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Global Energy Review 2021: global energy market recovers from COVID crisis

A.Solodovnikov, V.Arkhipova- CC BY-SA 4.0

The IEA's annual Global Energy Survey estimates energy demand and carbon dioxide emissions in 2021, providing insights into economic activity and energy consumption in countries around the world in the second year of the Covid-19 pandemic.

As predicted in last year's IEA report, global energy demand fell by 4% in 2020, the largest decline since World War II and the largest absolute decline on record. Energy demand statistics for the first quarter of 2021 show that the Covid 19 pandemic continues to affect global energy demand, but the market is expected to recover by 4.6% by the end of the year, resulting in global energy consumption in 2021 being 0.5% above pre-Covid 19 levels. Nearly 70% of projected global energy demand growth comes from developing economies, where demand will grow even 3.4% above 2019 levels. In India, for example, energy demand is expected to rise by 7%, a 2% increase over 2019. Experts view China as the country whose economy is least affected by Covid. China's economic activity is expected to accelerate further in 2021, and energy demand in 2021 is expected to grow by 6%, nearly 8% higher than in pre-covid 2019. Overall, China is likely to account for nearly half of the world's energy demand.

The steady demand for renewable energy sources seen in recent years will continue in 2021, with the electricity sector taking the lead, expanding by more than 8% to reach 8,300 TWh, the largest annual growth in absolute terms. Renewables are projected to increase their share of electricity generation to almost 30 percent in 2021, up from 27 percent in 2019.

Natural gas demand is projected to grow by 3.2 percent in 2021, the largest increase over 2019 levels among fossil fuels. This will be supported by increased demand in Asia, the Middle East and the Russian Federation. Almost three-quarters of global demand growth in 2021 will come from industries and buildings, while natural gas-fired electricity generation remains below 2019 levels.

Although global oil demand is expected to rise by 6.2% in 2021, it will remain about 3% below the 2019 level. According to forecasts, oil consumption by road transport will reach pre-crisis levels only by the end of 2021. The use of oil in aviation is projected to be more than 30% lower than in 2019.

Of particular note are the changes in the coal energy market. Coal demand has steadily declined in recent years, but in 2021, experts predict strong coal demand growth of 4.5%, of which more than 80% of the growth will be concentrated in Asia, with China ahead of the planet, which is projected to account for more than 50% of global growth. Coal demand is expected to increase by almost 9%, contributing the most to rebounding demand, as electricity demand recovers. Coal demand in the United States and the EU is also recovering, but is still well below pre-crisis levels.

In 2020, global CO2 emissions decreased by 5.8%. As demand for coal, oil, and gas recovers in 2021, global energy-related CO2 emissions are unfortunately also projected to rebound and increase by nearly 5%, approaching the 2018-2019 peak.