IEEJ：June 2020©IEEJ 2020
Special Bulletin
A Japanese Perspective on the International Energy Landscape (484)June 12, 2020

Impact of COVID-19 Pandemic on Decarbonization Initiatives
Ken Koyama, PhD
Chief Economist, Managing Director
The Institute of Energy Economics, Japan
This weekly column titled “a Japanese Perspective on the International Energy Landscape”
has continuously considered the impacts of the COVID-19 pandemic on the international energy
situation from various angles since the 471st issue on March 6, 2020. This issue analyzes thepandemic’s impacts on decarbonization initiatives.
First, I would like to review the current impacts of the pandemic. According to a preliminary
analysis by the Institute of Energy Economic, Japan, global energy-related carbon dioxide emissions
in 2020 will substantially decline as oil and other fossil fuels demand plunges due to considerable
economic contraction and an extreme fall in transportation demand through lockdowns. In a reference
scenario for a 3% global economic contraction in 2020, global energy-related CO2 emissions will
decline by 8% from an estimated 33.5 billion tons in 2019 to 30.8 billion tons in 2020. In a longerpandemic scenario for a 6% global economic contraction, CO2 emissions would fall further to 29.7
billion tons. These CO2 emission falls are basically attributable to a steep decrease in oil and otherfossil fuel consumption amid the global economic contraction. In the reference and longer pandemic
scenarios, therefore, global energy-related CO2 emissions will restore the 2019 level in 2021 as an
economic recovery leads energy consumption to rise back. If the second pandemic wave comes in
2021 to force a delay in the global economic recovery, however, global energy-related CO2 emissions
will remain as low as 30 billion tons in 2021. Global CO2 emissions will thus be greatly influenced by
the fate of the pandemic itself and the global economy.
The decline in CO2 emissions is desirable for climate change countermeasures. As indicatedby the above projections, however, the sharp fall in global CO2 emissions in 2020 is attributableprimarily to the huge impacts of the pandemic and cannot be welcomed unconditionally. If thepandemic ends, allowing the world to restore business as usual without any structural change in global
energy consumption, the world will go back to the past CO2 emission path in line with economic
growth. Attracting global attention now are the pandemic’s long-term and structural impacts on CO2emission reduction and decarbonization initiatives.
Interests are growing in the long-term and structural impacts of the pandemic because thepandemic, inflicting huge damage and enormous influence, is increasingly expected to change global
human behavior, affect business activities and greatly impact international politics, the global
economy and geopolitics. In such circumstances, attention is being paid to the pandemic’s impacts onenergy and environment policies of major countries and potential changes in the development,diffusion and future course of relevant technologies. However, the problem is that the impacts areuncertain, indicating no certain direction. It is unforeseeable whether conceivable long-term andstructural changes would come or how fast or strong such changes would be. Various factors indicatingutterly different directions are mixed, making it more difficult to predict the future.
I would like to begin by looking at “positive” factors for decarbonization initiatives. First,1

IEEJ：June 2020©IEEJ 2020
structural downward pressure on oil demand is attracting attention. It is pointed out that telework andweb conferences that have diffused under the pandemic could settle down and expand in a manner tostructurally suppress oil demand growth, leading oil demand to peak faster than expected earlier. If so,
it would help enhance net energy savings and structurally reduce CO2 emissions.
Second, moves to give priority to the powerful promotion of “post-corona” economic
reconstruction combined with decarbonization initiatives are attracting even greater attention. Suchmoves are typically seen in Europe including the European Union. The new EU leadership hasemphasized the so-called Green Deal that adopts the development and diffusion of renewable energy
and other decarbonization technologies as the pillar of a long-term growth strategy. As economic
reconstruction becomes an urgent challenge in the wake of huge economic losses brought about by thecorona disaster, the Green Deal concept is positioned as one of the key pillars in draft Europeaneconomic reconstruction plans. If such plans are realized, Europe will powerfully promotedecarbonization initiatives while reconstructing its economy. In the United States, the combination of
economic reconstruction with decarbonization initiatives would depend on who would be electedpresident. If Republican President Donald Trump is reelected, no major change would come. If
Democratic candidate Joseph Biden wins, however, he could emphasize the enhancement of climatechange countermeasures, leading the United States to strengthen decarbonization initiatives in a postcorona world.
However, currently emerging factors include those that could exert “negative” impacts on
decarbonization initiatives in the post-corona world. The first such factor is a priority change. Climatechange is unarguably a particularly important long-term problem for humans. However, the COVID19 pandemic has become a critical or grave problem involving our survival as of now. In suchcircumstances, top priority is given to dealing with the pandemic, leading interests in and priority forclimate change to decline relatively and globally. Experiences with the pandemic could prompt people
to view climate change as relatively, rather than absolutely, important. If the world gives relative
priority to climate change compared with other challenges, it may not necessarily exert positive
impacts on climate change. This may be more conspicuous in low-income developing countries.
Relevant moves in developing and emerging countries will attract attention as they are set to accountfor most of future greenhouse gas emissions.
The second factor is related to energy investment. Although there are plans to combine postcorona economic reconstruction with decarbonization initiatives as described above, the energy
investment environment is now tough. Falls in energy demand, uncertainties about future energy
demand and weak fossil fuel and electricity prices have made energy investment difficult. As theimportance of affordable energy supply for economic development and growth is recognized anew,
investment in decarbonization initiatives may face various challenges.
The third factor is whether international cooperation in decarbonization would work
sufficiently. The international community must be united to tackle climate change and other global
challenges for the sake of global interests. In the post-corona world, however, tensions between major
powers are expected to increase, leading to a difficult geopolitical environment. A matter of concern
is how decarbonization initiatives would be promoted globally in a “G zero world” where me-firstforeign policy would grow dominant in a manner to affect international cooperation in protecting
global interests.
I would like to closely watch how these various factors would work in the future.
2Contact: report@tky.ieej.or.jp
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