The annual World Energy Outlook has been released for 2020 by the International Energy Agency (IEA). The IEA highlights how the Covid-19 pandemic has shocked the energy industry in 2020. There will be a 5% drop in energy demand – mainly oil and coal – in 2020 leading to a decrease in carbon dioxide emissions by 7%. However, methane emissions, another potent greenhouse, remains unchanged. Solar electricity is expected to be the cheapest form of power in the coming decade. As mentioned in the executive summary, the report highlights four future energy scenarios stemming from the current pandemic. They are:
Future energy scenarios
- Stated Policies scenario (STEPS): the global economy reverts to pre-Covid conditions in 2021.
- Delayed Recovery Scenario (DRS) – global economy stabilizes only in 2023.
- Sustainable Development Scenario (SDS) – Same as STEPS, but with an increase in green energy policies.
- Net Zero Emissions by 2050 (NZE2050) – an extension of SDS where multiple developing and developed countries tries to reach carbon-neutral energy generation by 2050.
In all the above-mentioned scenarios, solar electricity comes out as the cheapest form of generation due to policies, falling technology costs and higher market penetration in developing countries. The demand for gas and oil power will reduce. In the STEPS scenario, renewables (hydro, followed by solar power) can meet 80% of the increase in global electricity consumption. In SDS and NZE2050, nuclear power contribution also becomes significant. Battery storage can become a very crucial market with India becoming its largest market. Despite this surge in renewables, projections places around 100 million people, globally, with no access to electricity due to lower income levels from economic turn downs. For the very first time since the industrial revolution, market share of coal can fall below 20% by the end of 2040 as per STEPS scenario.
Natural gas consumption might remain unchanged unless impacted by long-term policy changes. As per IEA, clean energy investment can improve the economy and increase jobs post the pandemic. Cities can also see major air quality improvements following the SDS scenario.