The world’s hunger for energy is set to decline by as much as 5% this year as the global pandemic has sapped demand for fossil fuels. But when it does recover, India would likely lead the demand together with developing economies, according to the International Energy Agency (IEA).
Oil demand will drop by as much as 8% and that for coal by 7%. That will contrast with a slight rise in the share of renewable energy. The silver lining in the energy rebalancing is that carbon dioxide emissions will drop by as much as 7% during the year.
The 2.4 Giga tons decline takes the annual carbon dioxide emissions back to where they were a decade ago. However, the initial estimates show that there may not have been as big a drop in emissions of methane — a powerful greenhouse gas — despite lower oil and gas output.
In the event that stated policies worldwide materialise, energy demand is expected to reach pre-crisis levels by early 2023. But in case the pandemic prolongs and leaves a deeper than the anticipated impact, it may take another two years to rebound to the same levels.
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Prior to the crisis, energy demand was projected to grow by 12% between 2019 and 2030. Growth over this period is now expected at 9% in the first scenario and by only 4% in the case of a delayed recovery scenario.
The slower pace of energy demand growth will put downward pressure on oil and gas prices compared with pre-crisis trajectories, although the large falls in investment this year also increases the possibility of future market volatility.
Lower growth in incomes will cut into construction activities and reduce purchases of new appliances and cars, with the effects on livelihoods concentrated in developing economies.
In the case of a delayed recovery, residential floor space will be 5% lower by 2040, 150 million fewer refrigerators will be in use, and 50 million fewer cars on the road.