This article is more than 6 months old

This article is more than 6 months old

The coronavirus health crisis may lead to a slump in global carbon emissions this year but the outbreak poses a threat to long-term climate action by undermining investment in clean energy, according to the global energy watchdog.

The International Energy Agency (IEA) expects the economic fallout of Covid-19 to wipe out the world’s oil demand growth for the year ahead, which should cap the fossil fuel emissions that contribute to the climate crisis.

But Fatih Birol, IEA’s executive director, has warned the outbreak could spell a slowdown in the world’s clean energy transition unless governments use green investments to help support economic growth through the global slowdown.

“There is nothing to celebrate in a likely decline in emissions driven by economic crisis because in the absence of the right policies and structural measures this decline will not be sustainable,” he said.

The virus has stoked fears of a global economic recession and helped to ignite one of the sharpest oil price collapses in the last 30 years, wiping billions of dollars from the world’s largest energy companies.

The economic contagion is likely to stall many infrastructure projects, including the multibillion-dollar investments in clean energy needed to avert a climate catastrophe by the end of the decade.

The year ahead could mark the first time the world’s solar power growth falls since the 1980s, according to a report from Bloomberg New Energy Finance. The analysts on Thursday slashed forecasts for new solar power projects by 8%. It expected sales of electric vehicles to stall too.

“We should not allow today’s crisis to compromise the clean energy transition,” Birol said. He said global governments should use the economic stimulus packages which are being planned to help countries weather the downturn to invest in clean energy technologies.

He added: “We have an important window of opportunity. Major economies around the world are preparing stimulus packages. A well designed stimulus package could offer economic benefits and facilitate a turnover of energy capital which have huge benefits for the clean energy transition.”

The IEA’s analysis has shown 70% of the world’s clean energy investments are government-driven, either through direct government finance or in response to policies such as subsidies or taxes. The watchdog has also found government fossil fuel subsidies total $400bn (£300bn) each year.

Birol urged global governments to invest in energy efficiency measures, which might not offer good short-term returns while energy prices are low but would prove a lucrative investment in the longer-term.

The IEA head also urged policymakers to use the downturn in global oil prices to phase out or scrap fossil fuels subsidies, which could be used to boost healthcare spending.

“These challenging market conditions will be a clear test for government commitments,” he said. “But the good news is that compared to economic stimulus packages of the past we have much cheaper renewable technologies, have made major progress in electric vehicles, and there is a supportive financial community for the clean energy transition.

“If the right policies are put in place there are opportunities to make the best of this situation,” he added.