Renewables currently account for around two-thirds of the increase in power generation, with their share in the global power sector increasing to around 30 percent by 2040, BP said in its latest report released Thursday.
According to BP's Energy Outlook 2019, the share of coal will decline significantly to the extent that by 2040, renewables will surpass coal as the primary source of energy in the global power sector.
The outlook for renewables is underpinned by continuing gains in technology, the Outlook showed.
These forecasts through 2040 are based on BP's Evolving transition (ET) scenario, which assumes that government policies, technology and social preferences continue to evolve in a manner and speed seen over the recent past.
In the ET scenario, the costs of wind and solar power are forecast to continue to decline significantly.
"To give a sense of the importance of technology gains in supporting renewables, if the speed of technological progress was twice as fast as assumed in the ET scenario, other things equal, this would increase the share of renewables in global power by around 7 percentage points by 2040 relative to the ET scenario, and reduce the level of carbon dioxide emissions by around 2 gigatonnes," the report explained.
The impact of these faster technology gains is partly limited by the speed at which existing power stations are retired, especially in the Organization for Economic Co-operation and Development (OECD) countries.
If, in addition to faster technological gains, policies or taxes double the rate at which existing thermal power stations are retired relative to the ET scenario, the reduction in emissions is set to double, the report showed.
BP highlights that this suggests that technological progress without other policy intervention is unlikely to be sufficient to decarbonize the power sector over the outlook to 2040.
By Gulsen Cagatay