The Covid-19 pandemic has radically changed the habits of millions of people sparking off an unprecedented economic shock. To slow the spread of the virus, governments across the world have imposed restrictions on most social and economic activities. These include partial or complete lockdowns, closure of educational institutions and non-essential businesses and bans on public gatherings. At the end of April 2020, 54% of the global population – 4.2 billion people, representing almost 60% of global GDP- were subject to complete or partial lockdowns.
The latest data from the IEA’s “Global Energy Review 2020“ shows that the drastic reductions in economic activities and mobility during the first quarter of 2020 pushed down global energy demand by 3.8% compared to the same period in 2019. If economic activity recovery were to be delayed by a further few months, annual energy demand would drop by 6.1% in 2020, a decline never recorded since the Second World War.
The evolution of energy demand through the remainder of 2020 will depend on the duration, stringency and geographical spread of lockdowns, and the speed of recoveries. If efforts to curb the spread of the virus and restart economies are more successful, the decline in energy demand could be limited to under 4%.
However, a bumpier restart, disruption of global supply chains and a second wave of infections in the second part of the year could curtail growth even further. In 2020, all fuels, except for renewables, are set to experience their greatest contraction in demand in 70 years (Fig.1). Oil demand could drop by 9.1%, while coal and nuclear power demand could decrease by 7.7% and 2.5%, respectively, due to a drop in electricity demand of almost 5%.
Gas demand could continue to decline even after the first quarter of the year, because of reduced demand in power and industry applications. The only countertrend in energy sources should be in renewables. The clean energy demand is expected to increase because of its lower operating costs and preferential access in many power systems. Biofuels may be the only renewable energy source likely to see a drop in demand, influenced by lower transport activity.