Its latest report shows that growth in electric vehicles (EVs) alone could lead to 2 million barrels of oil being displaced per day by 2025, the same volume that caused the price collapse in 2014/15.
Despite this, energy firms still expect continuous growth in fossil fuel demand, and are adopting a business-as-usual approach as the low-carbon transition gathers pace.
Carbon Tracker senior researcher, Luke Sussams, said: “Electric vehicles and solar power are game-changers that the fossil fuel industry consistently underestimates.
“Further innovation could make our scenarios look conservative in 5 years time, in which case the demand misread by companies will have been amplified even more.”
The report highlights that solar power could supply 23% of global energy generation in 2040, yet ExxonMobil believes that all renewables will supply just 11% by that time.
It also reveals that power and road transport sectors account for approximately half of fossil fuel consumption, and that EVs could make up a third of the transport market by 2035, yet BP’s 2017 outlook expects them to account for only 6%.
In addition, coal demand could peak by the end of this decade according to the report, yet most oil and gas companies do not expect this to happen before 2030, continuing to plan accordingly.
“There is no more business as usual in the energy sector – so it is time that scenario was discarded. There are a number of low-carbon technologies about to achieve critical mass decades before some companies expect,” Carbon Tracker head of research, James Leaton, said.
Under the potential Carbon Tracker scenarios, global warming would be limited to between 2.4°C-2.7°C by 2100, significantly below the 4°C business-as-usual scenarios often being used by the energy industry.
With the cost of solar energy falling by 85% over the last seven years, and the number of EVs currently growing 60% year-on-year, the report argues that the international response to climate change should be stronger than current commitments.
Imperial College London senior research fellow, Ajay Gambhir, said: “Most low-carbon pathways analysis considers what needs to be done to meet ambitious climate targets like 2°C.
“Here we’ve looked at what would happen to the global energy system and global temperature if the lowest-cost options are deployed, in light of the latest projections of solar and EV costs.
“It’s time we fully understood the implications of these technologies’ relentless ride down the cost curve.”