Published: Sat, February 04, 2017
Economy | By Melissa Porter

Coal and oil demand 'could peak in 2020'

According to the study, "Big energy companies are seriously underestimating the low-carbon transition by sticking to their "business as usual" scenarios which expect continued growth of fossil fuels, and could see their assets "stranded". In the past, a similar 10 per cent loss of power market share caused the collapse of the United States coal mining industry.

An event like this would have a similar effect as what the world experienced after the fall of the US coal industry that brought the value of European utilities down $108 billion from 2008 to 2013.

Luke Sussams, senior researcher at Carbon Tracker explained that electric vehicles and solar power are game-changers.

By 2040 16 million barrels a day of oil demand could be displaced, rising to 25 million by 2050, a "stark contrast to the continuous growth in oil demand expected by industry", according to the report.

"Most low-carbon pathways analysis considers what needs to be done to meet ambitious climate targets like 2°C".

The International Energy Agency has said that 2 million bpd of oil could be displaced by electric vehicles by 2040.

Several studies have warned investors that measures to curb carbon emissions growth will hit earnings at coal, oil, and gas companies as the world shifts to cleaner energy.

"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".

'Coal demand could peak in 2020 and fall to half 2012 levels by 2050. "It's time we fully understood the implications of these technologies' relentless ride down the cost curve", said Ajay Gambhir, senior research fellow at Imperial.

The power and road transport sectors account for about half of fossil fuel consumption, so growth in solar energy and electric vehicles can have a major impact on demand.

Emerging technology, such as printable solar panels, could mean the scenarios used in the study in fact still underestimate growth in the renewables sector.

Last week BP said that it expects global oil demand to continue growing into the 2040s, citing increased plastics consumption, while US peer ExxonMobil has said that it sees fossil fuels meeting nearly 80 percent of global energy needs by 2040.

Hard to say. Our inner optimists point to the falling cost of batteries and solar power (which has come down by about 85% in the past 7 years).

In addition, EVs are now growing 60 percent year-on-year and there are already more than a million on the roads.

"Our scenarios assume that EVs are cheaper than conventional ICEs (Internal Combustion Engines) from 2020", according to the research. That's enough to entirely phase out coal and leave natural gas with just a 1 percent market share.

The report is accompanied by an interactive dashboard so readers can delve into the results.

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