Sustainability & CSR
Silver lining for the environment from Covid-19
Halted travel and manufacturing slowdown mean a drop in carbon emissions, at least in the short term
By Duncan Levine
While the human and economic toll from the 2019 novel coronavirus (Covid-19) continues to rise, there is one silver lining: global fossil fuel consumption and carbon emissions have dropped substantially, at least over the past two months.
The biggest contributors to the decline have been from the manufacturing and transport sectors. In its Flagship report for February, released on 13 February, the International Energy Agency (IEA) cut its oil consumption growth forecast for 2020, predicting the first drop in oil demand growth for more than a decade. For the full year, the IEA says that COVID-19 is expected to curb annual growth in global consumption by about 30% to 825,000 barrels a day, the lowest growth rate since 2011. It noted that the effects would be more significant than those of the 2003 SARS outbreak, because of China’s increased importance and integration within the global economy. Meanwhile China’s own energy groups expect domestic oil demand to drop by 25% year-on-year in February.
The IEA has not released forecasts for how the cut will affect CO2 emissions in 2020, but according to its latest data, global energy-related carbon dioxide emissions stopped rising in 2019, even as the world economy expanded by 2.9%. This defied widespread expectations of another increase in emissions and gave grounds for optimism that the world can put emissions on a sustainable path without undermining economic growth. According to the IEA, global energy-related CO2 emissions flattened in 2019 at around 33 gigatonnes (Gt), following two years of increases. This was caused mainly by a sharp decline in CO2 emissions from the power sector in advanced economies, thanks to the expanding role of renewable sources (mainly wind and solar PV), fuel switching from coal to natural gas, and higher nuclear power output. This shows that clean energy transitions are already underway in the United States, the European Union and elsewhere, even though overall global oil consumption is still rising.
In the meantime in China, with many factories remaining shuttered or having resumed only partial production, demand for power, which still comes mostly from coal-fired power plants, has dropped substantially. According to China’s official statistics, as of mid February, daily coal consumption at six large power generation groups was down 43% year-on-year, a sign that many factories were either not operating or running at below capacity.
Covid-19 has also had a severe impact on travel, particularly passenger air travel, as well as shipping, logistics and commuter transport. The International Civil Aviation Organization (ICAO) reported on 14 February that 70 airlines globally have cancelled all international flights in and out of China, and 50 others have reduced their operations. Preliminary estimates show this has meant a reduction of around 40% of passenger capacity or a drop of close to 20 million passengers compared with expectations for the first quarter.
ICAO had previously forecast that, thanks to the ongoing trend of increasing global air travel, aeroplane emissions would triple by 2050 from a level of just over 900 million metric tonnes in 2018. Prior to the Covid-19 outbreak, airlines had reportedly planned to increase capacity by 9% on international routes to and from China for the first quarter of 2020 compared to 2019. However, these plans have been put on hold as foreign airline traveller capacity in and out of the country has gone down 80% in the wake of the outbreak. In China itself, national passenger traffic is down by as much as 85%, as of mid-February, compared with the same period a year ago, according to data compiled by Morgan Stanley, indicating that workers were not returning to their posts at factories around the country after the Chinese New Year break.
The Nikkei Asian Review has calculated that the coronavirus outbreak has slashed Japan’s air connections with the rest of the world by about two-thirds while ICAO estimates that Japan could lose US$1.29 billion in tourism revenue.
While air travel still accounts for a relatively small portion of global emissions, if you add the impact of the drop in passenger traffic to the drop in fossil fuel consumption by other transport and manufacturing activities in the first quarter, we are on track for a drop in global emissions for the period. This, of course, does not imply we can extrapolate the same trends for the rest of the year. If the crisis ends soon, pent-up demand for manufactured products is likely to lead to increases in emissions in the subsequent quarters as manufacturing and related activities ramp up. However, if the crisis drags on for several more months, we may well see an annual drop in emissions in 2020.
All this, of course, does not signify a sustainable trend. For carbon emission reductions to continue will require a continuation of energy transitions all across the globe and a much larger expansion of global decarbonisation efforts.