IEA: Plunging energy demand will benefit renewables

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Photo credit: IEA.

By Anders Lorenzen

The International Energy Agency (IEA) has said that the restrictions put in place due to the coronavirus outbreak have meant that coal power, the dirtiest of fossil fuels, will pay a huge price, while renewables will benefit. 

In IEA’s latest report, they predict that in 2020 carbon emissions will drop by 8% and energy demand by 6%. 

The report outlines how the lockdown is driving a massive shift towards clean energy sources such as solar PV, wind power, hydropower and nuclear. It states that after low-carbon sources overtook coal for the first time ever in 2019 they’re expected to extend their lead this year to reach 40% of global electricity generation, which will be six percentage points ahead of coal. In 2020 electricity generation from solar PV and wind continues to increase, due to new projects completed in 2019 and early 2020.

The demand for coal and natural gas is much decreased due to low overall power demand combined with the increasing output from renewables. As a result, the combined share of gas and coal in the global power mix is set to drop three percentage points in 2020 – that level was last seen in 2001. 

IEA projects that coal will be the big loser and that demand will fall by 8% in 2020. Compared to its peak in 2018 it will decline by 10% this year.

This does not look all that great for natural gas either, as this year will bring a halt to its ten-year uninterrupted growth and it is set to decline by 5% in 2020. This would represent the largest recorded year-on-year drop in consumption since natural gas developed at scale during the second half of the 20th century. 

There are huge questions marks about oil too, as the sudden drop in demand has resulted in record low dips in the oil price and unprecedented oversupply.  Indeed, there is a serious shortage of space to store excess oil.

This will, according to the IEA, benefit the renewable energy industry which is projected to be the only energy source to actually grow in 2020. Their share of global electricity generation will grow mainly due to their priority access to grids and to low operating costs. It is predicted that solar PV and wind are on track to lift renewable electricity generation by 5% this year. However, this is largely led by the drop in electricity demand which means that fossil fuel production decreases rather than renewables. It is not a result of much new capacity coming online. The increase in renewable power generation this year is set to be lower than in previous years. Nuclear is reporting a drop of 3% and, apart from electricity generation, other renewables such as biofuels are set to fall substantially.

IEA’s Chief Executive Dr Fatih Birol said: “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. 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.”

Many advocates for tackling climate change have argued that we should put a ‘green recovery’ at the hear of bouncing back from the COVID-19 outbreak which would deal with two challenges at the same time.

 

3 responses to “IEA: Plunging energy demand will benefit renewables

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