The coronavirus, signal of a sustainable decline in fossil fuels?

Audio 01:59

A view of the Abqaiq oil fields belonging to the Aramco company in Saudi Arabia. Fayez Nureldine / AFP

By: Claire Fages Follow

Oil prices picked up somewhat on Tuesday after the announcement of a new production cut by Saudi Arabia. But the coronavirus epidemic is likely to mark the fossil fuels industries with a lasting seal of decline.

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The entire oil industry is wondering about the long-term impact of the coronavirus. For the boss of the British company BP, whose reports are still very scrutinized in the sector, “  The shock on oil consumption will last beyond the epidemic.  Bernard Looney took over the reins of the British major in February, just before the coronavirus caused world oil consumption to collapse by 30% by nailing planes to the ground and largely disrupting road transport and maritime on the planet.

Peak oil demand reached ?

He judges in an interview with the Financial Times that "  the telework put in place during the confinement will persist, which will durably decrease the transport needs ... We may have reached the peak of oil demand," he concludes, " is possible, I do not exclude it . "

Peak reached or not, Saudi Arabia will drop back to its production level this year… 2002. In June the Saudi national company Aramco will only produce 7.5 million barrels a day, 40% less than a month. April which was certainly record (12.3 million barrels a day).

Kuwait and the United Arab Emirates have also announced additional production cuts, in addition to the volume agreed to by members of the OPEC + alliance, which associates Russia.

Closing the gates more is what the International Energy Agency had called on the producer countries to do. The IEA, which encourages states to support the development of renewable energy more than ever, expects in its latest report a decline in oil demand of at least 9% in 2020. It should be the most fossil fuel affected by coronavirus if you consider the whole year.

Coal demand resists better

On the other hand, coal consumption will drop less according to the IEA, by only 8%. And the entire decline has already taken place in the first quarter. This relative resilience of coal is explained by the inertia of public policies in favor of this energy. More than 600 billion dollars are programmed for the construction of coal-fired power stations in the world, of which 80% in Asia, according to Global Energy Monitor.

Even if banks, including Asian banks, turn their backs on coal, one after the other, deemed incompatible with environmental objectives, projects already in the pipeline will be carried out. China has just authorized new provinces to launch construction sites, underlines a report of Carbon Tracker, and it imported 22% more of coal in April, compared to last year. In South Korea, Japan, and the developing countries they finance, such as Vietnam and Indonesia, governments will direct funds devoted to post-coronavirus recovery to companies in difficulty in the coal sector.

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