With a slow economic development, there is a risk that the full recovery of global energy demand will not return to its level until 2025. To this end, the International Energy Agency (IEA) warns in a pre-emptive look at the world’s energy demand.
With a COVID-19 vaccine, energy demand may recover in 2021 and fully recover as early as 2023, but if the economic recovery is delayed, that timeline will shift for two years. In this case, the agency predicts a “deeper downturn” of the economy that is affecting growth, with high unemployment, bankruptcies and structural economic changes. Even in the most optimistic scenario, pandemic will have a lasting impact on the energy sector.
This year, according to IEA, the world’s energy demand is falling by 5 percent. CO2 emissions from energy consumption are falling by 7 percent and energy investments are falling by almost a fifth. The demand for oil is falling by 8 percent, the use of coal by 7 percent, while renewable energy sources will see a slight increase.
If the economy recovers worldwide, the demand for oil will also return to pre-crisis levels. But IEA also warns against uncertainty about the future demand for oil. Combined with the fall in oil prices this year, oil producers do not know what to do with investments, which could create a mismatch in supply and demand, according to the agency.
Over the next ten years, IEA expects the rising demand for oil to decrease. The agency also warns that, with current policies and the lack of other policies, we are far from achieving the climate goals. It is still too early to say whether the Coronas pandemic is an incentive or a setback for governments and the energy sector in their efforts to make them sustainable.
In the long term, the IEA expects that more efficient and electric vehicles will reduce the demand for oil. First, the demand for oil is growing by emerging countries such as India. By 2030, approximately 103 million barrels of oil will be produced per day. The agency is 2 million barrels below the previous estimate. After 2030, annual growth will fall to only 100,000 barrels per day.