Global global oil demand for road transport will peak in 2027 as the use of electric vehicles (EVs) increases in the coming years, BloombergNEF (BNEF) said on Thursday.
The use of electric vehicles is already displacing demand for 1.5 million barrels per day (bpd) of oil, and that displacement “will increase dramatically in the coming years,” the research firm said in its report annual perspective of electric vehicles.
Demand for road fuel has already peaked in the United States and Europe, and is expected to peak in 2024 in China, the report said. Global oil demand from two-wheelers, three-wheelers and buses has also peaked, while demand from passenger cars will peak in 2025. However, oil demand from commercial vehicles will take longer to reach -se due to the dependence of heavy trucks on diesel. , said BNEF.
According to BNEF’s economic transition scenario, oil demand from road transport will fall to 33.5 million bpd in 2040, about 21 percent below 2022 levels. In addition to the growing role of electric vehicles, improved fuel efficiency of combustion vehicles and the adoption of shared mobility also play an important role in reducing oil demand, according to the report.
However, falling oil demand does not necessarily mean a collapse in oil prices, he said. Oil prices could remain volatile and high if investments in new supply capacity fall faster than demand, the report said. BNEF’s Net Zero scenario, which takes into account additional demand from the electrification of heating, industry and the use of electrolyzers for hydrogen, foresees a sharper fall in oil demand in the process of total elimination of road transport by 2050.
According to the report, direct electrification via batteries is the most efficient, cost-effective and commercially available route to fully decarbonise road transport. Fuel cell vehicles have a role, specifically in some “difficult-to-electrify long-haul truck applications,” but “do not have a significant role in the passenger vehicle market,” the research firm said. A moreover, synthetic fuels are not reaching the scale in time or at the price needed to “have a material impact on road transport,” the report says.
Global projection of sales of electric vehicles
Sales of electric vehicles will continue to rise in the coming years, from 10.5 million in 2022 to about 27 million in 2026, the report said, with the EV share of new global passenger vehicles rising from 14% in 2022 to 30% in 2026.
Shares in some markets could be much higher, with electric vehicles making up 52 percent of sales in China and 42 percent in Europe. In the United States, the Inflation Reduction Act could push electric passenger vehicle sales to 28 percent by 2026, according to the report. Japan is “significantly behind” other countries in the adoption of electric vehicles, according to the report. Fleet operators will see even faster growth, from 27 million electric passenger vehicles on the road by the end of 2022 to more than 100 million by 2026.
Meanwhile, sales of internal combustion vehicles peaked in 2017 and are now “in long-term decline,” the report said. In 2026, sales of combustion vehicles will be 39 percent lower than their peak in 2017, while the fleet of combustion vehicles will peak in 2025, according to the report.
According to BNEF projections, electric vehicles will reach 44% of global passenger vehicle sales by 2030 and 75% by 2040. After increasing rapidly from 2022 to 2035, electric vehicle sales growth will slow slightly by the late 2030s in major EV markets such as Europe, China and the United States begin to saturate, according to the report.
Faster progress is required to reach net zero
Achieving net zero emissions from road transport by 2050 is still possible, but requires “much faster
progress”, said BNEF. The report identifies that heavy trucks are “well behind the zero trajectory” and the industry should be a “priority focus” for government policy makers. The economics of electric heavy-duty trucks will improve rapidly in the 2020s and become as cheap as diesel equivalents, even for long-haul applications. However, fuel costs will still matter and natural gas will remain economically competitive, according to the report.
The study also identifies grid investments, grid connections and authorization processes as areas that need to be streamlined to “support the large number of charging points required for the transition.”
Supporting the rise of electric vehicles are developments such as stronger new policy support in the US, early progress in electric vehicles in some emerging economies such as India, Thailand and Indonesia, growing global investment in charging infrastructure and the battery supply chain and technological innovations such as sodium. ion batteries, according to the report.
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