Electric Vehicles to Dent Climate Change, Oil Dependency

  • Date: 23-Dec-2020
  • Source: Al Bawaba
  • Sector:Oil & Gas
  • Country:Gulf
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Electric Vehicles to Dent Climate Change, Oil Dependency

Certainly, some of our appetite for oil stems from our cars. Passenger vehicles account for 25% of global oil demand - or 25 million barrels per day (bpd). So EVs have a role to play in reducing this. But the global fleet of internal-combustion-engine (ICE) vehicles could potentially take decades to phase out. There are currently more than 1.4 billion ICE vehicles on the planet, with around 100 million new ones bought every year.

Governments can undoubtedly take steps to incentivise the adoption of EVs and have long-sought to do so. In 2009, the Obama administration ran the 'cash for clunkers' programme, which provided between $3,500 and $4,500 for trading in an older, less fuel-efficient car for a new higher-efficiency one. This proved so popular that its funding had to be tripled to nearly $3 billion. Similar measures could help to accelerate the transition to EVs, but current incentive plans are mixed, Germany offers 9,000 EUR, the US $7,500 for the first 200,000 models sold while China has recently reduced incentives. Much more will be needed to incentivise widespread adoption, particularly given the relatively high price point of many EVs.

EVs ability to impact oil demand will be limited in the short