Renewable Energy Installer REI Feb/Mar 17 | Page 36

Knowledge: EV Solar and EV tech to halt growth of coal and oil Report says fossil fuel companies cannot afford to take business-as-usual approach to future Falling costs of electric vehicle (EV) and solar technology could halt growth in global demand for oil and coal from 2020, a new report has found challenging the wisdom of backing fossil fuel expansion. The report by the Grantham Institute at Imperial College London and the Carbon Tracker Initiative warns that big energy companies are seriously underestimating low-carbon advances with a business-as- usual (BAU) approach, and that stranding of fossil fuel assets is likely as the low- carbon transition gathers pace. Polluting fuels could lose 10 per cent of market share to solar power and clean cars within a decade. A 10 per cent loss of market share was enough to cause the collapse of the coal mining industry in the US, while Europe’ s five major utilities lost €100bn (£85bn) between 2008 and 2013 because they did not prepare for an eight per cent increase in renewables. Growth in EVs alone could lead to two million barrels of oil per day (mbd) being displaced by 2025 – the same volume that caused the oil price collapse in 2014-15. This scenario sees 16mbd of oil demand displaced by 2040 and 25mbd by 2050, in stark contrast to the continuous growth in oil demand expected by industry. “EVs 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. The power and road transport sectors 36 | www.renewableenergyinstaller.co.uk Discover a new level of eff iciency Above: The Jersey Postal system switched to EVs last year using Nissan vehicles account for approximately half of fossil fuel consumption, so growth in solar photovoltaic (PV) and EVs can have a major impact on demand. The report argues that the use of BAU scenarios should be scrapped. Scenarios should now apply, as a minimum, the latest cost reduction projections for solar PV and EVs, along with emissions commitments nations have made in their Nationally Determined Contributions (NDCs) under the Paris Climate Agreement, to reflect the current state of the low-carbon transition. This new “starting point” scenario more accurately reflects the current state of play and finds that: • Solar PV could supply 23 per cent of global power generation in 2040 and 29 per cent by 2050, entirely phasing out coal and leaving natural gas with just a one per cent market share. By contrast, ExxonMobil sees all renewables supplying just 11 per cent of global power generation by 2040. Companies seriously underestimating the likely growth of low carbon advances • EVs could make up a third of the road transport market by 2035, more than half the market by 2040 and more than two thirds of market share by 2050. BP’s 2017 outlook expects EVs to make up just six per cent of the market in 2035. • Coal demand could peak in 2020 and fall to half 2012 levels by 2050. Oil demand could be flat from 2020 to 2030 then fall steadily to 2050. Most major oil and gas companies do not expect coal to peak before 2030 and none see peak oil demand occurring before 2040. • Global warming would be limited to 2.4°C to 2.7°C by 2100 (50 per cent and 66 per cent probabilities) in this scenario. This is significantly lower than BAU scenarios to 4°C and over, often used by the energy industry. This shows that if specific decarbonisation efforts are made outside of the power and road transport sectors focused on in this report, i.e. heavy industries, aviation and shipping, global warming will be kept even lower. Expect the unexpected: The disruptive power of low-carbon technology, warns that fossil fuels may lose 10 per cent of market share to PV and EVs within a single decade — this may not sound much but it can be the beginning of the end once demand starts to decline. A 10 per cent loss of power market share caused the collapse of the US coal mining industry and Europe’s five major utilities lost more than €100 billion in value from 2008 to 2013 because they were unprepared for an 8% growth in renewable power, of which solar PV was a big part. “There is no more business as usual in the energy sector – so it is time that scenario was discarded. There are a number of low-carbon technologies about to achieve critical mass decades before some companies expect,” said James Leaton head of research at Carbon Tracker. The report provides full transparency on the assumptions underlying its scenario analysis, as recommended by the Financial Stability Board’s Taskforce on Climate- related Financial Disclosures. It calls for companies to start doing the same to enable the market to understand the basis for business as usual strategies. Variable Speed Compressor 508% Efficient 65 o c Water Up to 18kW (at B0W35, SCOP at 5) (at 300% efficiency) (on single phase) (Inverter driven) www.warmflow.co.uk