Feb 7, 2020 - Energy & Environment

The coronavirus is infecting everything in the energy sector

Illustration: Aïda Amer/Axios

It's hard to get one's head around all the ways that coronavirus is affecting oil markets, energy-related industries and even carbon emissions.

Why it matters: The tragic outbreak underscores that when it comes to energy, China is the straw the stirs the drink as the world's largest oil-and-gas importer, largest auto market and largest carbon emitter.

The big picture: Here are a few ways that coronavirus, which is centered in China but has now spread to over two dozen countries, is shaking things up...

When it comes to oil, it has pushed prices down to their lowest level in a year, stemming largely from reduced travel and economic activity in China.

  • That's a problem for OPEC and its alliance with Russia — the OPEC+ group has struggled to reach a deal this week on deepening joint production cuts to tighten markets. Russia, while agreeing in principle, has yet to sign off, per multiple reports.
  • "Brent is likely to hover around $55 [per barrel] as long as uncertainty on the impact of coronavirus persists and until OPEC+ ministers meet and agree to a cut," S&P Global Platts analysts said in a note.

It's impacting the liquefied natural gas market, which was already weak due to excess supplies.

  • Per Reuters and others, the Chinese energy giant CNOOC this week said it will temporarily stop honoring some import contracts.
  • "China’s near-term gas consumption is in question given the coronavirus quarantines and shutdown of factories, which consume the bulk of the country’s imported gas," the Wall Street Journal reports.

China is the world's largest solar equipment manufacturer, and a note from the consultancy Wood Mackenzie says work at several module plants is unlikely to resume until late February or later.

Tesla was forced to temporarily close its Chinese factory and delay vehicle deliveries, per multiple reports.

  • CNBC reports that a Tesla executive's comments about delays helped to push its share price back down Wednesday after its meteoric rise in preceding days.
  • It's hammering the auto industry, which is already struggling with soft sales, more broadly as automakers are forced to keep plants idled. CNN has more.

There's even a climate change dimension, per Bloomberg, which reports: "If there’s a silver lining to the deadly coronavirus outbreak in China, it’s that the world’s biggest polluter is spewing less carbon, at least for now."

  • The piece points out that emissions will drop temporarily due to halted plane and auto travel, closed steel mills and coal mines, and other effects.
  • It's unclear, Bloomberg reports, whether this will lead to a year-over-year drop in CO2 emissions.
  • Here's a wild stat, via S&P Global Platts: "Even a 1% drop in China’s annual CO2 emissions from energy consumption would amount to 96 million [metric tons], equivalent to France’s annual regulated CO2 emissions."

Go deeper:

Go deeper

OPEC considers production cuts as coronavirus impacts China's oil demand

Photo: Ryad Kramdi/AFP via Getty Images

OPEC's possible responses to the spreading coronavirus that's hurting oil demand and prices are starting to come into view.

Why it matters: Besides killing more than 360 people so far, the outbreak is severely curtailing airline and economic activity in China, the world's largest oil importer and second-largest oil consumer.

Coronavirus updates: Market ends worst week since financial crisis

Data: The Center for Systems Science and Engineering at Johns Hopkins, the CDC, and China's Health Ministry. Note: China numbers are for the mainland only and U.S. numbers include repatriated citizens.

The stock market ended its worst week since the financial crisis, prompting the Fed to release a statement. Meanwhile, the WHO warned that countries are losing their chance to contain the novel coronavirus and raised its global risk assessment to "very high" Friday.

The big picture: COVID-19 has killed more than 2,860 people and infected more than 84,000 others in over 60 countries and territories outside the epicenter in mainland China. The number of new cases reported outside China now exceed those inside the country.

Go deeperArrowUpdated 12 hours ago - Health

Global CO2 emissions were flat in 2019

Reproduced from IEA; Chart: Axios Visuals

An IEA analysis released Monday found that energy-related CO2 emissions were flat last year at 33.3 gigatonnes.

Why it matters: Scientific analyses show that steep cuts — not just a plateau — are needed to meet the temperature goals of the Paris climate agreement.