The International Energy Agency’s (IEA) ‘Global Energy Review 2021’ suggests that accelerating rollouts of COVID-19 vaccinations throughout many major economies, alongside widespread fiscal responses to the economic crisis, are helping to improve the outlook for economic growth and triggering a rebound in energy demand this year.
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There is, of course, a ‘but’. The pace of global vaccine rollouts, the emergence of new variants of the virus, and the size and effectiveness of economic stimulus measures all present significant uncertainties. Meanwhile, even if there is a big rebound in economic activity, the IEA notes that there is a danger that CO2 emissions will be pushed to a new high.
In its current projections, the IEA expects global energy demand to increase by 4.5% this year, which will offset the 4% contraction seen in 2020 and will push demand 0.5% above 2019 levels. Emerging markets and developing economies account for almost 70% of the projected increase, with demand set to rise 3.4% above 2019 levels. In advanced economies, energy use is set to be 3% lower than pre-COVID levels.
Global oil demand is set to remain 3.2% below 2019 levels, despite an expected increase of 6.2% in 2021 compared to last year. Although oil use for road transport is expected to reach pre-COVID levels by the end of 2021, its use as an aviation fuel is projected to be 20% below 2019 levels even in December 2021.
The only oil sector that is set to surpass pre-COVID levels is petrochemical feedstock, with plastic production increasing due to demand for packaging and personal protective equipment. LPG, naphtha and ethane demand are projected to increase by 4% in 2021.
Meanwhile, natural gas is expected to grow 3.2% this year, placing global demand 1.3% above 2019 levels. The recovery in demand is seen primarily in Asia and the Middle East, with the industry and buildings sectors expected to lead gas demand growth in 2021 (the IEA expects demand in both sectors to increase by 5%).
However, the big winner in the report is renewable energy. Last year, renewable energy use increased 3%, and it is expected that renewable electricity generation will grow by more than 8% in 2021, recording its fastest year-on-year growth since the 1970s. Wind is set for an increase of almost 17% (up 275 TWh), with China and the US accounting for more than half of global wind output, while solar photovoltaic (PV) electricity generation will increase by 145 TWh (almost 18%). The IEA expects the share of renewables in electricity generation to reach an all-time high of 30% in 2021.
Hydrocarbon Engineering’s sister publication, Energy Global, is the number one place to keep abreast of the latest developments in the growing renewables market. If you’re not already receiving a regular copy of the digital magazine, I’d encourage you to head over to www.energyglobal.com to register for a free subscription today. There you will also be able to keep up with the latest news regarding solar, wind, bioenergy, electric & hybrid, energy storage and much more.