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, a new study published today by the London-based Carbon Tracker Initiative finds.

The analysis challenges nine business as usual (BAU) assumptions made by the big energy companies when calculating that fossil use will continue to grow for the next few decades. Typical industry scenarios see coal, oil and gas use growing by 30%-50% and still making up 75% of the energy supply mix in 2040. These scenarios do not reflect the huge potential for reducing fossil fuel demand in accordance with decarbonisation pathways.

The in-depth analysis exposes that fossil fuel industry thinking is skewed to the upside, and relies too heavily on high demand assumptions to justify new and costly capital investments to shareholders. Reviewing previous industry, IEA and U.S. EIA projections, shows them to be too conservative in their expectations for renewables growth. This raises questions over the likely accuracy of their future projections.

Carbon Tracker’s head of research, James Leaton, said:

“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. 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.”

Source: Lost in Transition: How the energy sector is missing potential demand destruction | Carbon Tracker Initiative