Despite a massive increase in electric vehicles and other non-conventional cars, the internal combustion engine will still make up 94 percent of all motorized transportation by 2035, according to an Energy Outlook report by BP.
That’s because the number of internal combustion engine (ICE) vehicles is set to double in the same period, says BP. Another 900 million gas guzzlers on the world’s roads in the next 18 years means that demand for oil will continue to rise, as will carbon emissions. BP makes it clear that the International Energy Agency’s 450 Scenario targets to stabilize global temperatures will not be met.
“We expect electric vehicles to carry on growing very rapidly, but on our base case, at least, that won’t be a game-changer [to oil consumption]," said Spencer Dale, BP’s group chief economist.
Source: BP Energy Outlook 2017
Far greater savings will be achieved through increases in fuel efficiency plus other innovations such as car sharing, carpooling and autonomous vehicles, according to the report.
“An average passenger car is expected to achieve almost 50 miles per U.S. gallon in 2035, compared with less than 30 MPG in 2015,” concludes the report. Nevertheless, this is “a faster rate of efficiency improvement than in the past.”
Even if these efficiencies are achieved, demand for oil due to transportation will still jump by 4 million barrels a day by 2035, accounting for around a quarter of total growth.
The doubling in ICE vehicles and increase in EVs is due to rising incomes and improving road infrastructure in the developing world -- primarily in China and India.
The report is not without its critics. A key reason is the assumptions in BP’s base case. This essentially assumes a business-as-usual scenario that underplays the possibilities of decarbonization due to legislation.
“BP’s ‘base case’ outlook is premised on a demand for fossil fuels that vastly exceeds the carbon budget for limiting temperature rises to 1.5°C to 2°C, taking a very conservative view on growth in low-carbon technologies, the prospective scaling-up of governmental action, and overlooking the material impacts that such a level of climate change would have on the demand for fossil fuels," writes investment watchdog Share Action in a paper.
Dr. Stephen Hall, co-author of the report Business Model Innovation for Electric Vehicle Futures, agreed that a company whose business revolves around selling oil is not necessarily the best judge of how much that market might be undermined in future years.
“The BP report is one possible future, but they are unlikely to release a report saying otherwise,” he commented.
Hall told GTM that several different scenarios indicate EVs will make a much bigger dent in the world’s auto sector than BP believes -- from 15 percent to 35 percent, compared to a mere 6 percent predicted by the oil giant.
Although he wouldn’t give precise numbers, Hall said the social and political pressure for cleaner air, coupled with the economic argument that EV running costs are lower than those for ICE vehicles, would help ensure a massive uptake of EVs.
“There’s increasing impetus to curtail diesel. Meanwhile, in cities around the world, people are dying prematurely due to gasoline emissions, and pressure is building to make big cuts. City councils are starting to replace ICE buses and other council-owned vehicles with electric vehicles," said Hall.
The economics of recharging an EV versus filling an ICE gas tank are hard to ignore as well. It’s already much cheaper to run an EV than an ICE vehicle. And as the levelized costs of renewable energy continue to fall, and more renewables provide electricity to the grid, that cost will only go down, said Hall.
Barriers remain to the mainstreaming of EVs -- particularly the price of new vehicles, range issues and availability of charging points. However, even BP admits there will be large numbers on the roads within 20 years. The question is how much of a positive impact they will have in curbing emissions.