Global energy demand is forecast to rebound in 2021, IEA says
Energize Weekly, April 28, 2021
Global energy production and demand is set to rebound from their pandemic doldrums in 2021with energy consumption up 4.6 percent, according to the International Energy Agency (IEA).
The agency said in its annual Global Energy Review that government stimulus packages and widespread vaccine programs will help spur a rebound in economic activity of 6 percent for 2021, 2 percent higher than 2019 levels.
The increase in economic activity and energy consumption will also lead to an increase in carbon dioxide (CO2) emissions. After a 5.8 percent, or 2 gigaton, decline in carbon emissions in 2020 – the largest decrease ever – releases will grow 4.8 percent in 2021.
The 1,500 million ton increase in CO2 would be the largest single increase in more than a decade and leave global emissions in 2021 around 400 million tons of CO2, about 1.2 percent, below the 2019 peak.
The majority of the increase in energy demand – an estimated 70 percent – will come from emerging markets, which are forecast to be up 3.4 percent over 2019 levels. Demand in advanced economies will be 3 percent below pre-pandemic levels.
Coal demand will see the sharpest swing. After a decline of 4 percent in 2020, the biggest drop since World War II, coal demand is set to rise 4.5 percent, to 3,800 million tons, in 2021. That will raise coal demand above 2019 levels. It will also add up to an almost 5 percent increase in carbon emissions.
More than 80 percent of the 2021 coal is headed to Asia, with China accounting for half the increased demand. Coal consumption is also set to rise in the U.S. and Europe.
In the U.S., the share of coal-fired electricity generation – the main coal consumer – is forecast to rise from 20 percent in 2020 to 22 percent this year and 23 percent next, as natural gas prices are projected to rise 39 percent to $3.31 per million British thermal units in 2021, according to the U.S. Energy Information Administration (EIA).
The EIA is forecasting U.S. coal production to rise 9 percent over 2020 levels to 585 million tons, with the biggest increase coming in the Appalachian region, in part as a result of metallurgical coal exports rising to 54 million tons next year, up 27 percent from 2020 levels, the agency said.
Oil demand is having a tougher time bouncing back as key consumers in the transportation sector, which accounts for 60 percent of total demand, have not yet recovered.
“The drop in demand in 2020 did not affect all fuels evenly,” the IEA said. “Oil was by far the hardest hit, with restrictions on mobility causing demand for transport fuels to fall by 14 percent from 2019 levels … Overall, oil demand was down by almost 9 percent across the year.”
The IEA said it expects global oil demand to increase 6.2 percent in 2021, but that will still leave consumption about 3 percent below 2019 levels.
“Oil use for aviation is projected to remain 20 percent below 2019 levels even in December 2021, with annual demand more than 30 percent lower than in 2019,” according to the IEA.
The EIA is forecasting global consumption of petroleum and liquid fuels will average 97.7 million barrels a day for 2021, a 5.5 percent increase – a slightly lower figure than IEA’s.
The U.S. energy agency is also projecting a slight increase in domestic oil production to 11.9 million barrels a day in 2021, up from 11.1 million barrels a day in 2020. Before the pandemic, the U.S. was producing 13 million barrels a day.
Natural gas demand will rise 3.2 percent in 2021, as consumption grows in Asia, the Middle East and Russia. Still, global demand will be up just 1.3 percent over 2019 levels, the IEA said.
The U.S. is the world’s largest natural gas market, but rising gas prices and competition from renewables are pinching demand.
EIA is projecting a 0.4 percent decline in U.S. natural gas consumption to an average of 82.9 million cubic feet a day.
Global electricity demand is set to rise by 4.5 percent in 2021, or more than 1,000 terawatt-hours (TWh). “This is almost five times greater than the decline in 2020, cementing electricity’s share in final energy demand above 20 percent,” the IEA reported.
In the face of the pandemic, renewables were the only energy sector to grow, increasing by 3 percent in 2020, largely due to an increase in photovoltaic solar and wind electricity generation. “Renewables have proven largely immune to the pandemic,” the IEA said.
While the use of renewables is growing across all the key sectors – power, heating, industry and transport – electricity generation has driven growth.
Renewable electricity generation in 2021 is forecast by the IEA to expand by more than 8 percent to reach 8,300 TWh, the fastest year-on-year growth since the 1970s.