New Study Suggests Fossil Fuel Demand Is Beginning a Nosedive

Successful companies make and sell products that consumers demand, and fossil energy companies have long said demand for their products -- particularly from emerging markets -- will be strong decades from now.

A group of U.K. researchers trying to debunk that notion issued its latest salvo last night.

In a point-by-point analysis of population, economic, labor, energy and development trends, the authors of a report from Carbon Tracker Initiative, a London think tank that studies climate change and economic impacts, outline a host of reasons why fossil fuel demand may diminish sharply in 25 years.

Swift advancement in technology (such as electric vehicles and battery storage), flagging economic growth regionally and worldwide, inexpensive renewable energy options, swift renewable deployment, and a lower-than-expected rise in population could all blunt "fossil fuel demand significantly by 2040," CTI said in a statement last night.

Industry projections typically foresee coal, gas and oil demand climbing 30 to 50 percent and making up three-quarters of global energy supply in 2040.

Betting against decarbonization?
"These scenarios do not reflect the huge potential for reducing fossil fuel demand in accordance with decarbonization pathways," CTI said.

The report presents a litany of counterarguments to the energy industry's estimates of future demand for its products.

Market analysts and top government forecasting groups, namely the International Energy Agency and the U.S. Energy Information Administration, have long underestimated the growth of renewable energy sources, the authors contend.

Reductions in energy intensity -- the ratio of energy used compared against economic output -- could fall faster than many expect, CTI said.  (The IEA said this year carbon dioxide emissions didn't grow in 2014 even though the world's economy did.)

If investors don't prepare for a sharp decline in demand, "they will be on the wrong side of the energy revolution," said James Leaton, head of research at CTI.

Statoil ASA, the Norwegian oil and gas company, and the OECD have each forecast significantly lower growth rates than IEA, which many energy companies look to as a signpost.

New Study Suggests Fossil Fuel Demand Is Beginning a Nosedive