Abandoning fossil-fuel powered transportation in favour of cleaner resources like hydrogen and electricity would not only improve the environment, but also reduce the cost of transportation by billions of pounds a year, a study has found.
According to an analysis by Cambridge Econometrics, the world would save £232bn a year between 2020 and 2030 if it pushed for more renewable transportation. This push would lead to lower demand for oil, which would subsequently translate into lower prices. Money saved for oil could then be invested into the development of even more sustainable systems.
The report has warned that without such measures, the extremely low prices of oil at present are bound to pick up again and reach £90 per barrel by 2050 (up by more than £60 from current trading prices).
"Without any further policy changes, oil prices are likely to recover in the long-term, driven by global economic growth and increasing demand for mobility,” said Philip Summerton, director at Cambridge Econometrics and lead author of the report.
"In a world where climate policies are being implemented to drive investment in low-carbon technologies - as governments agreed in Paris - demand for oil will be curbed, and ultimately reduced, leading to lower oil prices than would otherwise be the case.”
The report, which has been launched ahead of the official opening for signing of the Paris Climate Change Agreement negotiated last December, also found that uptake of low-carbon transport could reduce oil prices by 15 per cent by 2020 and by 29 per cent two decades later.
"Through policy support and technological innovation, we can expect the global economy to be using 11 million fewer barrels of oil per day by 2030 than we would without significant changes to transport technologies,” Summerton said.
"Lower oil prices would benefit oil-importing regions such as Europe by reducing inflationary pressures on consumers, increasing real incomes, and shifting spending towards other goods and services that deliver more value for Europe."
The decreasing cost of hybrid and battery technology could facilitate the shift away from fossil fuels, making it more cost-effective for governments to put policies in place, encouraging interest in low-carbon transportation.
The research found that in 2014, the UK imported 38 per cent of its oil, which could translate to a £13bn a year saving by 2030 with a switch to clean transport, although imports dropped to 28 per cent in 2015 as domestic production grew.
Moreover, increased spending on innovative technology and domestically-produced electricity or hydrogen fuel to power low-carbon vehicles could boost the UK economy to the tune of between £2.4bn and £5bn and create thousands of jobs.