By: Explained Desk | New Delhi |
Updated: May 2, 2020 10:21:44 am
Explained: How Covid-19 lockdowns have impact the global energy sector Electricity pylons are seen during sunset in Gavrelle, near Arras, France, April 25, 2020. (Reuters Photo: Pascal Rossignol)

Coronavirus (COVID-19): The International Energy Agency (IEA) has released a report detailing the impact of Covid-19 — which it has called a “once-in-a-century crisis” — on global energy demands and CO2 emissions. With lockdowns imposed in several countries, transportation such as road and air travel has been largely restricted, due to which global energy demands have plummeted. Further, since millions of people are now confined to their homes, domestic electricity demand has elevated as commercial demand has fallen.

As per the report, countries in full lockdown are seeing an average decline of 25 per cent in energy demand per week, while in those with a partial lockdown, the fall in energy demand is about 18 per cent per week. This may not be a reason to celebrate as it is expected that emissions will soar once economies restart, unless governments take a conscious decision to change the sources of energy.

Covid-19 and the energy sector: What the IEA report says

The report estimates that the global demand for oil could drop by nine per cent on average this year, which will return oil consumption to 2012 levels. As a result of lockdowns, road transport has dropped between 50-75 per cent with the average global road transport activity falling to 50 per cent of what it was during this time in 2019.

Aviation activity the world over dropped by 60 per cent at the end of March 2020. The International Air Transport Association (IATA) expects the flight capacity utilisation to average below 65 per cent of what it was in 2019 in the second quarter of 2020, further impacting the demand for jet fuel and kerosene.

Coal demand could decline by eight per cent, mainly due to a fall in electricity demand of over five per cent over the course of the year.

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Every month of a full lockdown impacts electricity demand by 20 per cent on average or 1.5 per cent on an annual basis.

Explained: How Covid-19 lockdowns have impact the global energy sector The report estimates that the global demand for oil could drop by nine per cent on average this year, which will return oil consumption to 2012 levels. (Express Illustration: C R Sasikumar)

In advanced economies, coal demand will fall by 25 per cent in the US, 20 per cent in the European Union (EU) and 5-10 per cent in Korea and Japan. In the coming months, the demand for coal will be impacted based on how its biggest consumers, such as China, recover from the crisis. “In some markets, coal demand may even grow if recoveries are faster, such as in Southeast Asia, driven by Indonesia and Vietnam,” the report states.

Because of reduced demand in power and industry applications, the gas demand could also fall much further than in the first quarter of 2020. However, the demand for renewables is expected to increase because of low operating costs and preferential access for many power systems.

In fact, regardless of the lengths of global lockdowns or a second pandemic wave, the demand for renewables is likely to increase. Renewable sources of energy have been the “most resilient” to Covid-19 lockdown measures and the total global use of renewable energy is expected to rise by 1 per cent by 2020.

How has Covid-19 impacted CO2 emissions?

Since the end of World War II, the decline in CO2 emissions witnessed in 2020 as a result of Covid-19 will be the largest. In the first quarter of 2020, because the most carbon-intensive fuels saw the biggest fall in demand, the decline in CO2 emissions was more than the fall in global energy demand. In the first quarter of this year, carbon emissions were five per cent lower than during the same time in 2019. This year saw an 8 per cent decline in coal emissions, 4.5 per cent from oil and 2.3 per cent from natural gas.

Emissions declined the most in regions which were impacted the highest by the disease. For instance, there was an 8 per cent decline in emissions in China and Europe, and a 9 per cent decline in the US.

Also read | In Covid-19 lockdown, clean air in Europe leads to 11,000 fewer deaths: Report

Overall, the emissions decline in 2020 could be 8 per cent lower than in 2019, which would be the lowest level of emissions since 2010 and the largest level of emission reduction — six times larger than what was witnessed during the 2009 financial crisis, and twice as large as the combined total of all reductions witnessed since World War II.

Covid-19 impact on India’s energy demands

India, which is one of the IEA association countries, has seen a reduction in its energy demands by over 30 per cent as a result of the nation-wide lockdown. This translates to a fall in energy demand by 0.6 per cent with every additional week of lockdown.

In the first quarter of 2020, energy demand in the country increased by 0.3 per cent relative to the first quarter of 2019. This will be the first time that energy demand in India has fallen, “following on from low demand growth in 2019.”

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Moreover, in India, where “economic growth and power production are slowing significantly”, the demand for coal will decline steeply. China and India are the largest and third-largest electricity users in the world respectively, and coal use is dominant in both these countries shaping the global demand for this fuel.

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