IEA global energy review for 2021

The International Energy Agency has published its latest Global Energy Review, which forecasts energy demand and carbon emissions for 2021.

The report expects that carbon emissions will rise this year, due to economies rebounding from COVID-19. Levels will be influenced by the pace of global vaccine rollouts, the emergence of new variants, and the type of economic stimulus measures that governments use. 

Global economic output is expected to rebound by 6% in 2021, pushing the global GDP more than 2% higher than 2019 levels. Emerging markets are driving energy demand back above 2019 levels.

Global energy demand is set 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, where demand is set to rise to 3.4% above 2019 levels. Energy use in advanced economies is on course to be 3% below pre-COVID levels.

Demand for all fossil fuels is set to grow significantly in 2021.

Despite an expected annual increase of 6.2% in 2021, global oil demand is set to remain around 3% below 2019 levels. Oil use for road transport is not projected to reach pre-COVID levels until the end of 2021. 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.

Meanwhile, coal demand is on course to rise 4.5% in 2021, with more than 80% of the growth concentrated in Asia. China alone is projected to account for over 50% of global growth. Coal demand in the US and the European Union is also rebounding, but is still set to remain well below pre-crisis levels. The power sector accounted for only 50% of the drop in coal-related emissions in 2020. But the rapid increase in coal-fired generation in Asia means the power sector is expected to account for 80% of the rebound in 2021.

Natural gas is on course for biggest rise of all the fossil fuels, with demand set to grow 3.2% in 2021, mainly due to demand from Russia, the Middle East and Asia. This is expected to put global demand more than 1% above 2019 levels. In the US – the world’s largest natural gas market – the annual increase in demand is set to amount to less than 20% of the 20bn cm decline in 2020, squeezed by the continued growth of renewables and rising natural gas prices. Nearly three-quarters of the global demand growth in 2021 is from the industry and buildings sectors, while electricity generation from natural gas remains below 2019 levels.

Electricity demand also heading for biggest growth in over 10 years, set to increase by 4.5% in 2021. This is almost five times greater than the decline in 2020, cementing 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 alone accounting for half of global growth.

Renewables were the success story of the COVID-19 era, with demand growing 3% in 2020. This is set to increase in 2021 across all key sectors (power, heat, industry and transport). Solar PV (photovoltaic) and wind are expected to contribute two-thirds of renewables’ growth this year, with the share of renewables for electricity generation increasing to almost 30%, the highest level recorded to date, according to the IEA.