The impact of the covid-19 epidemic on non-renewable energy consumption in OECD countries

Energy, as one of the most important factors of production, plays a decisive role in the economic life and development of the civilization of societies. Along with population growth, industrial development and technological progress, humans demand for energy resources is becoming more and more intense. Energy consumption, along with energy production, is one of the important criteria for measuring the economic progress of countries. The effects of the Covid-19 pandemic on a strategic field such as the energy sector as the infrastructure of the economic artery are impressive. The resulting shock is so deep and effective that it changes energy consumption by affecting production activities and demand. The purpose of this study is to investigate and evaluate the impact of the Covid-19 pandemic on non-renewable energy consumption in the member countries of the Organisation for Economic Co-operation and Development (OECD), during the period of 2010-2020. In order to estimate the model, the Fully Modified Ordinary Least Square (FMOLS) estimation technique is used. The obtained results show that the covid-19 epidemic has a negative and significant effect on the consumption of non-renewable energy. In other words, the spread of the corona virus reduces the consumption of non-renewable energy. The global recession caused a demand and supply shock in the energy sector. On the demand side, some actions to curb the disease and economic disruptions related to the spread of Covid-19 led to a decrease in the speed of production and mobility around the world. The negative shock on the supply side also caused by disruptions in the flow of goods and services, and reinforced the demand shock. The result of these two shocks caused a significant decrease in global demand for fossil fuels. The covid-19 pandemic the consumption of fossil energy through various channels. The implementation of social distancing measures and public quarantine during the epidemic limited production, transportation, trade and financial markets globally. This resulted in a drop in energy demand.Also, the findings of the study show the positive impact of financial development, commercial freedom and economic growth on non-renewable energy consumption. The development of the financial system can provide financial resources for companies with much lower costs and facilitate the expansion of their production scale and thus increases energy consumption. In advanced and industrialized countries like OECD, the activities of capital markets first cause more energy production and consumption, then after a period of energy consumption, due to environmental considerations, capital market and money market resources are transferred to clean energies.