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The days of us leaving the combustion engine might seem a ways off, but the clean car push has real drive.
The recently released Deloitte paper “Resilient business: Success in the new energy market” says the future rise in electric vehicles poses a major disruption in the supply and demand for petroleum products and that there is no way to be certain what in 12 years’ time will be the new normal for petroleum transportation fuels and the automotive industry.
To say the days are numbered for internal combustion engine (ICE) vehicles is a long way off when the number of EV and PHEV (plug in hybrid electric vehicles) on roads worldwide only reached the two million mark in 2016. This is small in comparison to the 90 million new ICE vehicles expected to hit the road in 2018 and over 1.2 billion “light duty” cars and vans on the world’s roads.
But change is coming, driven by stringent regulatory carbon dioxide (CO2) emission standards imposed on global car manufacturers to reduce the average CO2 emissions of their fleet of new vehicles. The Paris declaration on electro-mobility made calls for at least 20% of all road vehicles around the world to be electrically driven by 2030. Post 2020 regulatory emission standards will provide a clear signal to global car manufacturers to invest in clean vehicles.
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By 2030, it is proposed that average CO2 emissions will have to be 30% lower than in 2021. These targets can only be met by increasing car manufacturers fleet of EVs. To meet the challenge many countries will ban the sale of new powered ICE vehicles: 2030 in Netherlands; 2040 in France and the UK; 2025 in Norway.
This may be bad for the oil and gas industry but good for the environment. The transport sector contributes over a quarter of global CO2 emissions, and is rising faster than any other sector, with the number of vehicles expected to triple by 2050. In Australia, consumption of petroleum fuels continues to be the main driver of emissions in Australia. The rate of growth in emissions from road fuels is accelerating and offsetting falling CO2 emissions from electricity generation.
The Australian Government will find it difficult to meet its Paris Agreement target by 2030 without large a reduction in emissions from road transport. In Australia, any disruption from the rise of EVs will not happen any time soon under the current policy settings. Australia has no Regulatory CO2 Emission Standards to encourage global car manufacturers to increase the importation of a wider range of EVs. There are no financial incentives to offset the price differences between EVs and internal combustion engine (ICE) vehicles. Consumers will not pay extra for an EV over an ICE vehicle. Otherwise, consumers may adopt a “wait and see” approach for the next seven to nine years for EVs to become cheaper.