A new research from Imperial College London and think tank Carbon Tracking Initiative has warned that the falling costs of solar power and electric vehicles is likely to weigh on the demand for oil and coal from 2020 onwards.
The research studied the cost trends in electric cars and solar power, and reviewed government policies targeting renewable energy and their effect on the power industry and road transport, which combined account for 50 percent of the global consumption of fossil fuels.
Despite much skepticism, especially from the oil industry, regarding the potential of renewables to become a mainstream source of energy, it seems that they are getting there, albeit slowly. According to the authors of the research, over a decade, solar and electric vehicles could capture 10 percent of the market share now belonging to fossil fuels.
This is a potentially devastating loss: the Carbon Tracker says the rise of electric vehicles on its own can take 2 million bpd from daily demand – the same amount that caused the 2014 oil price collapse.
In their report, the authors challenge energy outlooks from BP and Exxon, as well. For instance, according to the researchers, photovoltaic installations could come to account for as much as 23 percent of power generation in 2040, versus Exxon’s projection that all renewables will account for just 11 percent of power generation in that year. Related: Why 100% Renewable Energy Is Just A Dream
In EVs, the Grantham Institute/Carbon Tracker team says these will come to account for a third of all vehicles on the road in 2035 and more than half by 2040. These are very different figures from BP’s forecast, which estimates that EVs will only account for 6 percent of all cars on the road in 2035.
To substantiate its projections, the research team cites PV and battery costs that are falling sharply, making solar power and electric cars increasingly affordable. In fact, the scenario developed by the team assumes that EVs would become cheaper than fossil fuel powered cars from 2020 onwards.
By Irina Slav for Oilprice.com
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