China’s electric vehicle push spells doom and gloom for oil demand growth
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China’s push to increase the adoption of electric vehicles (EVs) could curb the growth in oil demand by 70 per cent by 2030, a report from financial think tank Carbon Tracker has found.
It reports that transport in emerging markets will account for more than 80 per cent of all expected growth in oil demand up to 2030, based on an analysis of the International Energy Agency’s business as usual scenario. Half of the growth is forecast to come from China and India.
Kingsmill Bond, the report’s lead author, said: “This is a simple choice between growing dependency on what has been expensive oil produced by a foreign cartel, or domestic electricity produced by renewable sources whose prices fall over time. Emerging market importers will bring the oil era to an end.”
A broad switch to EVs could save emerging markets up to $250bn a year collectively on oil imports by 2030, the findings suggest, which would be more than enough to cover the infrastructure needed to support electrified transport. Annual savings would be over $80bn in China and over $35bn in India.
There are also strong public health grounds to cut oil use. Pollution linked to road transport causes 285,000 deaths a year in oil-importing emerging markets, including 114,000 in China and 74,000 in India, the report states. Around half the world’s population are being exposed to progressively worse air pollution, a study in June found.
With battery prices falling by 20 per cent a year since 2010, they are expected to go below $100/kWh in the next few years, which is the point at which EVs become as cheap to buy as conventional vehicles.
By 2030 they will be cheaper still – BNEF forecasts a battery price of $61/KWh, while carmakers like VW and Tesla expect $50/kWh.
In 2019, EVs accounted for 61 per cent of China’s two-wheeler sales and 59 per cent of bus sales. The government hopes that by 2025 one in five cars sold will be an EV. President Xi Jinping’s recent commitment to achieve net-zero emissions by 2060 implies that all car sales in China will need to have an EV drivetrain by 2035.
Other countries are poised to follow. The Indian government plans for EVs to make up 30 per cent of car sales by 2030, but local forecasters believe that by that date 30 per cent of cars and 80 per cent of two-wheeler sales could be electric.
“A switch to EVs in emerging markets would see oil importers alone cut growth in global oil demand by over 70 per cent,” Bond said. “Factor in the war on plastics hitting petchem demand and rising EV penetration in developed markets, and it becomes ever more likely that we have seen peak oil demand in 2019.”
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