The coronavirus (Covid-19)
has created the biggest
global crisis in generations,
sending shock waves
through health systems, economies,
and societies around the world.
Faced with an unprecedented
situation, governments are focused
on bringing the disease under control
and reviving their economies.
The energy sector is also severely
affected by this crisis, which
has slowed transport, trade and
economic activity across the globe.
The IEA's analysis, published in our
Global Energy Review 2020, shows
that global energy demand declined
by 3.8% in the first quarter of 2020
and that months-long restrictions
on economic activity could lead to
a drop in energy demand by 6% by
the end of the year. This is the largest
drop in 70 years and seven times
greater than the 2009 financial crisis.
The story is similar for global CO2
emissions projections as we expect
a decline of nearly 8% in 2020, where
Europe might see the lowest levels
since the late 1950s.
Global energy investments are
also severely affected by the crisis.
As shown by our World Energy
Investment report released end May,
a fall in businesses' capital spending
of US$400 billion – one fifth of 2019
levels – could be expected in 2020.
Investment activities have been
disrupted by lockdowns but also by
a sharp fall in revenues, especially
for the oil and gas sector. Europe’s
estimated decline is around -17%,
with investments in electricity grids,
wind and efficiency holding up better
than distributed solar PV and oil and
gas, which see steep falls.
To avoid a big rebound, we need
sustainable recovery plans based on
smart energy policies. In this context,
the EU's Covid-19 recovery package
and Multiannual Financial Framework
(MFF) will be important as well as
continued commitment from the EU
to the European Green Deal - as a
growth strategy and to ensure a just
transition towards a climate neutral
Europe by 2050.
Near-term opportunities for jobs and cutting emissions
In March, the IEA's Executive Director
Dr. Fatih Birol was the first leader of
an international organisation to make
a call to governments to put clean
energy at the heart of economic
recovery. Numerous IEA events have
been held since to examine Covid-19
implications across the energy sector,
including Ministerial Roundtables on
clean energy in economic recovery,
mobilising investment in sustainable
and resilient electricity systems,
impacts on Africa's energy sector as
well as our annual Global Conference
on Energy Efficiency. These events
will culminate in the IEA's Clean
Energy Transitions Summit on 9
July 2020, which will gather a grand
coalition of leaders representing the
global energy community to explore
pathways to a sustainable recovery,
on the way to COP26.
As a basis for this discussion, we will
release the World Energy Outlook
Sustainable Recovery report this
June. The report will provide input on
how governments most effectively
can use economic recovery to boost
jobs while advancing clean energy and innovation. Two promising areas
could be highlighted herein, namely,
energy efficiency and renewables,
both providing millions of jobs today
and where we see a huge economic
and sustainable impact.
For energy efficiency actions such as
grants, rebates, tax incentives and
auctions could stimulate demand
and cost-effectiveness. Governments
should however build upon pre-existing
structures and support
programmes that can mobilise
stakeholders quickly. Renewables
were the only energy source that
experienced a growth during the first
months of this year but we expect an
overall decline in demand this year
compared to 2019. So, to maintain
renewable’s progress and keeping
jobs, governments should focus on
re-confirming if not increasing their
renewable ambitions, bringing greater
clarity to the uncertainties that the
industry is facing.
The role of clean energy technologies for reaching long-term energy objectives
Energy efficiency and renewables like
wind and solar PV – the cornerstones
of clean energy transitions – are good
places to start. However, more will be
required to put the world on track to
meet long-term energy and climate
goals. IEA analysis has repeatedly
shown that a broad portfolio of clean
energy technologies and innovation
will be needed to decarbonise all
parts of the economy.
Batteries and hydrogen-producing
electrolysers stand out as two
important technologies. Both
industries have the potential to
create many more jobs across
their entire supply chains. The
technologies will also be important
to reduce emissions in sectors such
as shipping, aviation, long-haul trucks,
the iron and steel sectors or chemical
industries. The outlook for these
technologies is more promising today
than a few years ago which is why
these technologies deserve a special
place in any economic stimulus
package today.
The IEA's tracking report on clean
energy technologies (TCEP) shows the
world's progress on key technologies
and sectors for reaching longterm
policy objectives. Still many
of the key technologies are not on
track. Considering the wind and
solar PV took decades to develop,
governments' policy and RD&D
support to key technologies such
as CCUS, hydrogen and batteries
will be crucial. The IEA will publish
the Energy Technology Perspectives
Special report on Clean Energy
Technology Innovation on 2 July 2020,
which will discuss these and other
attributes of technologies that are
particularly suitable for fast clean
energy transitions, in sectors that
are more diffi cult to decarbonise,
the full report Energy Technology
Perspectives 2020 – will be released
in September 2020.
The EU as a great opportunity to take the lead on sustainable recovery
How governments can best deal with
the implications of the pandemic is
still evolving but the clean energy
transitions should be at the centre
of economic recovery plans. Moving
forward, the IEA sees a crucial role
for all governments in Europe and
beyond in tackling this crisis and
the recovery to come out of it by
focussing on these key areas of clean
energy technologies. The European
Green Deal provides the EU with a
very clear and unifying strategy for
economic growth and a pathway to
carbon-neutrality. The strong backing
of the 'European Green Deal' from
the leaders of the EU Member States
and the European Commission will
be crucial if the EU wants to be the
fi rst climate-neutral continent as
expressed by President von der Leyen
in her Agenda for Europe.