IEA: EU energy demand to fall 10% in 2020 International 2020-06-29 08:59:46

The Covid-19 pandemic and associated lockdowns will reduce 2020 EU energy demand by 10% from last year, almost double the decline seen during the 2008-09 financial crisis, according to the International Energy Agency (IEA).

The pandemic had already resulted in a 5% decline in the bloc's energy demand during the first quarter, the agency said in its latest energy policy review.

"EU electricity demand has declined and remains sluggish by June 2020 despite the need for electricity in hospitals and residential sectors," it said.

It noted average weekday electricity demand for services had declined "considerably".

"In Italy, the hardest-hit country in Europe, declines reached 75% relative to the same period in 2019," it added.

The IEA said also that with lower power demand, coal and gas power plants were running fewer hours and the share of renewable energy had increased rapidly.

This had led in some instances to negative electricity prices in EU wholesale markets.

Coal decline

Meanwhile, the IEA projected coal demand will drop by a fifth this year, "with industrial production largely on hold".

EU coal demand in the first three months dropped by 20%, year on year, it said, adding the bloc has experienced the largest reduction in nuclear generation compared with other countries during the lockdown period.

"Gas demand in the EU also declined – amid a milder winter – but proved rather resilient, as gas is mainly used for heating and global gas prices reached a record low in the first half of 2020," it said.

Emissions targets

At the same time, while reduced usage of fossil fuels enabled the EU to cut energy-related carbon emissions 8% in the first quarter, this "should not lead to complacency", the IEA said.

"While these trends could enable the EU to meet its 2020 targets for renewable and energy efficiency, … investment in renewable energy is set to decline by one-third in 2020, compared to 2019."

It noted this would be an historic decline for the EU, pointing in particular to a 50% decline in solar power investment.

"The rebound in emissions and energy use is expected to be high, supported by very low global commodity prices," it said.

As such, the agency said the EU was not yet on track towards the targeted increase of the renewables share to 32% by 2030.

"Today's 2030 targets will require a significant system transformation," it said.

"The EU should therefore accelerate the implementation of the current policies and regulations, while considering the need for new EU policies," it said.

(Writing by Becky Du  Editing by Tammy Yang)
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