Business Ain’t Usual: Fossil Fuels Facing Their End of Days



A new report by the Carbon Tracker Initiative has concluded that the fossil fuels industry’s business as usual scenarios will not last for much longer. Specifically, according to the Carbon Tracker Initiative (CTI), “Rapid advances in technology, increasingly cheap renewable energy, slower economic growth, and lower than expected population rise could all dampen fossil fuel demand significantly by 2040.”

The CTI’s findings are in direct contrast to a number of models and assumptions being made by the fossil fuel industry, which is relying on their product to continue growing in demand, as per business as usual. The new report, Lost in transition: How the energy sector is missing potential demand destruction, challenges nine business as usual assumptions that are currently being made by big energy companies when calculating the use of fossil fuels over the next few decades.

For example, according to CTI, relatively standard fossil fuel industry scenarios see coal, oil, and gas use all growing by between 30% and 50%. Making up just 75% of the energy supply mix in 2040.

However, as CTI notes, there are any number of reasons to suggest that fossil fuel use is going to decline. Especially in the face of increased energy efficiency reducing the demand for electricity and with more affordable and widespread renewable energy drawing attention away from fossil fuels.

The business as usual scenarios perpetrated by the fossil fuels industry may be an intentional attempt to mislead the public, or an unintentional self-delusion, but either way, investors and policy-makers must be aware of the reality of fossil fuel use over the next three decades.

“We have seen in recent weeks how the fossil fuel sector has misled consumers and investors about emissions — the Volkswagen scandal being a case in point — and deliberately acted against climate science for decades, judging from the recent Exxon expose,” explained James Leaton, Carbon Tracker’s head of research. “Why should investors accept their claims about future coal and oil demand when they clearly don’t stack up with technology and policy developments?

“Investors need to challenge companies who are ignoring the demand destruction that the market sees coming through much sooner than the business as usual scenarios being cited by the industry. Otherwise they will be on the wrong side of the energy revolution.”

According to the study, fossil fuels companies often run off business models that are “woefully behind the curve.” This can happen because of “underestimating changes in emissions policy, technological advances, or energy efficiency gains, that can cause dramatic changes in demand trends.”

“The incumbents are taking the easy way out by exclusively looking at incremental changes to the energy mix which they can adapt to slowly,” said Luke Sussams, Carbon Tracker’s senior analyst and co-author. “The real threat lies in the potential for low-carbon technologies to combine and transform society’s relationship with energy. This is currently being overlooked by big oil, coal and gas.”

Specifically, the key findings from the report include:

  • The fact that global population growth may not rise to 9 billion by 2040, with climatic and socioeconomic modelling suggesting that the global population may only grow to 8.3 billion

  • Global gross domestic product (GDP) in major markets could be lower than expected as well, including two of the world’s most dominant energy intensive countries — China and the United States

  • Recent research has shown that energy demand is slowly decoupling itself from economic growth — something that many experts had, for years, believed could not happen

Furthermore, the assumptions being made by many fossil fuel companies are not taking into account the decarbonization plans set out by nearly three-quarters of the planet’s countries. Specifically, based on the more than 150 Intended Nationally Determined Contributions (INDCs) currently submitted to the UN in advance of next month’s UN climate summit in Paris, Carbon Tracker determined that fossil fuel companies’ current scenarios see global cumulative CO2 emissions by 2030 being up to 100GtCO2 higher than in an INDC scenario. This in and of itself represents a whole host of assumptions being made about the energy sector over the next few decades, namely:

  • The speed and scale of advancements in the competitiveness of renewable energy technologies is exceeding expectations

  • The cost of energy (battery) storage is falling rapidly and is seven years ahead of average forecasts

  • Global coal demand is structurally declining

  • Electric vehicles could be cost-competitive with combustion engines by 2025

  • Gas demand will be lower if it loses its base-load role

All in all, and especially in the lead up to next month’s climate negotiations in Paris, real facts are going to be absolutely vital for policy-makers and investors the world over in the next two and a half decades, regardless of the success of either renewable energy or fossil fuels.


Originally published by Cleantechnica.

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  • Marcel

    Makes sense, wait till affordable EVs with decent range hit the market in a couple of years and the outlook will worsen. Also hopefully population growth will slow down further so maybe we have a chance as a species…

    • beernotwar

      Exactly. I think the “tipping point” for ICE’s will come around 2020 when there are mulitple EV models around $25k (after incentives) that have ~200 mile range. That’s a car that will work for nearly every commuter. And with expansion of level 3 charging you should be able to take trips in one as well. Once range is solved the other benefits of EVs will win out.

  • super390

    After the catastrophic crimes carried out under the Washington Consensus (World Bank/IMF enforcement of austerity) to blackmail 3rd World countries via their access to capital, maybe, just maybe, said countries are looking for ways to avoid capital-intensive development and imported oil dependency. Decentralized solar seems to have wiped out the traditional, Western-backed development model of building giant dams and power plants and high-tension lines across impoverished continents. That’s just electricity, but it must be the basis for everything else. Without that, all the oil industry’s assumptions about what a successful new economy demands go out the window.

  • suomunon

    As we (the U.S.) refuses to allow nuclear electric generating plants to be built (yes. yes. I know, One, I repeat ONE, has received permission to be constructed), and is forcing the closure of coal fired plants, and trying to force the U.S. (not China, not Russia, not India, not Etc. Etc.) to switch to alternative, (read electric) powered vehicles, the omnipotent, vastly superior intellect of the Federal Government hasn’t a clue on where we will get the electric power to recharge the vehicles or how the transmission infrastructure will carry the additional load.