Globally, 6.5 million energy workers could lose their jobs this year due to the novel coronavirus (COVID-19) outbreak, said the head of International Energy Agency (IEA) late on Tuesday.
Speaking at the webinar titled Sustainable Energy and New Reality, organized by Sabanci University Istanbul International Center for Energy and Climate (IICEC), the head of the IEA, Fatih Birol said there is a very serious wave of layoffs in the energy sector worldwide.
Birol said in the last six months, over 3 million people lost their jobs in the global energy sector and there is also a risk of losing more than 3.5 million people in the next six months.
"The word we will hear most in the next months' is 'unemployment' and unfortunately, the energy sector will be one of the sectors that have suffered the most at this point," he said.
In addition to growing unemployment worldwide, he said two global uncertainties would dominate the agenda in the coming six months.
"The first is the probability of the second wave of the COVID-19 outbreak and the second is how the world economy will recover. Although there is no global development, presidential elections in November in the US will also have a serious impact on the world economy and international politics," Birol explained.
COVID-19 will cause a huge decrease in world energy demand, he warned.
"We have seen in this period that oil took the biggest blow especially in April, which we called 'Black April', when there was a big drop in demand, but now there is a recovery in oil, even if slow," he said.
According to the IEA's Global Energy Review report, energy demand will fall 6% in 2020 – seven times more than the decline after the 2008 global financial crisis.
The report said that this represents the biggest shock to the global energy system in more than seven decades. “In absolute terms, the decline is unprecedented and is equivalent to losing the entire energy demand of India, the world’s third-largest energy consumer.”
The aviation sector is also included in the decline in current oil demand, Birol explained with air transport accounting for 7% of world oil consumption.
"If the policies of oil-producing countries do not change, we can say that the recovery in prices may continue," he cautioned.
Birol emphasized that renewable energy was the only sector that showed growth over the period.
He said a big decrease was seen in carbon dioxide emissions after the fall in energy demand due to the COVID-19 outbreak.
"This decrease will erase the last 10 year's increase in carbon dioxide emissions, but this is not good news. The reason for this decline is not the right environmental policies but the collapse of economies and the loss of lives of hundreds of thousands of people."
The IEA's report also projected that the drop in demand this year would dwarf the impact of the 2008 financial crisis and result in a record annual decline in carbon emissions of almost 8%.
The energy sector is forecast to see more takeovers and mergers with companies with strong financial standing in Asia and the Middle East swallowing those in difficulty due to the COVID-19, Birol said.
He urged for support for state rescue packages for an increase in energy efficiency, renewable energy investments, and modernization of electricity networks to create employment.
"The current size of the economic rescue packages is currently $9 trillion and we believe that by the end of the year it will reach $20 trillion," he said.
By Firdevs Yuksel and Nuran Erkul Kaya