fu­ture un­clear for big oil

Surge elec­tric cars may may petrol de­mand

Global Times - Weekend - - TECH -

Oil com­pa­nies un­der­es­ti­mat­ing the global mar­ket for elec­tric ve­hi­cles could be caught un­aware by weak­ened de­mand for petrol within a decade, an­a­lysts said Wed­nes­day.

Fall­ing costs of elec­tric cars and re­new­able tech­nol­ogy may halt growth in oil de­mand from as early as 2020, they ar­gued in a re­port.

The cur­rent boom in elec­tric ve­hi­cles is on track to dis­place 2 mil­lion bar­rels of oil per day by 2025, they cal­cu­lated.

A sim­i­lar drop in de­mand pre­ceded the col­lapse of oil prices in 2014.

By 2035, that fig­ure could quin­tu­ple, with elec­tric cars ac­count­ing for a third of the road trans­port mar­ket, said the re­port, jointly is­sued by fi­nan­cial think tank Car­bon Tracker and the Gran­tham In­sti­tute, both in Lon­don.

The power and road trans­port sec­tors ac­count for about half of fos­sil fuel con­sump­tion, so growth in so­lar en­ergy and elec­tric ve­hi­cles can have a ma­jor im­pact on de­mand.

“Elec­tric ve­hi­cles and so­lar power are game- chang­ers that the fos­sil fuel in­dus­try con­sis­tently un­der­es­ti­mates,” said Luke Sus­sams, a se­nior an­a­lyst at Car­bon Tracker.

“Very few com­pa­nies or in­sti­tu­tions in the en­ergy in­dus­try are re­ally con­sid­er­ing the up­side if the tech­nol­ogy ex­plodes and grows ex­po­nen­tially,” he told AFP.

Oil and gas gi­ant BP, for ex­am­ple, pre­dicted last week that oil de­mand from cars would con­tinue to rise well into the mid-2030s.

In 2035, elec­tric ve­hi­cles will only make up 6 per­cent of the global car fleet, it said in its 2017 En­ergy Out­look.

Other fos­sil fuel com­pa­nies have made sim­i­larly rosy fore­casts for oil de­mand.

Non-in­dus­try an­a­lysts are split on how quickly elec­tric ve­hi­cles will dis­place those pow­ered by in­ter­nal com­bus­tion en­gines.

The 29-na­tion In­ter­na­tional En­ergy Agency (IEA), formed af­ter the 1973 oil cri­sis, sees rel­a­tively mod­est growth, re­sult­ing in an 8

per- cent mar­ket share – about 150 mil­lion ve­hi­cles – by 2040, and only 1.3 mil­lion bar­rels of oil dis­placed per day.

Ex­po­nen­tial growth

Even their pre­scrip­tive fore­cast – a blueprint for en­ergy growth deemed con­sis­tent with cap­ping global warm­ing at 2 de­grees Cel­sius – only fore­sees 710 mil­lion elec­tric ve­hi­cles by that date.

Hold­ing warm­ing to 2 de­grees is the core goal of the 196-na­tion Paris cli­mate treaty.

But the IEA’s poor track record for fore­cast­ing so­lar and wind growth sug­gests es­ti­mates for elec­tric cars may be too con­ser­va­tive as well.

“The IEA and the oil com­pa­nies are still play­ing catch up on re­new­ables,” said Sus­sams. “Ev­ery year they are up­grad­ing their as­sump­tions around re­new­able en­ergy pen­e­tra­tion.”

The IEA’s last re­vi­sion was in Oc­to­ber 2016.

Pri­vate fore­caster Bloomberg New En­ergy Fi­nance’s es­ti­mates, by con­trast, are much closer to the new fig­ures: a 22 per­cent mar­ket share for elec­tric ve­hi­cles by 2035. The dis­agree­ment on how quickly fos­sil fuel com­pa­nies may face fall­ing

de­mand – and pos­si­bly stranded as­sets – is built into the as­sump­tions be­hind the fore­casts.

“We as­sume the elec­tric ve­hi­cles will be cheaper than oil-burn­ing com­bus­tion en­gine ve­hi­cles from 2020 on­ward,” ex­plained Sus­sams.

The Car­bon Tracker model also pre­sumes very rapid growth, and an ab­sence of bot­tle­necks, such as a short­age of charg­ing sta­tions.

China – the largest mar­ket in the world for elec­tric ve­hi­cles – sold more than half a mil­lion in 2016.

“That is close to ex­po­nen­tial growth,” Sus­sams said.

The fore­casts are also in line with those of ma­jor car­mak­ers, in­clud­ing Tesla, GM and ma­jor Euro­pean man­u­fac­tur­ers.

The 60-page re­port – en­ti­tled “The dis­rup­tive power of low-car­bon tech­nol­ogy” – notes that a 10 per­cent loss of the power mar­ket-share caused the col­lapse of the US coal min­ing in­dus­try.

Sim­i­larly, Europe’s five ma­jor util­i­ties lost more than 100 bil­lion eu­ros ($105 bil­lion) in value from 2008 to 2013 “be­cause they were un­pre­pared for an 8 per­cent growth in re­new­able power.”

An oil drilling plat­form is seen next to wind tur­bines at Vam­cruz Wind­farm in Serra do Mel, Brazil on June 29, 2016.

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