IEA: Rebound in global economic growth to drive a surge in CO₂ emissions in 2021

20 April 2021

The International Energy Agancy (IEA) released its Global Energy Review 2021 report, which assesses the direction global energy demand and carbon dioxide emissions are taking in 2021. According to the IEA assessment, Covid-19 vaccine rollouts and government’s stimulus packages are boosting the outlook for economic growth. Global GDP is expected to increase by 6% in 2021 relative to 2020—more than compensating for the 3.5% drop—and by more than 2% relative to 2019. This level of economic activity will require a steep increase in energy demand, causing a sharp growth in CO₂ emissions.

Global energy demand is predicted to increase by 4.6% in 2021, more than offsetting the 4% contraction in 2020 and pushing demand 0.5% above 2019 levels. Almost 70% of the projected increase in global energy demand is in emerging markets and developing economies. The demand for oil, natural gas, and coal is to increase in 2021. The growth in coal consumption is driven by strong electricity demand that is heading for its fastest growth in more than 10 years.

Global energy-related CO₂ emissions are heading for their second-largest annual increase ever. As coal demand alone is projected to increase by 60% more than all renewables combined, CO₂ emissions are to rise by almost 5%, or 1,500 Mt—the biggest annual rise in emissions since 2010, during the recovery from the Global Financial Crisis. This expected increase would reverse 80% of the drop in 2020, with emissions ending up just 1.2% (400 Mt) below 2019 emissions.

The key findings of the report include:

• Global oil demand is predicted to increase by 6.2% in 2021. This, however, is still around 3% below 2019 levels, as demand remains low in the aviation industry. Oil use for aviation is projected to remain 20% below 2019 levels even in December 2021, with annual demand more than 30% lower than in 2019. A full return to pre-crisis oil demand levels would have pushed up CO₂ emissions a further 1.5%, putting them well above 2019 levels.
• Among fossil fuels, natural gas is on course for the biggest rise relative to 2019 levels. Natural gas demand is set to grow by 3.2% in 2021, propelled by increasing demand in Asia, the Middle East and Russia. This is expected to put global demand more than 1% above 2019 levels. In the United States—the world’s largest natural gas market—the annual increase in demand is set to amount to less than 20% of the 20 bcm decline in 2020, squeezed by the continued growth of renewables and rising natural gas prices.
• Electricity demand is due to increase by 4.5% in 2021, or over 1,000 TWh. This is almost five times greater than the decline in 2020, putting electricity’s share in final energy demand above 20%. Almost 80% of the projected increase in demand in 2021 is in emerging market and developing economies, with China accounting for half of global growth. Almost 50% of the increase in global electricity generation is to be provided by coal-fired power plants, with their output expected to increase by 480 TWh. This means that the energy transition process has not yet displaced any fossil-derived electricity—renewable energy still does not cover the electricity demand growth and continues to be added on top of the rising fossil energy consumption.
• Demand for renewables grew by 3% in 2020 and is set to increase across all key sectors—power, heating, industry and transport—in 2021. The power sector leads the way, with its demand for renewables on course to expand by more than 8%, to reach 8,300 TWh, the largest year-on-year growth on record in absolute terms. The share of renewables in electricity generation is projected to increase to almost 30% in 2021, with the share of wind and solar reaching nearly 10% of global electricity generation. Wind is on track to grow by 275 TWh, or around 17%, from 2020. Solar PV electricity generation is expected to rise by 145 TWh, or almost 18%, and to approach 1,000 TWh in 2021.

Source: IEA