Abstract
Coronavirus caused several challenges to the energy industry. This chapter overviews the impacts and challenges of the Coronavirus outbreak on energy demand, supply, and market and illustrates energy-related lessons and emerging opportunities. The changes in energy industry requirements are compared and studied from multiple views according to available data and oil and gas information markets. In general, although the overall energy demand declines, the spatial and temporal variations are complicated. The energy intensity has presented apparent changes, the extra energy for coronavirus facing is not negligible for energy supply side, and the energy industry recovery in different regions presents significant differences. A crucial issue has been to allocate and find energy-related emerging opportunities for the post-pandemic. This study could offer a direction in opening a new perspective for increasing energy industry stability during emergencies such as pandemics or war in the Middle East region.
TopIntroduction
According to the July 2020 report of the Ristad Energy Research Institute, new scenarios are being considered due to the second wave of the Covid-19 virus outbreak in the world (Dong et al., 2020). As the countries gradually reopened their economic activities, with the corona’s escalation, especially in the United States, Brazil, India, and Europe, the scenarios for predicting world oil demand changed once again. Although the second wave of the corona epidemic has become widespread globally, this level of demand does not return to the level of April (Faust & Del Rio, 2020). However, the global economic crisis is not easily manageable. According to the Energy Ministry, global oil demand in October will not recover as quickly as previously forecast, and its level will be steady and without growth. Global oil demand is expected to average 90.2 million barrels per day in July and to 90.6 million barrels per day in August, September, and October. It will reach 93 million barrels per day in November and 94.7 million barrels per day in December. This is while the global oil demand level last year was more than 99 million barrels per day. It is predicted that even in February 2021, due to the second wave of the corona epidemic, the level of global oil demand will still be lower than in 2019 (Faust & Del Rio, 2020; Brosemer et al., 2020).
The annual estimate of global oil demand will be 89.7 million barrels per day, and the average in 2021 will be about 97.1 million barrels per day. In the institute’s previous report, the projected demand level by the end of this year was estimated at 88.8 million barrels per day, and the total demand for the next year was estimated at 98.1 million barrels per day. In fact, in terms of energy recovery, global oil demand will not be fully restored by the end of 2022 to reach pre-corona levels.
According to Ristad Energy, the rate of adherence of OPEC+ to the reduction of production in May and July 2020 compared to the agreed amount shows that 88% of the obligations have been fulfilled in the mentioned months, and in the meantime, the violations will be compensated in the coming months. In other words, countries that have violated OPEC Plus’ commitment will see the effect in the coming months in the oil market. Figure 1 shows the level of adherence to OPECPlus commitments and member violations during May and July 2020. Overall, the outbreak of the second wave of the coronavirus seems to have drastically reduced global oil demand, and since most governments will no longer impose those strict restrictions, the second wave will be a serious threat that could affect oil prices.
As mentioned in the facts above, COVID-19 has been swiping the world. And by late 2020, reached to more than 75 million confirmed cases and more than 1.7 million deaths in 220 countries all over the world had been reported to the World Health Organization (Dong et al., 2020). In comparison to the early 2020 COVID-19 outbreak and the 1918 Spanish flu pandemic, A study done by Faust ((Faust & Del Rio, 2020) suggests that the coronavirus pandemic might get more severe than the most deadly pandemic twentieth century. Many indexes such as quarantine, social distancing, and lockdown have been implemented to face the COVID-19 pandemic (Walensky & Del Rio, 2020). Coronavirus pandemic has harmed many industries, including agriculture, manufacturing, finance, education, healthcare, sports, tourism, and food (Nicola et al., 2020). And the energy industry was not immune to those harms (Mastropietro et al., 2020). According to foresight and projection data from the International Energy Agency (IEA) (IEA. Global Energy Review 2020), the shock to energy demand-side in 2020 is set to be the largest in the last seven decades. World’s energy demand in 2020 is estimated to decrease by 6% compared to 2019, a decline more than seven times greater than the 2009 financial crisis.
Key Terms in this Chapter
Green Economy: A green economy is an economy that aims at reducing environmental risks and ecological scarcities and that aims for sustainable development without degrading the environment. It is closely related to ecological economics but has a more politically applied focus. The 2011 UNEP Green Economy Report argues “that to be green, and an economy must be not only efficient but also fair. Fairness implies recognizing global and country-level equity dimensions, particularly in assuring a Just Transition to an economy that is low-carbon, resource-efficient, and socially inclusive.”
