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Leon Kaye headshot

Report: EVs and Solar Will Displace Oil and Coal By 2020

By Leon Kaye

Will the Trump presidency and stubbornly low fossil fuel prices stall or even reverse the growth of renewables? Not according to a joint study released today by Carbon Tracker and the Grantham Institute of Imperial London College.

According to their researchers, the double-whammy of falling of electric vehicle costs plus rapidly falling solar power prices could slow the world’s demand for both oil and coal after 2020.

Such a scenario is in sharp contrast to the forecasts of energy companies such as ExxonMobil. In its most recent energy outlook report, the world’s largest energy company has projected oil to provide about one-third of the globe’s energy needs by 2040. Natural gas, coal and nuclear will provide just over half of the world’s energy needs; renewables such as wind and solar, insists ExxonMobil, will only contribute 4 percent to the planet’s energy portfolio (others, such as hydro, comprise 7 percent of the company’s 2040 forecast).

The problem with the forecasts of ExxonMobil and those derived by other energy analysts, claims the Carbon Tracker and Grantham Institute joint study, is that their conclusions are based on business-as-usual (BAU) scenarios.

Conventional energy studies generally omit cost projections of renewables such as photovoltaic (PV) solar and electric vehicle technologies. They also do not consider the nationally determined contributions (NDCs) to which countries committed at the 2015 Paris climate talks. (The study, however, does not account for what could happen if the global populism wave leads countries to amend or eliminate their climate change goals.)

The Grantham Institute’s researchers' modeling looks at the extraction costs of fossil fuels while evaluating projected efficiency and prices of solar power. The researchers also examined four possible climate policy scenarios, as well as projections for future energy consumption.

This approach is in contrast to other energy forecasts -- which generally use a baseline case assuming future trends can be based on past performance, while ignoring any potential changes in climate- or energy-related policies.

Hence, according to this study, fossil fuels will see a bleaker future than those suggested by the likes of ExxonMobil.

The combination of falling PV and battery costs could plunge coal’s contribution to the world’s energy mix to 8 percent – less than half of ExxonMobil’s forecast. By 2050, coal would practically disappear as a measurable source of energy, the researchers concluded.

Meanwhile, solar could generate anywhere from 16 to 28 percent of the world’s power needs by 2040, and as much as 29 percent by 2050. The study does not account for any solar subsidies (which are on the retreat worldwide anyway), meaning this source of power could score an even higher market share than suggested.

Meanwhile, as solar power grows, so will the expansion of electric vehicles worldwide. The study points to the cost of battery power, which has fallen from $1,000 per kilowatt-hour in 2008 to $268 per kWh in 2015.

The continued declining price of battery power, which could fall to $100 per kWh by 2020, along with declining capital costs necessary for manufacturing and improving batteries, leads the Grantham Institute and Carbon Tracker to make a bold prediction: Electric vehicle power trains could reach cost parity with those of internal combustion engines by the beginning of next decade.

Add the potential for these vehicles to have a range of anywhere from 200 to even 300 miles per charge, and consumer acceptance could lead to the largest transformation in the automobile industry since Henry Ford launched his company's first assembly line.

The results, this study’s authors infer, should be a warning to energy companies and investors. As the world transitions even more rapidly to a low-carbon economy, growing acceptance of electric vehicles could leave 2 million barrels of oil per day (MBD) stranded by 2025; that number could surge to 16 million MBD by 2040.

These conclusions should hardly be surprising. Carbon Tracker urges energy companies to look beyond their business-as-usual strategies, become part of the global decarbonizing trend, and even start investing in clean energy and electric vehicle technologies.

Investors should demand that these same energy companies adjust how they disclose their long-term forecasts. And regulators should update disclosure rules to ensure energy companies reveal a more accurate perspective of the long-term risks (and potential benefits, if energy firms acknowledge the data by organizations such as Carbon Tracker) involved with investing in this evolving industry.

Image credit: Leon Kaye

Leon Kaye headshot

Leon Kaye has written for 3p since 2010 and become executive editor in 2018. His previous work includes writing for the Guardian as well as other online and print publications. In addition, he's worked in sales executive roles within technology and financial research companies, as well as for a public relations firm, for which he consulted with one of the globe’s leading sustainability initiatives. Currently living in Central California, he’s traveled to 70-plus countries and has lived and worked in South Korea, the United Arab Emirates and Uruguay.

Leon’s an alum of Fresno State, the University of Maryland, Baltimore County and the University of Southern California's Marshall Business School. He enjoys traveling abroad as well as exploring California’s Central Coast and the Sierra Nevadas.

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