The energy industry has experienced its worst year in decades because of the pandemic, but clean sources for generating electricity have still managed to grow, the International Energy Agency said Tuesday.
Consumption of electricity generated by wind, solar and hydroelectric sources will grow nearly 7 percent in 2020, a remarkable jump because overall energy demand will slump by 5 percent, the steepest drop since World War II, the Paris-based forecasting group said in a new report.
This performance shows that these renewable sources of energy are “immune to Covid,” Fatih Birol, the agency’s executive director, said at a news conference.
In fact, renewables are likely to expand nearly 50 percent by 2025, the year when, together, they are expected to eclipse coal as the world’s largest source of electric power.
Renewable electricity is growing because of government policies that encourage such investments and strong interest among investors who want to put money into clean energy projects, according to the report.
The world this year is expected to add nearly 4 percent to its capacity to generate electricity from renewables like wind and solar, despite travel restrictions, factory closings and other obstacles caused by the pandemic.
Next year, growth is expected to accelerate to around 10 percent. That is because projects disrupted by the pandemic will come online, and because governments in Europe and Asia are eager to ramp up spending to tackle climate change and to help kick-start their economies.
Mr. Birol said a return to the Paris accord on climate change by the United States, as President-elect Joseph R. Biden Jr. has pledged, could give “unprecedented positive momentum in the fight against climate change.”
In an indication of the new energy landscape that is taking shape, the London-based oil giant BP said on Tuesday that it had reached a preliminary agreement with Orsted, a Danish company that is the world’s largest developer of offshore wind farms, to build a large pilot plant for generating emissions-free hydrogen.
Hydrogen, a gas, is receiving enormous attention as a potential clean fuel for transportation and industry. The proposed plant, at a refinery in Lingen, in northwestern Germany, would use electricity from an Orsted wind farm in the North Sea to generate the gas from water. Currently, the refinery, like other industrial installations, makes the hydrogen that is consumed at the facility from natural gas.
The companies say their plant would replace 20 percent of the refinery’s consumption of this so-called gray or polluting hydrogen, reducing emissions each year by the equivalent of around 45,000 cars. The companies have applied for financing from the European Union.
The deal is intriguing because it involves one of the world’s largest providers of clean energy and an oil giant that produces millions of barrels of polluting oil and gas every day. Orsted is scouting for new uses for the electric power generated at its many large wind farms in the waters off northern Europe.
Under Bernard Looney, who became chief executive this year, BP is hoping to show investors that the company has a future as a broader provider of energy and that it is on the right side of what may prove to be historic trends away from fossil fuels.
Certainly investors during the pandemic have proved eager to back clean energy, while scorning legacy oil and gas production. Since the early days of the pandemic, shares of “major wind and solar companies have rebounded, reaching all-time highs,” the International Energy Agency report said. Strong share price performance can make it cheaper to finance expensive renewable energy projects, the report said.