While many fret over whether Donald Trump will or will not shred the United States’ commitment to the global climate deal, market forces may very well help mitigate climate change risks in the long run. We will certainly see the global transportation energy mix shift over the next few decades.
According to the International Energy Agency (IEA), the sun is already setting on gasoline. In its 2016 World Energy Outlook, the Paris-based intergovernmental agency projects an eventual decline in demand for gasoline over the next 25 years. The IEA says global demand for oil will remain steady until at least 2040, due to the lack of alternatives for truck and aviation fuel. But the agency expects electric vehicles to increasingly displace gasoline cars that run on gasoline.
The agency expects the number of all-electric cars worldwide to surge from the current estimate of 1 million to 150 million by 2040, Executive Director Dr. Fatih Birol told Bloomberg last week. So, even if the number of passenger cars on earth double over the next quarter century – a daunting statistic by any measure – global gasoline consumption has already peaked, the group estimates.
Recent events suggest this trend is already irreversible. The Government Fleet Declaration, for example, commits some of the world’s wealthiest countries to increasing the percentage of electric cars within their governments’ automobile fleets. Such policies could have a huge impact in the U.S. alone: Estimates suggest about 400,000 electric vehicles drive on U.S. roads; and the size of the U.S. federal government’s fleet totaled over 640,000 last year, so there is a huge opportunity for automakers to rapidly increase EVs’ market share.
On the consumer side, if GM succeeds with the launch of its mid-range priced, all-electric Chevy Bolt, other automakers will ramp up their efforts while Telsa is poised to disrupt the market with next year’s release of its Model 3.
While energy companies such as Shell have been far more dramatic than the IEA in predicting when society will reach peak oil, the reality is that other petroleum derivatives will continue to experience growth over the next several years. A booming global middle class and the expansion of more emerging economies means those middle distillates such as jet fuel and diesel will still have a large role in the global transportation energy mix. Ongoing demand for petrochemicals also suggests that petroleum will not recede as quickly as its detractors would like.
The IEA believes consumer acceptance of electric vehicles must increase rapidly if the world will come even close to becoming carbon neutral and limiting the earth’s warming to another 2 degrees Celsius by the end of this century. We’d have to put 700 million electric cars on global roadways by 2040, which would offset 6 million barrels of oil consumption daily, for such a scenario to become reality.
Cleaner sources of power are quickly transforming the world’s grids; the next frontier is to have clean technology become the reality in transportation as well as industry.
“Renewables make very large strides in coming decades but their gains remain largely confined to electricity generation,” Dr. Birol wrote in the IEA’s most recent report. “The next frontier for the renewable story is to expand their use in the industrial, building and transportation sectors where enormous potential for growth exists.”
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