Global oil consumption has not peaked, International Energy Agency (IEA) executive director Fatih Birol said yesterday, throwing cold water on hopes that the COVID-19 pandemic would cap demand and reduce climate-changing emissions.
“In the absence of strong government policies, a sustained economic recovery and low oil prices are likely to take global oil demand back to where it was, and beyond,” Birol said in an interview.
The world last year consumed nearly 100 million barrels of oil a day and some in the energy industry believe that could mark the peak for global demand.
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Their hypothesis is that the pandemic would trigger changes, like widespread working from home and less overseas travel, reducing consumption permanently.
If true, that would have huge implications for climate change, as burning less oil would permanently reduce greenhouse emissions, easing the way to meet the goals of the Paris climate agreement.
However, Birol said the coronavirus would only reduce oil demand briefly, with consumption dipping this year to about 91 million barrels a day, before rebounding next year and beyond.
“Behavioral changes in response to the pandemic are visible, but not all of them are negative for oil use. People are working from home more, but when they do travel, they are more likely to be in cars than public transport,” he told Bloomberg News from Paris. “Videoconferencing will not solve our energy and climate challenges, good government policies might.”
Birol is urging governments to use their economic recovery packages to fight climate change, spending on green energy to help to achieve the goals set in the 2016 Paris accord.
Without deep structural changes, emissions are expected to rise again when economies recover.
“If there’s a strong economic recovery, American business consultants using Zoom will not compensate for 150 million new urban residents in India and Africa traveling, working in factories and buying products transported by trucks,” Birol said.
Birol drew parallels with the 2008-2009 global financial crisis, when oil demand also suffered a major annual drop, before consumption increased again.
The economic recovery packages back then did not focus on green energy and savings, missing an opportunity to tackle the challenge of climate change.
The IEA is sticking to its view that global oil demand will continue to increase over the next decade or so, before reaching a plateau by about 2030.
However, the current economic crisis is likely to reduce vehicle sales for a while, keeping less-efficient clunkers on the road.
“Fewer car sales means older cars stay on the road,” Birol said.
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