Nuclear Power and Secure Energy Transitions: From Today's Challenges to Tomorrow's Clean Energy Systems
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COVID-19

Exploring the impacts of the Covid-19 pandemic on global energy markets, energy resilience, and climate change


The coronavirus (Covid-19) has created the biggest global crisis in generations, sending shock waves through health systems, economies, and societies around the world. Faced with an unprecedented situation, governments are focused on bringing the disease under control and reviving their economies.  

The energy sector was severely affected by repeated lockdowns in 2020, with slowed transport, trade and economic activity across the globe pushing energy use down by 4%. But even as waves of the pandemic continued to roll across the world in 2020, stimulus packages and vaccine roll outs allowed much economic activity to return, and global energy demand was seen rebounding by 4.6% in 2021, taking it above pre-pandemic levels. 

The implications of the pandemic for energy systems and clean energy transitions are still evolving but three areas in particular stand out:

  • Energy security remains a cornerstone of our economies especially during turbulent times;
  • Electricity security and resilient energy systems are more indispensable than ever for modern societies;
  • Clean energy transitions must be at the center of economic recovery and stimulus plans, and renewables were a major bright spot, with wind and solar installations continuing to expand even during the pandemic.

In all these areas, the IEA is focused on bringing data, analysis and real-world solutions to help governments navigate these challenges and build secure and sustainable energy systems.

Key findings

Change in quarterly oil demand in 2020 and 2021 relative to 2019 levels

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An unprecedented decline in demand for mobility

Despite the rebound, demand across 2021 is expected to remain 3.2% below 2019 levels.

Covid-related restrictions on mobility continue to suppress oil demand for transport in the first half of the year, even if the impact is much less than a year earlier. Demand rose progressively in the second half of 2021, as vaccination campaigns ramp up and travel returns. Nonetheless, oil demand is not projected to reach pre-crisis levels with demand in the fourth quarter of 2021 expected to be 1.4 mb/d lower than pre-crisis levels. International aviation's oil use is the slowest area to rebound and is expected to be 20% below 2019 levels even in December 2021. Excluding international aviation, oil demand is expected to return to 2019 levels in the last months of 2021.

Annual total clean energy and sustainable recovery measure spending by governments, related mobilised investments and targeted levels in the Sustainable Recovery Plan, 2021-2023

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Government spending is increasingly concentrated on a handful of sectors

Most government spending on clean energy and sustainable recovery measures has been designed to crowd in additional private sector investment through direct spending, favourable regulations, standards or price mechanisms

Based on IEA estimates as of October 2021, policies implemented worldwide since the pandemic could mobilise around USD 400 billion a year on average during 2021-2023 in clean energy and sustainable recovery investment by. Accordingly, government spending now represents nearly 28% of the 2021-2023 clean energy and sustainable recovery investments – roughly in line with the 30% share of public investment recommended in the Sustainable Recovery Plan.

Global energy investment, 2017-2021

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Global energy investment is set to rebound by around 10% in 2021

In 2021, annual global energy investment is set to rise to USD 1.9 trillion, rebounding nearly 10% from 2020 and bringing the total volume of investment back towards pre-crisis levels. However, the composition has shifted towards power and end-use sectors – and away from traditional fuel production.

While many energy companies remain in a fragile financial state, there are signs developers are using the window provided by accommodative monetary policy and government backing to plan infrastructure developments and investments in new projects.