The Kaya Identity in Energy Forecasting

Abstract

In response to shareholder interest in greater transparency, oil industry participants issued reassuring forecasts about the role of fossil-fuels by 2040. While differing in energy demand analysis, these forecasts had similar, status-quo predictions on energy intensity and fossil fuels’ share of total energy. The forecasts, however, failed to consider the effects of their own alternative energy projects as well as four key contributors to oil market instability; (1) responses to global warming, (2) mandates to write off noneconomic reserves, (3) oligopolistic oil pricing, and (4) technological change. All of these instabilities converged in 2020, causing industry forecasts to be outdated.