A new report from the Carbon Tracker Initiative suggests that fossil fuel companies are continuing to push for increased investment in their multi-billion dollar projects despite evidence that the industry is in decline.
The UN Climate Talks in Paris next month will see a strong global push for ambitious climate change policies, making the future of oil and coal giants look uncertain.
The International Energy Agency has pledged before the Paris summit to strive for minimal growth in emission levels between now and 2030, which in turn means very little growth in the fossil fuel sector.
James Leeton from Carbon Tracker explained that fossil fuel companies are going further than just undermining their competition, they are now trying to fool their investors into increasing their financial support for the industry.
The Carbon Tracker study revealed the perspectives promoted by the Big Coal and Big Oil are not in line with the realistic future direction of the energy industry.
Fossil Fuels Working On False Assumptions
The study found nine main assumptions that reflected a “business as usual” mentality within the fossil fuel industry that were not only damaging to the decision process of the companies themselves but misleading their investors into believing that the industry is stable and growing.
The International Energy Agency predicted that “demand for coal during this time period is projected to rise 51% by 2040”, which is good news for fossil fuel companies.
The Carbon Tracker study, however, predicted that this assumption was unfounded and “expected demand for fossil fuels may not transpire, especially as the profile and geography of the world’s population changes”.
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James Leeton argues 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”.
He explains how the fossil fuel industry has misled consumers and investors in terms of the impact of carbon emissions as well as intentionally ignoring glaring evidence of climate change that emerged decades ago. The two primary examples of this are Volkswagen’s recent scandal and Exxon’s revelations of ignoring climate science and continuing severe environmental pollution.
The Carbon Tracker report provides a number of significant conclusions as to the relationship between population growth, GDP growth and demand for fossil fuels within the industry.
The Impact of Technology
In addition to their misled perspectives on the reality of climate change and carbon emissions, Carbon Tracker has accused fossil fuel giants of overlooking the most significant changes occurring in the industry today and those predicted in the near future.
The study examines how renewable energy technologies are becoming ubiquitous in society today as well as getting constantly cheaper.
Energy models were also referenced by the study in terms of their potential transformational impact in terms of “technology, energy storage, decentralised renewable generation and communications technology” and the way consumers now relate to power.
The evidence of these changes in the industry can be seen clearly in the decline in coal demand in OECD markets, in contrast to commonly held opinions of the opposite trend in the fossil fuel community.
Electric vehicles were also targeted as a strong contributor to the decline of the fossil fuel industry and the predictions of increased popularity of the technology will further impact the growth of fossil fuels.