Questionable future: A truckload of coal at Goonyella Riverside Mine near Moranbah in Central Queensland. Credit:Peter Braig That will make electric cars as affordable as cars fuelled by petrol, and much cheaper to run. If the project succeeds, the changes it will bring to the automotive industry will be huge, with obvious implications for the global demand for oil. But rapid advances and price falls in electricity storage technologies like lithium batteries will reverberate way beyond the automotive sector. According to a growing band of investment bankers and energy market economists, it could fundamentally recast the way the world produces and consumes power.

Ambitious plan: billionaire Elon Musk. As Swiss Bank UBS told its clients in August, the world is on the cusp of a once-in-a-century shift towards renewable energy led by "solar and batteries". Power stations fuelled by fossil fuels like coal will be the "dinosaur of the future energy system". "By 2025, everybody will be able to produce and store power. And it will be green and cost-competitive." "Coal is good for humanity": Tony Abbott. Credit:Melanie Russell The consequences for coal producers and the fossil fuel industry that Australia relies heavily upon are immense.

Australia left behind? "We will resolutely declare war against pollution": Li Keqiang, Chinese Premier. Credit:Andrew Meares At the opening of a massive new colliery in the Bowen Basin in central Queensland on Monday, the notion that the world could be on the cusp of an energy revolution was farthest from the mind of our prime minister. "Coal is good for humanity," he said in a direct rebuke to a growing anti-coal campaign. "Energy is what sustains our prosperity, and coal is the world's principal energy source and it will be for many decades to come."

The comments, predictably, outraged environmentalists. The global expansion of electricity generation dominated by coal is the biggest source of greenhouse gas emissions that scientists estimate will increase global temperatures by a catastrophic 3 to 4 degrees by the end of the century if no action is taken. But the remarks also produced gasps of incredulity among financial analysts. Markets have already let their views be known on coal's prospects - driving down prices by 60 per cent since their highs of 2011. While the government has been dismantling climate-change mitigation policies, acting as boosters for the mining industry and wreaking havoc among renewable energy firms, investors worldwide have been flocking to clean energy companies. As one writer observed, the investment banks now "sound like green NGOs".

Citigroup believes coal demand is in structural decline. HSBC says traditional power plants will never see profitability "anything near" that of the past decade. Deutsche Bank won't finance polluting industries. "Australians have been sold the myth that the world has an insatiable and everlasting desire to buy our coal," says Kobad Bhavnagri, head of the Australian operation of Bloomberg New Energy finance. "The reality is demand for coal in the developed world is declining, and the developing world is turning as fast as it can to other sources of power. "At some stage coal is destined to become a low-value commodity, probably at a faster pace than many appreciate or are willing to admit. "Meanwhile, Australia's policymakers are doubling down on tying the economy to a fuel source of the past."

Betting everything on red Not everyone is so pessimistic. Some analysts - and the industry - see continuing growth in China and India, the two countries responsible for almost 90 per cent of the increased demand for coal in the past decade. The latest report from Australia's Bureau of Resource and Energy Economics notes that coal continues to dominate China, and its coal-fired power stations have a lifespan of 50 to 60 years, meaning it will be a "few decades" before there are any large-scale closures. Good quality coal, such as that produced by Australia, plus carbon-capture technology, mean China can still rely on thermal coal while improving air quality, it adds. Moreover, India's new prime minister Narendra Modi has announced a hugely ambitious program to electrify a nation where some 300 million live without power.

Tim Buckley, the former head of Citigroup's equity division now working for the low carbon advocating Institute for Energy Economics and Financial Analysis, says the assessment fails to appreciate the determination of Chinese authorities to address the country's terrible pollution problem. "You just have to look at their five-year plans to see how serious they are," he says. Accelerating a trend that's been apparent for years, two-thirds of new power generation in China last year came from renewable energy - solar, wind or hydroelectric. According to Buckley's projections, demand for coal in China will peak in 2016. Indeed, it may already have slumped. The figures for the nine months to September this year are down 6.7 per cent on the same period in 2013. As for India, Modi has also embraced solar and wind energy, although he still sees a place for coal.

