(Credit: McKinsey & Company)The pandemic has resulted in a profound reduction in energy demand, and it will take between one to four years to recover, according to new research by global consultancy McKinsey & Company. Electricity and gas demand are expected to bounce back more quickly than demand for oil. However, demand for fossil fuels will never return to its pre-pandemic growth curve, McKinsey says.
Over the long-term, the impacts of behavioral shifts due to Covid-19 are minor compared to “known” long-term shifts such as decreasing car ownership, growing fuel efficiencies and a trend towards electric vehicles, whose impact is estimated to be three to nine times higher than the pandemic’s by 2050.
“While the pandemic has certainly provided a substantial shock for the energy sector across all fuel sources, the story of the century is still a rapid and continuous shift to lower-carbon energy systems,” says Christer Tryggestad, senior partner at McKinsey.
Energy systems around the world will shift to renewables, which are able to compete with the marginal cost of fossil power already in most places, but by 2050 more than half of all global energy demand will continue to be met by fossil fuels.
As a result, while the earlier peak of hydrocarbon demand means a substantial reduction in forecasted carbon emissions, the world remains significantly off of the 1.5ºC pathway and will run out of its carbon budget for 2100 in the early 2030s.
“There is still a long way to go to avert substantial global climate change. According to our estimates, annual emissions would need to be around 50% lower in 2030 and about 85% lower by 2050 than current trends predict to limit the global temperature increase to 1.5ºC,” Tryggestad says.
