Current Supporters

UHERO thanks the following institutions for providing a public service through their support of UHERO.

Ka wēkiu - the topmost summit

American Savings Bank
Bank of Hawaiʻi
DGM Group
First Hawaiian Bank
Hawaiʻi Business Roundtable
Hawaiʻi Community Foundation
Hawaiʻi Pacific Health
Hawaiian Electric Industries
Kamehameha Schools
HMSA

Kilohana - a lookout, high point

Board of Water Supply
Dowling Co
DR Horton
First Insurance Company of Hawaii, Ltd.
Hawaiian Airlines
Island Holdings, Inc.
Matson Company
Stanford Carr Development

Kuahiwi - A high hill, mountain

Architects Hawaii, Ltd.
Better Homes and Gardens Real Estate Advantage Realty
Central Pacific Bank
Dowling Company
Halekulani Corporation
Hawaii Gas
Hawaii Tourism Authority
Hau’oli Mau Loa
HGEA
The Howard Hughes Corporation
HPM Building Supply
Kaiser Permanente Hawai’i
The Hawaii Laborers & Employers Cooperation and Education Trust Fund
The Natural Energy Laboratory of Hawaii Authority
The Pacific Resource Partnership
Servco Pacific, Inc.

Assessing the impact of COVID-19 on global fossil fuel consumption and CO2 emissions

Nori Tarui

Abstract

We assess the effect of the COVID-19 pandemic on global fossil fuel consumption and CO2 emissions over the two-year horizon 2020Q1-2021Q4. We apply a global vector autoregressive (GVAR) model, which captures complex spatial-temporal interdependencies across countries associated with the international propagation of economic impact due to the virus spread. The model makes use of a unique quarterly data set of coal, natural gas, and oil consumption, output, exchange rates and equity prices, including global fossil fuel prices for 32 major CO2 emitting countries in 1984-2019. We produce forecasts of coal, natural gas and oil consumption, conditional on GDP growth scenarios based on alternative IMF World Economic Outlook forecasts that were made before and after the outbreak. We also simulate the effect of a relative price change in fossil fuels, due to global scale carbon pricing, on consumption and output. Our results predict fossil fuel consumption and CO2 emissions to return to their pre-crisis levels, and even exceed them, within the two-year horizon despite the large reductions in the first quarter following the outbreak. Our forecasts anticipate more robust growth for emerging than for advanced economies. The model predicts recovery to the pre-crisis levels even if another wave of pandemic occurs within a year. Our counterfactual carbon pricing scenario indicates that an increase in coal prices is expected to have a smaller impact on GDP than on fossil fuel consumption. Thus, the COVID-19 pandemic would not provide countries with a strong reason to delay climate change mitigation efforts.