In the last three months, three-quarters of new power projects announced in India have been for renewable energy plants, including a massive solar facility in Tamil Nadu. The "game changer" though for coal - and oil and gas - are the advances in electricity storage, exemplified by the gigafactory being built at the foot of the Sierra Nevada mountains by Musk. The electricity system based on large-scale power stations was developed on the principle that power must be immediately consumed. That means having hugely expensive back-up capacity to be turned on for the handful of days each year when there are uncommon peaks in electricity, such as during a heatwave. Advanced energy storage, says UBS, the world's largest private bank , means "you don't need to overproduce and you don't need back-up reserves." When combined with solar panels, cheaper and more powerful batteries will enable households and businesses to capture energy during the day and store it until peak usage times, traditionally in the early evening.

"By 2020 investing in a home solar system with a 20-year life span, plus some small-scale home battery technology and an electric car, will pay for itself in six to eight years," it said in a briefing note to clients in August. As such, households and businesses will rely less and less on the main power grids fuelled by coal, gas and nuclear energy. "We are at a tipping point," Bhavnagri says. "The only question is exactly when." For consumers looking to cut their power bills and governments determined to find cheap, green technology to combat climate change, the possibilities of the technology are hugely exciting. On the evidence of this week, when the federal government unleashed a full court press in support of fossil fuels, the fervour for the transformation of global energy appears to have completely passed it by.

As well as Abbott entreaties from central Queensland, he lambasted the "stupid decision" of the Australian National University's super fund to divest from some resource companies. On Tuesday, Treasurer Joe Hockey dismissed as "absolutely ridiculous" the notion that Australia was one of the biggest emitters of greenhouse gases, per capita, in the industrialised world, a blatantly false denial. The coming shock Meanwhile, the release of the government's new industry policy confirmed the government's faith in extractive industries. Two of the five priority areas identified for the economy were in the resource industry - mining equipment and oil, gas and energy resources. And, as the government considers whether it will change the regulation mandating that Australia gets 20 per cent of its electricity from renewable sources by 2020, investment in solar, wind and hydropower here has plummeted almost 80 per cent in the first nine months of 2014.

In contrast, global clean energy investment was $US55 billion ($62.6 billion) in the September quarter alone, up 12 per cent, data from Bloomberg New Energy Finance shows. The environmental impact of Australia's push to ensure coal-generated energy continues to dominate is well known - increased greenhouse gas emissions that underpin global warming. Perhaps less appreciated are the economic consequences if the faith in coal proves to be misplaced. As it stands, as many as half of Australia's coalmines are unprofitable. Most continue to pump out coal because they are tied to long-term transport contracts that would require them to pay out rail and shipping companies whether they are loading coal or not.

They are also hoping and waiting that demand, and prices, will pick up again from their current nadir. But, if the low prices continue and the predicted seismic shift towards renewables takes place, tens of billions of dollars invested in the mining boom could be wasted. Entire communities could be decimated, especially in NSW, which mostly mines thermal coal used in power stations. According to Erwin Jackson from the Climate Institute, the government's policies are "exposing communities and industries to massive shocks in the future". "We are seeing a myopic view of the energy system which is entirely inconsistent with that of financial markets and policy developments in our trading partners," he says.

"Where is the risk management?" To be sure, there are uncertainties with technologies like Tesla's lithium-ion batteries. The transformative impact many predict may fail to eventuate, or take much longer to come to pass. At the moment though, global investors are placing their bets firmly on clean energy and the coming "revolution" in power storage, as UBS has dubbed it. Certainly, the mercurial Musk - who founded the online payment system PayPal - has an extraordinary record of success. Loading

While Tesla has come off its recent share price highs, it is - by far - the best performing major stock on the US sharemarket over the past two years. As of Thursday, its shares were valued at $226.35 each, up from $28 in October 2012.