Sustainable Development: Sustainable development is an organizing principle for meeting human development goals while simultaneously sustaining the ability of natural systems to provide the natural resources and ecosystem services on which the economy and society depend. The desired result is a state of society where living conditions and resources are used to continue to meet human needs without undermining the integrity and stability of the natural system. Sustainable development can be defined as development that meets the needs of the present without compromising the ability of future generations to meet their own needs. Sustainability goals, such as the current UN-level Sustainable Development Goals, address the global challenges, including poverty, inequality, climate change, environmental degradation, peace, and justice.
Natural Resource Economics: Natural resource economics deals with the supply, demand, and allocation of the Earth’s natural resources. One main objective of natural resource economics is to understand better the role of natural resources in the economy to develop more sustainable methods of managing those resources to ensure their future generations. Resource economists study interactions between economic and natural systems intending to develop a sustainable and efficient economy.
Eco-Tariffs: An Eco-tariff, also known as an environmental tariff, is a trade barrier erected to reduce pollution and improve the environment. These trade barriers may take the form of import or export taxes on products with a large carbon footprint or imported from countries with lax environmental regulations.
Emissions Trading: Emissions trading (also known as cap and trade, emissions trading scheme, or ETS) is a market-based approach to controlling pollution by providing economic incentives for reducing the emissions of pollutants.
Environmental Enterprise: An environmental enterprise is an environmentally friendly/compatible business. Specifically, an environmental enterprise is a business that produces value in the same manner which an ecosystem does, neither producing waste nor consuming unsustainable resources. In addition, an environmental enterprise rather finds alternative ways to produce one’s products instead of taking advantage of animals for the sake of human profits. To be closer to being an environmentally friendly company, some environmental enterprises invest their money to develop or improve their technologies which are also environmentally friendly. In addition, environmental enterprises usually try to reduce global warming, so some companies use environmentally friendly materials to build their stores. They also set in environmentally friendly place regulations. All these efforts of the environmental enterprises can bring positive effects both for nature and people. The concept is rooted in the well-enumerated theories of natural capital, the eco-economy, and cradle-to-cradle design. Examples of environmental enterprises would be Seventh Generation, Inc., and Whole Foods.
Circularity: A circular economy (also referred to as “circularity”) is an economic system that tackles global challenges like climate change, biodiversity loss, waste, and pollution. Most linear economy businesses take a natural resource and turn it into a product that is ultimately destined to become waste because it has been designed and made. This process is often summarised by “take, make, waste.” By contrast, a circular economy uses reuse, sharing, repair, refurbishment, remanufacturing, and recycling to create a closed-loop system, minimize resource inputs, and create waste, pollution, and carbon emissions. The circular economy aims to keep products, materials, equipment, and infrastructure in use for longer, thus improving the productivity of these resources. Waste materials and energy should become input for other processes through waste valorization: either as a component or recovered resource for another industrial process or as regenerative resources for nature (e.g., compost). This regenerative approach contrasts with the traditional linear economy, which has a “take, make, dispose of” production model.
Eco Commerce: Eco commerce is a business, investment, and technology-development model that employs market-based solutions to balancing the world’s energy needs and environmental integrity. Through green trading and green finance, eco-commerce promotes the further development of “clean technologies” such as wind power, solar power, biomass, and hydropower.
Low-Carbon Economy: A low-carbon economy (LCE) or decarbonized economy is based on low-carbon power sources with minimal greenhouse gas (GHG) emissions into the atmosphere, specifically carbon dioxide. GHG emissions due to anthropogenic (human) activity are the dominant cause of observed climate change since the mid-20th century. Continued emission of greenhouse gases may cause long-lasting changes worldwide, increasing the likelihood of severe, pervasive, and irreversible effects for people and ecosystems.
Green Politics: Green politics, or ecopolitics, is a political ideology that aims to foster an ecologically sustainable society often, but not always, rooted in environmentalism, nonviolence, social justice, and grassroots democracy. It began taking shape in the western world in the 1970s; since then, Green parties have developed and established themselves in many countries around the globe and have achieved some electoral success.