New Report Highlights “The Disruptive Power of Low-carbon Technology”

The political winds may blow this way and that, but the underlying technological, economic and environmental cases for continued, rapid “scaling” of clean energy continue and even strengthen. A new study by the Grantham Institute and the Carbon Tracker Initiative demonstrates, in detail, why this is the case, and specifically how “ongoing cost reductions could see solar photovoltaics (PV) and electric vehicles (EVs) impact future demand for coal, oil and gas.” A few highlights from this fascinating study include the following.

  • The study applies “up-to-date solar PV and EV cost projections, along with climate policy effort in line with the Nationally Determined Contributions,” in a way that “is not a radical disruptive scenario in terms of its inputs, but a reflection of the current state of play.” The authors of the study add that, “[g]iven the energy transition is clearly already underway, and there is no way that [Business As Usual — BAU] can meet the climate targets that many countries, states and companies have committed to, it is our contention that it is time to retire the conventional approach to use BAU as a starting point in scenario analyses. “
  • In other words, “This study is not an exercise in applying wildly optimistic cost reduction trends, but rather an exploration of how plausible advances in solar PV and EVs could impact on future fossil fuel demand, as well as efforts to reach international climate targets.”
  • “Solar PV (with associated energy storage costs included) could supply 23% of global power generation in 2040 and 29% by 2050, entirely phasing out coal and leaving natural gas with just a 1% market share.”
  • “Updating solar PV costs with the latest available data and cost reduction projections, as described in the methodology, results in a huge gain in market share for solar PV at the expense of fossil fuel alternatives.
  • “In addition to potential growth in solar PV, wind power also grows significantly across all scenarios to 2050, up to around 12% of the power market.”
  • “EVs account for approximately 35% of the road transport market by 2035...By 2050, EVs account for over two-thirds of the road transport market. This growth trajectory sees EVs displace approximately two million barrels of oil per day (mbd) in 2025 and 25mbd in 2050.”
  • The study sees both coal and oil demand “peaking in 2020,” while gas demand growth is “curtailed.”
  • “Global average temperature rise is limited to between 2.4°C (50% probability) and 2.7°C (66% probability) by 2100 in this scenario – far below the BAU trajectory towards 4°C and beyond used by fossil fuel companies.”
  • Massive growth in clean energy will likely lead to “the mass stranding of downstream fossil fuel assets.”
  • “Across our scenarios, this analysis shows very little uplift in fossil fuel demand due to [carbon capture and storage – CCS] deployment in the power sector. No CCS is deployed with coal or gas in any scenario assuming climate policy effort less than the NDCs because the carbon price is too low for CCS to become cost-competitive. This is in spite of a declining capital cost trajectory for CCS from 2020 to 2050. “
  • “Decarbonisation of heavy industry and buildings is vital.”
  • Carbon Tracker believes that “a 10% shift in market share can be crippling for incumbents,” that “10% shifts in market share from incumbents to solar PV or EVs could occur within a single decade,” and that this is significant ” because [10% market shares for clean energy] signal the peak in demand for coal or oil, changing the fundamental market dynamic for these fossil fuels.”



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