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
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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.
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