TheCarbonMarket2016

Lowcarbontechnologymarkets

Fourapproachesdominate lowcarbontechnologies

Solarphotovoltaicgrowth

Policypressureisintensifying toadoptsolarphotovoltaics

Batterycostreductionsandperformanceimprovements

Lowcarbontechnologiesareachievingrapidimprovements

Lowcarbontechnology’smarketshare

Lowcarbontechnologiesaretakinganincreasingshareinauto,powergeneration,andlightingmarkets

Reducedcarbonemissionswithlowcarbontechnologies

Lowcarbontechnologiescansaveover5gigatonnesofcarbondioxideemissionsby2025

Conclusions• 2015shapesupasawatershedyearforthelowcarboneconomy.Windandsolarareontracktoexceed100GWinnew

installations forthefirsttimeandonourestimatesnowsaveagigatonne inCO2emissionsperyear.Inautos,theVWscandalhashighlightedgrowingemissions-relatedcomplianceandreputationalrisks.Incoal,themarketcapofthetopfourUScoalcompanieshasdroppedbyover90%in2015astheyhavestruggledwithacombinationofcheapgas,renewables,emissionregulationsandweakexports;andintheUK,thegovernmenthasannouncedthatcoal-firedpowergenerationwill ceasealtogetherby2025.

• Thisisnotthebeginningoftheendforfossilfuels;butmarkstheendofthebeginningforthelowcarboneconomy.Oil,gasandcoalgenerate two-thirdsofelectricity, powerover75%ofindustryandfuel95%oftheglobaltransportfleet.However,theyalsoemitc.32gigatonnes (Gt)ofCO2eperannum,andpublicpressuretofindwaystoreducethisisincreasing (athemewehavehighlighted inpastreports,seeGSSUSTAINChangeiscoming:AframeworkforclimatechangeMay2009;GSSUSTAINWhatistheclimateforchange?October2013).Solutionsrangefromswitchingfromcoaltolesspollutinggas,boostingefficiency (e.g.incars),aswellasintroducingtransformativelow-carbontechnologies.

• Whilethepolicydebatesoftencenteron2030forecastsand2050targets,weexpectthegreatestmarketdislocationstooccurbetween2015and2025.Weestimate thatin2015-2020,newwindandsolarinstallationswilladdtheoilequivalentof6.2mnbarrelsperday(mbpd)toglobalenergysupply.Thisismorethanthe5.7mbpd USshaleoilproductionaddedover2010-15.OuranalystsexpectChinatoadd23GWcoaland40GWgaspowercapacityby2020,butthiscomparesto193GWofwindandsolarthecountrywilladdatthesametime.Inlighting,ouranalystsforecastthatLEDswillaccountfor69%oflightbulbssoldand over60%oftheinstalledglobalbaseby2020.Inautos,ouranalystsexpectcarmakerstosellc.25mn hybridandelectric vehiclesby2025–10xmorethantodayanda$600bn+revenueopportunity.