Falling costs of solar PV and electric vehicles (EVs) could curtail new demand for coal and oil as early as 2020, according to a new report by the Grantham Institute at Imperial College London and the Carbon Tracker Initiative.
The main finding of the report is the underestimation by fossil fuel companies of the pace and scale of advances in low carbon technology, particularly EVs and solar PV. According to the study, road transport and power account for half of global fossil fuel demand.
“Electric vehicles and solar power are game-changers that the fossil fuel industry consistently underestimates. Further innovation could make our scenarios look conservative in five years’ time, in which case the demand misread by companies will have been amplified even more,” said Luke Sussams, senior researcher at Carbon Tracker.
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The report ultimately recommends that existing business as usual models be abandoned and replaced with a new base level forecast that it terms “starting point”.
This includes a forecast for solar PV to make up 23% of global electricity supply by 2040, which it contrasts to ExxonMobil’s forecast for all renewables to constitute 11% of global generation by 2040.
A mass rollout of solar PV could leave fossil fuel assets stranded, the report claims.
Similarly, Carbon Tracker predicts that EVs could represent one-third of road transport by 2035. BP puts the same figure at 6%. Germany, Norway and the Netherlands intend to phase out petrol and diesel cars by 2030, and 2025 in the case of Norway and the Netherlands.
Mike Tholen, upstream policy director with trade body Oil & Gas UK pointed to contradictory forecasts and stressed on the ongoing role for the industry.
“The International Energy Agency’s (IEA) 2016 World Energy Outlook continues to predict an increase in global oil and gas demand over the next two decades,” said Tholen. “As part of the carbon reduction agenda, oil and gas will continue to provide a vital share of the UK’s energy mix for decades to come, in addition to the uses as transport fuels and the plastics used in every part of modern society. As a low-emission and widely available energy source, natural gas can help reduce the global growth in greenhouse gas emissions particularly in tandem with carbon storage technology.
“Maximising economic recovery of our oil and gas resources is a key component of the UK’s energy policy,” he added. “Our industry continues to support hundreds of thousands of highly-skilled jobs across the UK and has the opportunity to make the UK world leaders in low-carbon, electricity generation.”