Economic Report 2020

ECONOMIC REPORT 2020

Global energy demand The economic challenges being faced around the world arising from COVID-19 have already had a direct impact on levels of energy demand, with the International Energy Agency (IEA) anticipating a 5 per cent decline this year. The largest decline was seen during the second quarter when countries accounting for more than half of demand had some form of lockdown measures in place. The impact will also continue to be seen in the years to come. The IEA estimates that, based on existing policies, global energy demand will remain suppressed compared to pre- pandemic levels, with all forms of energy being impacted in some way and will not return to pre-pandemic levels until 2023.

The longer-term growth outlook will be largely defined by the recovery strategies implemented by governments following the pandemic and the progress of measures to support the aims of the Paris Agreement. 6 Based on pre-COVID trends, energy demand was projected to see a 12 per cent increase over the next decade. The vast majority of this would be fuelled by growth in renewable power generation, with limited overall growth in demand for oil and gas. However, the IEA Sustainable Scenario (a scenario compatiblewith the aims of the Paris Agreement) would see a situation in which energy demand could continue to fall by 10 per cent based on significant investment in energy efficiency measures. Such a scenario would see no full recovery in global demand for oil and gas from the supressed levels in 2020.

Global Energy Demand Projections

20,000

18,000

IEA Stated Policies Scenario

16,000

14,000

IEA Sustainable Development Scenario

12,000

10,000

8,000

6,000 Energy Demand (Mtoe)

4,000

2,000

0

2010

2015

2018

2019

2025

2030

2035

2040

Source: IEA

6 The Paris Agreement aims to ensure a global temperature rise this century well below 2 degrees Celsius above pre-industrial levels and to pursue efforts to limit the temperature increase even further to 1.5 degrees Celsius.

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