Name: IEA’s best case scenario calls for energy demand recovery in 3 years
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IEA’s best case scenario calls for energy demand recovery in 3 years

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Global energy demand isn’tlikely to return to levels seen before the COVID-19 crisis for another threeyears, under the best case scenario presented by the International EnergyAgency’s World Energy Outlook report issued Tuesday. “The Covid-19 pandemic has caused more disruption to the energy sector than any other event in recent history, leaving impacts that will be felt for years to come,” the report said. &nbsp;The IEA expects global energy demand to drop by 5% this year, with oil demand down by 8%. Energy investment also is forecast to fall by 18%. The report, however, emphasized the difficulty in looking further ahead in the outlook for the market, “as uncertainty over the duration of the pandemic, its economic and social impacts, and the policy responses open up a range of possible energy futures.” Under what it refers to asthe “Stated Policies Scenario,” or STEPS, which is its best-case scenario, COVID-19is brought under control in 2021, with the global economy returning topre-crisis levels that year. It’s under that scenario that the IEA expectsworld energy demand to rebound to pre-crisis level in early 2021. Under the “Delayed Recovery Scenario,” or DRS, however, during which the global economy doesn’t return to pre-crisis size until 2023, a rebound in global energy demand won’t come until 2025, the IEA report said. The report also touches on climate change, a topic that’s been at the forefront during another devastating wildfire season in California. “A delayed economicrecovery results in slower emissions growth, but it is not an answer to climatechange,” said Fatih Birol, the IEA’s executive director, in the report. “Ouranalysis makes it clear that the somewhat lower emissions come for all thewrong reasons and at huge economic and social costs.” Before the COVID-19 crisis,energy demand was expected to grow by 12% between 2019 and 2030, but “growthover this period is now 9% in the STEPS, and only 4% in the DRS.” For oil, the best-case scenario would see global oil demand grow by 5 million barrels per day in 2021 and return to pre-crisis levels by “around” 2023, the report said. After that, demand would rise by 700,000 barrels per day each year, on average, through to 2030. Concerns over weak energy demand in the face of efforts to stem the spread of the pandemic led front-month futures prices for West Texas Intermediate crudethe U.S. benchmark, to drop to negative $37.63 a barrel on April 20, the lowest on record. In Tuesday dealings, the November contracttraded at $40.28. Also under that best-case scenario, renewable energy sources will meet 80% of the growth in global electricity demand to 2030, the report said. Hydropower will remain as the largest renewable energy source of electricity, but solar would be the main driver of growth, setting new records for deployment each year after 2022. Meanwhile, even under that best-case scenario, coal demand won’t return to pre-crisis levels and its share in the 2040 energy mix will fall below 20% for the first time since the Industrial Revolution, the report said. “Coal phase-out policies, the rise of renewables and competition from natural gas lead to the retirement of 275 gigawatts of coal-fired capacity world-wide by 2025.” The IEA estimates a fall of 7% in 2020 coal demand to levels not seen since 2009. “This drop in coal demand is likely to make it clear that 2014 was indeed the peak year for coal,” the report said. Demand for natural gas is likely to see a fall of 3% this year–the largest annual decline “since it emerged as a major fuel in the 1930s.” Still, it’s been “more resilient to the immediate impact from the COVID-19 crisis than coal and oil.” Year to date as of Monday, front-month natural-gas futures were up by nearly 32%. The November contracttraded at $2.85 per million British thermal units in Tuesday dealings.Former Vice President Joe Biden currently leads Republican incumbent President Donald Trump by a handsome margin with less than a month remaining before the Nov. 3 election.

Global energy demand isn’tlikely to return to levels seen before the COVID-19 crisis for another threeyears, under the best case scenario presented by the International EnergyAgency’s World Energy Outlook report issued Tuesday. “The Covid-19 pandemic has caused more disruption to the energy sector than any other event in recent history, leaving impacts that will be felt for years to come,” the report said. &nbsp;The IEA expects global energy demand to drop by 5% this year, with oil demand down by 8%. Energy investment also is forecast to fall by 18%. The report, however, emphasized the...

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Myra P. Saefong, reporter & assistant editor for MarketWatch, has covered the commodities sector for more than 20 years.

Myra P. Saefong

MarketWatch is a website that provides financial information, business news, analysis, and stock market data. Along with The Wall Street Journal and Barron's, it is a subsidiary of Dow Jones & Company, a property of News Corp. Notable contributors include Mark Hulbert and Francine McKenna.

IEA’s best case scenario calls for energy demand recovery in 3 years

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