Cheaper solar panels and electric cars ‘present mounting threat to fossil fuels’
With the cost of electric vehicles and solar panels falling rapidly, increasing global demand for fossil fuels could halt by as early as 2020, according to a new report.
The report, co-authored by the Grantham Institute at Imperial College London and the Carbon Tracker Initiative, predicts that fossil fuels could lose 10 per cent of market share to solar power and clean cars within a decade.
The research took into account the latest cost reduction projections for green technologies in addition to pledges from countries around the world to cut emissions. In particular, solar and electric vehicles were cited as “game-changers” that could severely dampen demand for fossil fuels.
The prediction could be bad news for America if correct, considering President Donald Trump’s fervent support for the oil and gas industry and general antipathy towards renewables.
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 8 per cent increase in renewables, the report says.
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”, the study claims.
Emerging technology, such as printable solar photovoltaics which generate electricity, could bring down costs and boost take-up even more than currently predicted.
Luke Sassams, senior researcher at Carbon Tracker, said: “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.”
James Leaton, head of research at Carbon Tracker, added: “There are a number of low-carbon technologies about to achieve critical mass decades before some companies expect.”
The cost of solar has fallen 85 per cent in seven years, and the report finds panels could supply 23 per cent of global power generation by 2040 and 29 per cent by 2050, entirely phasing coal out and leaving natural gas with just a 1 per cent share.
By 2035, electric vehicles could make up 35 per cent of the road transport market, and two-thirds by 2050, when it could displace 25 million barrels of oil per day.
Under such a scenario, coal and oil demand could peak in 2020, while the growth in gas demand could be curtailed.
It could also limit global temperature rises to between 2.4C and 2.7C above pre-industrial levels, while more ambitious action by countries than currently pledged, along with falling costs of solar panels and electric vehicles, could limit warming to 2.1C to 2.3C.
However, even the more optimistic estimate would break the 2C target agreed upon as part of the Paris Agreement. In November the United Nations admitted that greenhouse gas emissions would exceed that which is needed to keep global warming in check by 2030.
But the report shows cutting carbon from the power sector and road transport may not be enough to achieve international climate targets, so emissions reductions from other sectors such as heating buildings and heavy industry will also be needed.