Everyone deserves a sustainable future. But solutions are most urgently needed in developing countries, where the investment gap is deepest and peopleare most disproportionately impacted by the climate crisis. Helping countries prepare for and invest in low-carbon, resilient development requires key transitions – in energy, transport, cities, and food systems – which are also key to an inclusive and effective recovery from the COVID-19 pandemic. Join us as we discuss solutions sectors, highlight key priorities for COP26, and look at what it will take to shape a resilient recovery that works for people and planet.
Speakers – David R. Malpass, President, World Bank Group – John Kerry, United States Special Presidential Envoy for Climate – Sri Mulyani Indrawati, Minister of Finance, Indonesia – Shemara Wikramanayake, Chief Executive Officer
The following analysis from BP’s Chief economist about World Energy 2021, 70th edition
Chief economist’s analysis
(Spencer Dale Chief economist July 2021)
Energy in 2020: the year of COVID This is the 70th anniversary of the bp Statistical Review – something we are incredibly proud of. Since it was first published in 1952, the Statistical Review has provided a constant source of objective, comprehensive – and, most importantly – trusted data to help industry, governments and commentators make sense of developments in global energy markets. Over those 70 years, the Statistical Review has borne witness to some of the most dramatic episodes in the history of the global energy system: the Suez Canal crisis in 1956, the oil embargo of 1973, soon followed by the Iranian revolution in 1979, and more recently, the Fukushima disaster in 2011.
All moments of great turmoil in global energy. But all pale in comparison to the events of last year. Most importantly, the pandemic that engulfed the world last year is a humanitarian tragedy. As of the beginning of July, close to four million people were reported to have died as a result of COVID-19. The true number is likely to be far higher, and it continues to rise.
The pandemic also led to huge economic loss. Global GDP is estimated to have fallen by over 3.5% last year – the largest peacetime recession since the Great Depression. The IMF estimate that around 100 million people have been pushed into poverty as a result of the virus. And the economic scarring from the pandemic – especially for the world’s poorest and least developed economies – is expected to persist for many years after the virus is brought under control. Long COVID can take many different forms.
For the global energy system, the combination of the pandemic, together with efforts to mitigate its impact, led to developments and outturns unmatched in modern peacetime.
For energy, 2020 was a year like no other. The aim in this analysis is to use the new Statistical Review data to try to shed light on those developments, focusing on three key questions. First, over the past year, we have been bombarded with daily headlines of unprecedented developments and volatility. Standing back from all the noise, what exactly happened last year in the world of energy and how surprising was it?
Second, the global pandemic was the mother of all stress tests. Engineers will tell you that we can learn a lot from how systems behave under extreme pressure. In that spirit, what have we learnt from the response of the global energy system to the COVID-19 crisis?
And finally, this all took place against a backdrop of increasing societal and political demands for an accelerated transition to a net zero energy system. Indeed, Glasgow in Scotland was due to host COP26 last year – arguably the most important UN climate conference since Paris. In the event, the conference had to be delayed until November 2021. So, as we prepare for Glasgow, what lessons can we draw from the past year – and, more generally, from the developments since Paris – for the challenges and opportunities for this year’s COP?
Oil
The key feature of last year’s fall in energy demand is that it was surprisingly big. Even after controlling for the collapse in economic activity, the decline in energy demand was close to twice the size of the ‘predicted’ fall: 4.5% compared with a predicted fall of around 2.5%. The source of this surprise can be better understood by looking at the size of the falls in the different components of energy demand.
Oil demand is estimated to have fallen by an unprecedented 9.3% (9.1 million barrels/day, or Mb/d) in 2020 – far bigger than anything seen in history and far bigger than the falls in the other demand components. Indeed, the fall in oil demand accounts for around three-quarters of thetotal decline in energy consumption. It’s also the key factor accounting for the near-record fall in the carbon intensity of the energy mix.
Similarly, gasoline demand fell by around 13% (3.1 Mb/d) as road mobility measures crashed. In contrast, products most closely related to the petrochemicals sector (naphtha, ethane and LPG) were broadly flat, supported in part by increasing demand for PPE and other medical and hygiene-related supplies.
In comparison, natural gas showed far greater resilience. Gas demand is estimated to have fallen by 2.3% (81 bcm) in 2020, a broadly similar decline to that seen in 2009 in the aftermath of the financial crisis. Consumption fell in most regions, with the notable exception of China, where gas demand grew by almost 7%. The relative immunity of natural gas was helped by sharp falls in gas prices, which allowed gas generation to gain share in the US power market and hold its own in the EU.
Electricity
Electricity consumption is estimated to have experienced the smallest fall across the main components of final energy demand, declining by just 0.9% in 2020. The relative resilience of electricity usage was aided by the nature of the lockdowns, with falling power demand in industry and commercial buildings partially offset by increased domestic use by homebased workers and locked-down families. The relative resilience of overall power generation disguises a more significant shift in the generation mix.
In particular, despite the fall in overall power demand, generation from renewables (wind, solar, bioenergy and geothermal energy, and excluding hydroelectricity) recorded its largest ever increase (358 TWh). This growth was driven by strong increases in both wind (173 TWh) and solar (148 TWh) generation.
Over the past five years, renewable generation has accounted for around 60% of the growth in global power generation, with wind and solar power more than doubling. The growth in renewables last year came largely at the expense of coal-fired generation, which experienced one of its largest declines on record (405 TWh, 4.4%). In addition to falling power demand and increasing deployment of renewables, coal was also hurt by a loss of competitiveness relative to natural gas, especially in the US and EU.
These trends are exactly what the world needs to see as it transitions to net zero: strong growth in renewable generation crowding out coal. That said, the ‘more than doubling’ in wind and solar generation over the past five years hasn’t made even the smallest dent in total coal generation. The level of coal generation in 2020 was essentially unchanged from its level in 2015 as last year’s fall simply offset increases from the previous few years. It will take more than just strong growth in renewable energy to remove coal from the global power sector, especially at the pace it needs to happen. There is still a long way to go to squeeze coal out of the power sector.
Will 2020 be seen as a turning point when the shock of COVID-19 finally caused the world to take decisive action to mitigate the threat of climate change? Will the good intentions and increased ambitions of the past few years be translated into a sharp and sustained fall in emissions? Will renewable energy be able to maintain the rapid rates of growth seen over the past five years? And how important will the private sector – in the form of green and greening companies, prompted and supported by growing societal expectations – be in the eventual success or otherwise of the energy transition? If 70th birthdays are important, 100-year anniversaries are really special. What events will the 100-year-old Statistical Review report as it analyses energy developments in 2050?
posted by gandatmadi46@yahoo.com