International Energy Agency (IEA) projections that show the world will continue its heavy reliance on fossil fuels deep into this century are uncertain and being used to mislead governments and shareholders, according to a new report.

The fossil fuel industry commonly cites modelling by the IEA, an intergovernmental organisation considered to be an authoritative source of information on energy, which finds demand for their products increasing until at least 2040.

But analysts at the London-based Carbon Tracker thinktank found IEA models were based on high-end assumptions about global population and economic growth. In additon, the agency has failed to track the exponential growth of the renewable energy industry.

An IEA spokesman defended the agency’s modelling: “We stand by our analysis. We also think that the world’s climate goals should not rely on a hope that there are fewer people in the world or that they are all poorer.”

But he said that the IEA’s reports were not predictions of the future, instead they were a guide to inform policy makers, shareholders and industry of the consequences of certain courses of action.

“These are projections and are not forecasts,” he said. “Of course, other paths are possible.”

Yet these projections are often stated as fact by companies and industry advocates. “Energy demand will be significant. The IEA says it will be up by almost 40% by 2040,” Shell CEO Ben van Beurden told an Opec seminar in June. Shell often cited this demand as the justification for their now-failed Arctic drilling venture.

Oil company bosses announce their support for an agreement that keeps global temperatures within 2C on October 16, 2015 in Paris. Photograph: ERIC PIERMONT/AFP/Getty Images

In December, governments from more than 190 countries are expected to meet in Paris and sign a deal that pledges to limit global warming to at least 2C. Last week the bosses of 10 major oil and gas companies signed a statement urging governments to meet this goal.

But in shareholder reports, the same companies refer to the IEA’s baseline scenario, which accounts for existing policies and the broad commitments made by nations toward carbon emissions reduction and which the agency says will lead to a devastating 4C increase in global temperature.

In its most recent company report, Shell told shareholders the IEA “central scenario” predicted fossil fuels’ share of the energy mix would drop just 6% to 75% over the next 25 years, while total energy demand continues to rise. In 2040, said Shell, investors would live in a world in which demand for oil and gas was 14% and 55% greater than today. Shell did not respond to a request for comment.

ExxonMobil’s in-house energy demand estimates are slightly lower than the IEA’s own, yet its CEO, Rex Tillerson, has warned that expansion of the oil industry was vital or else “everybody’s lights would be going off before not too long”. Australia’s energy minister also quoted the IEA last week while putting forward what he called the “moral case” for coal.

Carbon Tracker’s research director James Leaton said shareholders in fossil fuel companies were having their money spent on projects that relied on high demand and high prices long into the future.

“Shareholders may never see the returns they were promised,” he said. Rather than being a “central scenario” as Shell called it in their reporting to shareholders, Leaton said “the scenarios presented by the companies are at the high end of the range of potential outcomes – so for investors this only leaves a potential downside with demand destruction”.

“This is true,” said senior modelling analyst at Thompson Reuters Point Carbon, Yan Qin. “IEA provides three policy scenarios to provide more flexibility regarding the assumptions. But this is not sufficient and IEA should be more transparent regarding the sensitivities of its key assumptions.”

The Carbon Tracker report found that the cumulative impact of a world of low population and economic growth and a continued renewable energy boom would cut energy demand even lower than the IEA’s low emissions scenario, which keeps the world within 2C of warming. In this scenario, fossil fuels account for just 60% of energy mix in 2040.

The IEA was seperately criticised on Friday for a “deeply misleading” report which highlights the socioeconomic benefits of coal, published under its auspice but written by the coal industry.

The International Energy Agency’s predictions for solar PV growth vs historical data. Photograph: Carbon Tracker

The IEA (along with almost all energy analysts) has consistently failed to grasp the disruptive potential of renewable energy and new technologies to rapidly change the energy landscape. Even Shell estimates far more electricity will be generated by solar and wind in 2040 than predicted by the IEA’s central scenario.

“There has often been a certain lack of sophistication when it comes to forecasting future energy demand,” America’s chief of Bloomberg New Energy Finance, Ethan Zindler, told the Guardian. “As Yogi Berra once said, making predictions is hard, particularly when you’re talking about the future. But no question about it, IEA clearly was behind the curve in some of its projections for clean energy.”

“In modelling, one should also consider the paradigm shift or non-linear changes in the trends,” said Qin.

The closest any group has gone to accurately forecasting the rise and rise of green energy is Greenpeace, however they recently told Vox they did not make long term predictions, but decided on the future they desired and created scenarios to fit. This is similar to the fossil fuel industry choosing the IEA’s baseline, which closer aligns to their interests.

The IEA’s spokesman said: “The differences that have occurred between actual levels of renewables generation and projected levels in [our past reports] really just serve to reinforce the point that the IEA has made for a long time: that policies do matter.”