Energy Consumption Drops 3.6% in First Half of Year... Annual Decline Likely Larger Than Financial Crisis

In the first half of the year, overall energy consumption, including industrial use, sharply declined due to the impact of the novel coronavirus infection (COVID-19). View of Namdong National Industrial Complex.

[Asia Economy Reporter Moon Chaeseok] Energy consumption significantly decreased in the first half of this year. Energy consumption is an indicator that reflects the real economy situation.

Due to the impact of the novel coronavirus infection (COVID-19), production activities in industries and services were greatly contracted, leading to a decline in both industrial and household energy consumption.

According to the "Monthly Energy Statistics Report" by the Korea Energy Economics Institute on the 16th, the final energy consumption from the beginning of the year to June was recorded at 112.554 million TOE (tons of oil equivalent). This is a sharp drop of 3.6% compared to the first half of last year (116.747 million TOE).

Final energy consumption refers to the energy used in the industrial, transportation, household, and commercial sectors, combining petroleum, coal, liquefied natural gas (LNG), nuclear power, electricity, solar energy, and others into one indicator.

Last year, final energy consumption decreased by 0.6% compared to the previous year, marking the first negative growth in 10 years since 2009 (-0.6%) right after the global financial crisis. Prior to that, the last decrease in energy consumption was in 1998 (-8.6%) following the International Monetary Fund (IMF) foreign exchange crisis.

Looking at energy consumption by sector in the first half of the year, the largest share, industrial use, was 68.784 million TOE, down 2.3% from the first half of last year. Transportation energy consumption sharply dropped by 10.6% to 19.052 million TOE due to movement restrictions caused by COVID-19, and household and commercial use also decreased by 1.5%.

By energy source, consumption of petroleum (-2.4%), coal (-8.2%), and electricity (-2.9%) all declined.

Energy consumption is an indicator that reflects the real economy and tends to follow a curve similar to the economic growth rate. This year, the real Gross Domestic Product (GDP) recorded negative growth for two consecutive quarters, with -1.3% in the first quarter (compared to the previous quarter) and -3.2% in the second quarter. Notably, the second quarter growth rate is the lowest in 11 years and 6 months since the fourth quarter of 2008 (-3.3%) during the financial crisis.

The Korea Energy Economics Institute forecasted in its "2020 First Half Energy Demand Outlook" released last July that energy consumption would decline for the second consecutive year this year.

In the second half of the year, with the resurgence of COVID-19 and an extended rainy season, final energy consumption is expected to decrease more annually than during the financial crisis.

This content was produced with the assistance of AI translation services.