Report: Fossil fuel demand to peak in the 2020s due to clean energy growth
The global transition to clean energy and low-carbon technologies is set to be much quicker than previously expected, with worldwide demand for fossil fuels set to peak in the 2020s.
That is the key conclusion of a new report from think tank Carbon Tracker, which predicts that global fossil fuel demand will peak between 2020 and 2027 – most likely in 2023 – as the cost of renewable installations and battery storage technology falls.
The document reveals that this “tipping point” in fossil fuel demand is likely to come when wind and solar account for around 6% of total energy supply and 14% of global electricity supply.
Entitled 2020 Vision: Why You Should See Peak Fossil Fuels Coming, the report forecasts a 1-1.5% rise in energy demand each year throughout the 2020s and argues that these needs will be met entirely with renewable power.
It notes that the policy and business landscapes are beginning to align in a way which will enable renewables to thrive, with emerging economies beginning to pursue clean energy as governments introduce policies aimed at slashing emissions, controlling climate change and reducing air pollution.
Carbon Tracker’s new energy strategist Kingsmill Bond, who authored the report, said that the findings of the study prove that fossil fuel demand is “entering structural decline” for the first time in 200 years.
“The 2020s will be the decade of fossil fuel demand peaks, as one bastion after another is stormed and overwhelmed by the rising renewable tide,” Bond said
“This will inevitably lead to trillions of dollars of stranded assets across the corporate sector and hit petro-states that fail to reinvent themselves.”
Specifically, the report notes that the clean energy transition is likely to hit the investment and finance industry hard, along with the notoriously carbon-heavy mobility and capital goods sectors.
The report predicts that every sector will undergo four stages of energy demand before the end of the 2020s – namely ‘innovation’, ‘peaking’, ‘rapid change’ and ‘endgame’ – with the electricity sector leading the transition. Meanwhile, the report forecasts that issues around laggard areas such as winter heat, aviation fuel and renewable intermittency are likely to be addressed in the ‘endgame’ phase.
Carbon Tracker argues in the report that unsavvy investors are likely to lose trillions of dollars if they remain oblivious to the speed of the unfolding energy transition, noting that the fossil fuel sector has invested an estimated $25trn in infrastructure to date.
However, Bond noted that the majority of large investors are likely to react before the business community and general public experience peak fossil fuel demand.
Indeed, a recent Unfriend Coal report revealed that approximately £15bn has been divested from fossil fuels by insurers in the past two years, with 15 companies having fully or partially cut financial ties by selling holdings in coal companies and refusing to back their operations.
Similarly, LGIM this summer announced that it would divest from a host of companies it believes are showing “persistent inaction” on addressing climate risks, removing the firms from its Future World Fund, which requires the firms it holds to disclose their environmental impact.
“We believe that investors will start to react faster as the energy transition works its way through the world’s capital markets,” Bond concluded. “As each sector is impacted, it becomes easier for the market to anticipate something similar happening to the next sector.”
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other reports are available … https://www.eia.gov/todayinenergy/detail.php?id=32912
Could the following paragraph be better explained? Total energy supply and global energy supply appear to be the same, if talking in terms of world-wide energy production. Could it be 6% of global energy supply and 14% of global electricity supply?
The document reveals that this “tipping point” in fossil fuel demand is likely to come when wind and solar account for around 6% of total energy supply and 14% of global energy supply