There will be no growth for oil and coal from 2020, says a new report by the think tank “Carbon Tracker Initiative” and Imperial College of London´s Grantham Institute. Should the electric vehicle and the photovoltaic boom be blamed for this?
The report “Expect the Unexpected: The Disruptive Power of Low-Carbon Technology” states that decrease in costs of electric vehicles and solar technology could halt the growth of global demand for oil and coal from 2020.
The paper, after analyzing different scenarios, warns that large energy companies are seriously underestimating the advances of low carbon technologies with a business-as-usual approach (BAU) while pointing out that stagnation of fossil assets is likely to be greater as the transition to decarbonization increases.
In addition, the report points out that only the growth of electric vehicles (EVs) could replace the equivalent of 2 million barrels per day of oil by 2025 ” the same volume,” it points-out, “which has led to the collapse of oil prices in 2014-15 “. In this scenario, it foresees the replacement of 16 mbd in 2040 and 25 mbd in 2050, “in marked contrast to the continued growth of oil demand expected by the industry,” it adds.
“Electric vehicles and solar energy are game–changers that the fossil fuel industry is consistently underestimating. Greater innovation could turn our scenarios into conservative over a five-year period, in which case the demand misunderstood by companies will have amplified even more, “said Lucas Sussams, senior researcher at Carbon Tracker.
Since the road transportation and energy sectors account for about half of the consumption of fossil fuels, the growth of photovoltaic solar energy and electric vehicles can have a very significant impact on demand.
The report describes a new scenario called the “starting point” and which in their view reflects the situation more accurately. In it, photovoltaics could supply 23% of global energy generation in 2040 and 29% by 2050, completely displacing coal and leaving natural gas with only 1% of the market share. “On the contrary, ExxonMobil envisages that renewable energies will supply only 11% of the world’s energy generation by year 2040.”
Similarly, electric vehicles could account for a third of the road transportation market by 2035, more than half the market by 2040 and more than two thirds of the market share by 2050. In contrast to BP´s perspective that expects electric vehicles to account for only 6% of the market by 2035, Carbon Tracker notes in a statement.
As for fossil fuels, demand for coal can reach a peak in 2020 and fall to half of 2012 levels by 2050 while oil could be flat in the period 2020-2030 and then fall constantly towards 2050.
However, the report notes, most major oil and gas companies do not expect a peak of coal before 2030 and no peak in oil demand before 2040. That is, low-carbon technologies can cause fossil fuels to lose 10% of market share within a single decade.