IEEJ：July 2021©IEEJ 2021
Special Bulletin
A Japanese Perspective on the International Energy Landscape (541)

July 15, 2021

2020 Global Energy Situation Indicated by BP Statistics
Ken Koyama, PhD
Chief Economist, Managing Director
The Institute of Energy Economics, JapanOn July 8, international oil company BP PLC released its “BP Statistical Review of World
Energy 2021.” As noted in nine past editions of this report, the BP statistics are one of the world’s
most representative annual energy supply and demand statistics. Energy stakeholders in the worldrefer to the BP statistics known for comprehensive coverage of the latest annual data. In thefollowing, I would like to review the 2020 international energy situation based on the data.
First, the most important point of the 2020 international energy situation is that theunprecedented impacts of the COVID-19 pandemic rattled the world and directly hit energy markets.
This was typically indicated by an unprecedentedly steep decline in global primary energy
consumption. In 2020, global primary energy consumption plunged by 4.5% from the previous year
to 556.6 exajoules (EJ). Energy consumption is indispensable for living and economic activities inhuman society and usually expands under economic and population growth in the world. In the pasthalf century, global energy consumption decreased from 1980 to 1982 under a global recession
triggered by the second oil crisis and in 2009 under the global financial crisis. In other years before
2020, global primary energy consumption followed an uptrend. The 4.5% plunge in 2020, the third
drop in the past half century, indicated the enormous impacts of the COVID-19 pandemic. Of thetwo earlier declines, the 1.5% drop in 2009 was larger. The 2020 drop tripled the 2009 decline,representing the largest drop since the end of World War II.
Second, a region-by-region breakdown of the global energy consumption decline clearly
indicates the impacts of the pandemic. The Organization for Economic Cooperation andDevelopment accounted for 70% of the 2020 global decline of 24.9 EJ or 4.5%. This reflects theserious social and economic impacts of the COVID-19 pandemic on OECD advanced economies
including the United States and European countries. OECD primary energy consumption posted a7.7% plunge, far faster than a non-OECD decline of 2.4%. This represents enormous economic
impacts and the effects of urban lockdowns forced in Western countries. Among countries, theUnited States recorded the largest decline of 7.1 EJ or 7.7%, followed by 1.9 EJ or 5.9% for India,
1.6 EJ or 5.5% for Russia and 1.3 EJ or 7.5% for Japan. The European Union as a region showed adrop of 5.0 EJ or 8.5%. The four countries and the European Union accounted for 68% of the global
primary energy consumption decline. Europe, the United States, India and Russia, which are amongmajor energy consumers and the world’s most pandemic-affected economies, became the center ofthe global energy consumption plunge. In contrast, China, known as the world’s largest energy
consumer, expanded primary energy consumption by 2.1% to 145.5 EJ as it took the initiative inovercoming the COVID-19 pandemic. While global energy consumption declined substantially,
China minimized social and economic impacts of the COVID-19 pandemic and increased energy
consumption. China thus raised its share of global primary energy consumption by 2 percentage
points to 26% in 2020, becoming more important in international energy markets.
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Third, fossil fuel consumption centering oil consumption declined substantially. While theglobal economy plunged into the worst situation since the Great Depression, lockdowns were forced
to severely restrict demand for human and goods mobility and economic operations to prevent
COVID-19 infections from spreading. As a result, overall energy demand fell substantially mainly inEurope and the United States. Particularly, mobility demand decreased dramatically. The mobility
demand plunge, including a steep fall in international air transport demand, affected oil consumption.
Global oil consumption in 2020 posted a 9.7% plunge from the previous year, the fastest fall in thepast half century. As explained below, the dramatic oil consumption decline caused oversupply andprice falls in the international oil market, leading to a record oil production cut by the Organizationof the Petroleum Exporting Countries and its allies known as the OPEC-plus group, as well as asteep drop in U.S. shale oil production. Global natural gas consumption in 2020 decreased by 2.3%
from the previous year after sustaining a steady increase over a long term. The year’s coalconsumption also plunged by 4.2%. As a result, oil’s share of global primary energy consumption in2020 dropped by 2 percentage points from the previous year to 31%. Fossil fuels’ share declined
from 84% to 83%. Non-fossil energy sources’ share rose to 17%. Particularly, renewable energy
consumption (excluding hydro) expanded by a substantial 9.7% to 31.7 EJ. Factors behind therenewable energy consumption increase even amid an overall energy consumption decrease might
have included a fast fall in solar photovoltaics and wind power generation costs, growing solar PV
and wind power generation capacity under the falling costs, priority supply access to power market
given to renewable energy power generation in many countries and a competitive edge for renewableenergy power generation featuring the near-total absence of variable costs in a competitive wholesale
electricity market. Nuclear energy consumption in 2020, though increasing in developing economies,
posted an overall decrease from the previous year as nuclear power generation dropped in major
markets such as Japan, the United States and Europe.
Fourth, global energy-related CO2 emissions declined substantially amid theabovementioned changes in energy supply and demand. Global CO2 emissions in 2020 totaled 31.98
billion tons, down 6.3% from the previous year. The percentage drop tripled the previous largest fallin the past half century of 2.1% recorded in 2009. The 4.5% decline in global primary energy
consumption was coupled with the dramatic drop in fossil fuel consumption including oil and theincrease in non-fossil energy consumption to bring about a substantial decrease in CO2 emissions,indicating a great impact of the COVID-19 pandemic on CO2 emissions. The CO2 emission decline
represents a positive effect on climate change prevention but has resulted from massive adverse
effects on economy and society. At a time when global demand for energy including fossil fuels is
restoring an uptrend, however, we must acknowledge that it would not be easy to sustain asubstantial decline in CO2 emissions over a long term. If the annual CO2 emission cut of 6.3% issustained over three decades, global CO2 emissions may decline by more than 85%. The CO2emission reduction pace under the serious COVID-19 pandemic would have to be sustained overthree decades to bring about an emission cut of more than 80%, indicating that it would a difficult
challenge to cut global CO2 emissions substantially and sustainably.
Fifth, the year 2020 featured a free fall in energy prices amid the substantial energy
demand decrease and growing oversupply in its first half. In a symbolic development, thefront-month futures contract for West Texas Intermediate crude oil plunged into minus territory. Spotnatural gas and LNG, and coal prices also posted sharp declines. In response to the oil price plunge,
the OPEC-plus group launched a record coordinated oil production cut and has sustained it to date.
The oil price drop led to a fast decline in high-cost U.S. shale oil production. The price plunge
stimulated energy demand, prompting Asian LNG demand to increase in the second half of 2020.
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Overall energy prices rose back in the second half. As energy markets responded to the dramatic
impacts of the COVID-19 pandemic in the first half of 2020, energy supply and demand wererebalanced in the second half.

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