With countries imposing strict targets on car makers, as they try to achieve stiff emissions benchmarks, some researchers are predicting that demand for oil could nosedive, with oil demand growth falling by as much as 70% by 2030.
A recent Reuters report indicated that an aggressive China-led shift to electric vehicles (EVs) is expected to slash global oil demand growth by 70% by 2030 and would help bring an end to the “oil era”. This was based on research by the Carbon Tracker think tank which was published in the past week.
Some of the world’s biggest markets for vehicles are starting to see the economic benefits, as well as the huge reductions in carbon emissions that are now spewed out by petrol and diesel vehicles.
“Within 10 years, China could save more than $80bn (more than a trillion dollars) in annual oil import costs as new-energy vehicles (NEVs) become increasingly competitive,” Carbon Tracker said (as reported by TimesLIVE).
Apparently this was based on a “conservative” scenario by the International Energy Agency, which projected that electric vehicles would account for 40% of China’s total car sales by 2030.
The cost of importing the oil required to fuel an average car is 10 times higher than the cost of solar equipment required to power an electric vehicle, Carbon Tracker said.
“Most governments have strong incentives to electrify their transport systems. Emerging markets – India, China, South East Asia and most of Africa – spend huge sums on oil imports every year, and two thirds (68%) is used for transport. Oil imports cost 1.5% of China’s GDP and 2.6% of India’s GDP.”
These countries are certainly not alone … US carmakers, with Tesla showing the way, are under pressure to reach strict targets, while many European countries are already forging ahead with ambitious plans to hike production of NEVs, either hybrid or fully electric, with the former to be phased out by 2040 in some cases. South Korea has been championing hydrogen-fuelled cars, while India and Japan are other Asian countries setting the bar high with ambitious targets. The size of the Indian and Chinese markets have to be taken into account as they will be driving huge volumes of sales in the coming decades.
Which all leaves many unanswered questions. One assumes that as demand for oil tails off and then plummets, so will the price of oil, but will this be the case? How many countries will hang on to petrol and diesel cars and for how long? And what about here in SA, where we are so behind the game?
In many less sophisticated auto markets, a lack of charging machines has been a barrier to electric vehicle sales and, so far, it seems that is the case in SA. South Africans are emotionally attached to their petrol and diesel cars, particularly in the bakkie, SUV, segment, where it would be difficult to see many being willing to change.
Yet change seems inevitable, and perhaps with incentives like more charging facilities in public spaces; incentives for trade-ins of traditional models; and subsidies for manufacturers, SA could (one day) embrace the EV route?
It’s still a long road ahead methinks.