Economic output has already dropped significantly worldwide due to the corona crisis. And yet the pandemic is far from over. Economists are presenting their forecasts with corresponding caution these days. The two companies that dared defy this trend are British oil company BP and Norwegian risk management company DNV GL.
Their reports focus on the impact of the COVID-19 pandemic on energy consumption. The first six months of the crisis showed that lockdown measures significantly reduce energy consumption, which promptly rose again as soon as measures were relaxed or lifted.
Nevertheless, DNV GL and BP assume that energy usage will remain lower even after the crisis. In particular, the trend towards more hours working from home should, according to both analyst groups, prove to be a more long-term shift even in a world without lockdowns. “Energy consumption in transport will never again reach the level we saw in 2019 and the demand for steel and building materials for office buildings will be significantly lower,” predict the DNV GL authors.
But the crisis also means that the economy will continue from a new, lower level overall. According to the BP Energy Outlook, it is the economic growth of emerging economies in the global South, in particular, that will take a hit and thus have a knock-on effect on energy consumption. This could well mean that the world will never again use as much oil as it did last year.
Analysts largely agree that the current crisis will not be a short-term phenomenon from which the global economy will soon fully recover. At least not in the sense that in a few years it will be where it would have been without COVID-19.
The experts of DNV GL have reduced their forecast for the entire period under review until 2050 by six to eight percent. For BP, the overall projected impact is smaller. Depending on the severity of the coronavirus pandemic, a 2.5 to 3.5 percent reduction in energy consumption versus the original pre-corona forecast is to be expected by 2025. In any case, it is likely to have a snowball effect. According to the analysts, by 2050, annual energy usage could be three to eight percent lower than in a world where COVID-19 never existed.
The BP Energy Outlook 2020 is available here.
And you can order the Energy Transition Outlook 2020 along with more detailed forecasts for the power supply, shipping and oil and gas sectors as PDF files here. The highlights as well as a presentation video can be found here.
Photo credit: shutterstock.com, Frederic Legrand – COMEO