Analyst Kingsmill Bond estimates peak years for different growth rates of renewables & global energy demand, and warns of “trillions of dollars in stranded assets” across the corporate sector and in petro states.
Extracts from the Carbon Tracker press release:
- The fossil fuel sector has invested an estimated $25 trillion in infrastructure and there will be systemic risk to financial markets as they seek to digest vast amounts of stranded assets.
- The transition will directly affect companies that compose up to a quarter of equity indexes and debt markets, hitting banking, capital goods, transport and automotive sectors.
- Fossil fuel exporting countries will suffer. Russia is one of 12 countries where fossil fuel rents account for 10% or more of GDP.
Kingsmill Bond: “We have seen a similar pattern in many energy transitions, from electricity, coal and cars in recent years to horses and gaslights in the past. Demand for incumbents peaks early, and investors in incumbents lose money early on.”
Much of the fossil fuel industry appears blind to this risk. BP, OPEC, and the IEA do not expect peak fossil fuel demand for another generation or more. Yet some forecasters such as DNV GL forecast peak fossil fuel demand in the 2020s.
The report finds that the tipping point for fossil fuel demand will come when the challenging technologies of solar and wind make up around 6% of total energy supply and 14% of global electricity supply – far below levels of penetration in many countries in Europe.