Box 1. The indicators of COVID-19 impacts on energy
Bloomberg New Energy Finance (BNEF) predicted that global passenger vehicle sales would fall considerably in 2020 and not recover until 2025, with sales of internal combustion engine vehicles falling by 23 per cent and those of electric vehicles by 18 per cent.
BNEF and the IEA have also predicted global demand for natural gas to fall by 4 per cent in 2020, compared to growth of 2 per cent in 2019. In the US, the price of natural gas fell to a 25-year low in June 2020 to $1.6 per million British thermal units (MMBtu), down from $14/MMBtu in 2005. Lower prices will have a significant impact on investment decisions. Dominion Energy and Duke Energy cancelled their Atlantic Coast Pipeline project in July 2020. In Europe, gas demand fell by 7 per cent in the first five months of 2020, as a result of lockdowns, strong wind generation and mild temperatures. All of this produced something of a perfect storm for gas markets, with various European market prices collapsing to record lows in Q2 of 2020. UK wholesale prices hit their lowest levels for 21 years while the Dutch market fell by around two-thirds, relative to the same time in 2019.
The fall in European gas prices in the first half of 2020 accelerated the switch from coal to gas in the power sector. In the US, coal power generation plunged by 30 per cent in that period. In China, coal consumption fell by 8 per cent in Q1 of 2020 compared with 2019 as the economy contracted by 6.8 per cent and coal power generation fell by close to 9 per cent.
Demand in the global power sector fell by 10 per cent and 5 per cent in June and July 2020, respectively. Power demand in Europe also fell by 5–10 per cent during thefirst wave of the pandemic. In the UK, it was down by as much as 20 per cent during the spring lockdown, but slowly returned to near normal levels by mid-summer. Renewables continue to displace fossil fuel generation in Europe. In Q1 of 2020, renewables provided 47 per cent of UK electricity, with wind power accounting for 30 per cent. Renewables delivered a record-level of just under 56 per cent of Germany’s electricity in the first half of 2020.
Global investments in low-carbon technologies rose by 9 per cent to $501 billion in 2020, compared to 2019. During this period, investment by China and the US declined by 12 per cent and 11 per cent, respectively. European countries more than countered these declines, increasing their low-carbon investment by 67 per cent. The EU’s investment of $166.2 billion now surpasses both China and the US, $134.8 billion and $85.3 billion, respectively.
