Switch to low carbon transport could save billions says new report
Wed 20 April 2016
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New analysis by Cambridge Econometrics, the ICCT and Poyry Consulting shows that policies to promote low-carbon mobility would reduce global oil prices and could thereby reduce global spending on oil by $330 bn each year between 2020 and 2030. The report was launched by the European Climate Foundation at an event held at the London Stock Exchange.
The report says that the uptake of technologies such as hybrid and electric vehicles would help keep oil prices significantly lower – by 15% in 2020 & 29% in 2040 – when compared with business as usual. Cheaper oil will free-up billions for oil importing countries, to then be spent in other parts of the economy.
The main conclusions are:
● As the EU imports 88% of its oil, the projected reduction in demand would lower its oil bill by €29 bn by 2030. If this transition were pursued globally, the additional fall in oil prices would lower the EU’s oil bill by a further €12bln.
● As a major oil importer, the European economy as a whole will see significant benefit from as a result of lower oil prices, far outweighing any reduction in profits for importers and processors.
● Under a low carbon mobility scenario, GDP for the region will be 0.2% higher by 2030 and 0.5% higher by 2050, as a result of lower oil prices. Further economic benefits could accrue from increased investment in low-carbon transport technologies and energy sources.
● This would partly be the result of a 0.9% rise in average real incomes by 2050 and lead to the creation of 400,000 new jobs.
The analysis also demonstrated that the age of ultra-cheap oil will be limited. Without the necessary action to address climate change, the oil price could rise as high as $130 per barrel in 2050. But if policies were implemented to drive investment in low carbon transport technologies, thereby reducing demand for oil, this could be limited to $83 - $87 a barrel in 2050.
Phil Summerton, Director at Cambridge Econometrics, said, “In a world where climate policies are being implemented to drive investment in low-carbon technologies – as they have too and as governments agreed in Paris – we’ll simply need less oil for transport. Through policy support and technological disruption, we can expect the global economy to be using 11 million fewer barrels of oil per day by 2030. This rises to 60 million in 2050. This will have profound impacts, but the advantages are clear and by moving early the benefit can be maximized.”
Drew Kodjak, Executive Director, ICCT, said, “We have seen how vehicle standards around the globe have already reduced oil demand, and with governments increasingly waking up to the imperative to tackle climate change, we can expect this trend to strengthen. Companies such as Tesla have shown what innovative engineers are capable of, and governments in California, Norway and the Netherlands have shown how rapidly change can be delivered via smart policies. This analysis shows how decision-makers can tackle the twin challenges of transport emissions and resource dependency.”
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