The Energy Sector Survived
The Minister of Energy of Russia Alexander Novak in a conversation with the President of the Global Energy Association Sergey Brilev at the online conference "COVID-19: accelerating the transition to the energy of the future for all” assessed the prospects of the energy sector.
Despite the fact that the world economy has faced unprecedented shock related, among other things, to the behavior of markets, to the decline in demand, to the change in lifestyle during these few months, energy, in my opinion, was sustainable. The Fuel and Energy Complex covers a wide range of industries: the oil and gas sector, coal, electrical energy sector and renewable energy.
In April, we saw the worst period of decline in demand for oil refining products in the amount of 28-30%. It was announced that investment in industries as a whole would be reduced by 30%. Air and road transportation have been severely affected. And, nevertheless, the fuel and energy sector remained stable.
We will experience changes in the structure of the energy industry. Many companies will change their strategies. Forecasts that were made earlier on the development of the world energy sector would be significantly adjusted. The recovery will not be a V-shaped one, but most likely it will be early primary recovery with a slow return to pre-crisis levels.
It will be necessary to change forecasts related to the structure of energy consumption and electricity generation in the world. While it was previously planned that by 2040 the share of hydrocarbons would decline from 85% to 75%, these forecasts are now being revised and the share of oil would be much lower. We will see the rapid development of IT and digital technology. This will have an impact on the development of the electric power industry. More electricity will be consumed, less of it will be produced from hydrocarbon sources and more from renewable sources.
Many companies and countries claim that remote work will become permanent. We have heard a statement from companies such as Facebook, Twitter, that over the next few years about 30% of employees will continue to work remotely.
Whereas previously we had seen quite significant changes in climate policy and increased movement towards green energy, today this dynamics is becoming more and more of a pressure on the energy industry.
Despite the fact that prices have fallen three times for oil and coal and energy production from renewable sources has become less competitive, governments and the management of large energy companies have strengthened policies and investments in green technologies. We see increasing requirements for reporting on emission reductions, we see statements that by 2050 we will reach carbon neutrality in some developed countries, especially in European countries. This trend has definitely increased.