Growth of fuels used in transport slows as the impact of rising prosperity is offset by efficiency gains
Increasing prosperity in developing economies causes the demand for transport to increase, with the impact on fuel demand largely offset by efficiency gains.
In the evolving transition (ET) scenario, global demand for both passenger and freight transport services more than double by 2040. These patterns are broadly consistent across road, aviation and marine. But the impact on transport fuel demand is largely offset by efficiency gains: energy used in transport increases by only 25% over the Outlook – far slower than the 80% increase during the previous 25 years – and plateaus towards the end of the Outlook.
Within road transport, the impact from increased ownership and travel is offset by efficiency improvements, dampening the overall growth of fuel used by cars and motorbikes. Growth in fuel demand for trucking is stronger, with increasing freight activity and more modest efficiency gains causing the share of energy within transport consumed by trucks to increase.
Energy consumption in aviation and marine transportation increases by broadly similar amounts. This is supported by the expansion in global GDP, with air passenger traffic growing particularly strongly.
The transport sector continues to be dominated by oil, despite increasing penetration of alternative fuels, particularly natural gas and electricity.
In the ET scenario, oil demand accounts for around 85% of total transport fuel demand in 2040, down from 94% currently. Natural gas, electricity and a mix of ‘other’ types of fuels are each projected to account for a little less than 5% of transport fuel by 2040.
Growth in natural gas is concentrated in the use of LNG in long-distance road haulage and marine transportation. In contrast, electricity usage increases most rapidly in passenger cars and light trucks. (We outline an alternative scenario in which electric cars are assumed to grow more rapidly than in the ET scenario.)
‘Other’ fuels are dominated by biofuels, with hydrogen accounting for only a small proportion of total fuel transport. The prospects for hydrogen, particularly towards the end of the Outlook and beyond, depend on the ability of hydrogen to compete against liquid fuels and electricity in fuelling long-distance road haulage.
All of the growth in transport fuel demand comes from developing economies, with China and India accounting for over half of the increase.
Transport energy consumption by fuel type (billion toe)
In the evolving transition scenario, oil accounts for 85% of total transport fuel demand in 2040, down from 94% currently
The number of passenger cars on the planet increases substantially by 2040, with an increasing number of electric cars and a substantial improvement in vehicle efficiency.
In the ET scenario, the passenger car parc nearly doubles to 2 billion cars by 2040, including more than 300 million electric cars. The increase in electric cars in the ET scenario is faster than in the base case in last year’s Outlook.
There are two main types of electric cars: plug-in hybrids (PHEVs) and battery electric vehicles (BEVs), with roughly equal amounts of PHEVs and BEVs by 2040. PHEVs contain both a conventional internal combustion engine (ICE) and an electric motor, and run on a combination of oil and electricity from the grid. PHEVs are broadly equally powered by electricity and oil. In contrast, BEVs are powered solely by electricity.
The efficiency of the global car parc improves by between 2-3% p.a. during the Outlook, significantly faster than the past 15 years, driven by tightening government regulations and targets. In the EU, new cars in 2040 are likely to around 70% more efficient than in 2000. A typical new ICE passenger car in the EU by 2040 consumes around 3 litres per 100 km, compared with 5 litres today and 7 litres in 2000.
Fuel economy of new cars (litres/100km*)
* Based on the NEDC (New European Drive Cycle), gasoline fuel
A typical new ICE passenger car in the EU by 2040 consumes around 3 litres per 100km, compared with 5 litres today and 7 litres in 2000
The mobility revolution, shared mobility and autonomy
Fuel demand within road transport is increasingly affected by the combined impact of: electric vehicles (EVs), shared mobility and autonomous driving.
The importance of EVs is best measured by the share of vehicle kilometres (Vkm) powered by electricity, rather than by the number of EVs, since this takes account of: (i) different types of EVs (PHEVs vs BEVs); and (ii) different intensities of usage due to shared mobility.
In the ET scenario, by 2040 around 30% of passenger car Vkm are powered by electricity, significantly higher than the proportion of EVs (BEVs and PHEVs) in the global car parc of just over 15%.
This higher share reflects the importance of EVs in shared mobility, where the lower costs per km of EVs make them more competitive than privately-owned cars, as shared-mobility cars are used much more intensely. In particular, the sharp fall in the cost of car travel associated with fully-autonomous cars, which start to become available in the early 2020s, leads to a substantial increase in shared mobility (and use of EVs) in the 2030s.
In the ET scenario, the penetration of electricity in the car market depends equally on the increasing number of EVs and the interaction of autonomy with shared mobility.
The share of truck Vkm powered by electricity reaches 15% by 2040, concentrated within short-distance, light trucks.
Liquid fuel use in cars – increased travel offset by tightening efficiency standards
The outlook for liquid fuel consumption by passenger cars is determined by the increased demand for passenger car travel offset by tightening vehicle efficiency standards and the impact of increased share mobility.
In the ET scenario, demand for travel by passenger cars more than doubles, largely due to increasing prosperity in developing countries.
But the impact of increased car travel on liquid fuel demand is largely offset by the tightening in vehicle emission standards. Car manufacturers can satisfy these emission standards by a combination of: changing the mix of ICE cars sold; selling more EVs; or making other efficiency improvements, such as light-weighting.
Car manufacturers may choose to sell more EVs for a variety of other reasons, including meeting customer demands and long-term strategy. But for a given vehicle emission standard, if the proportion of EVs sold does increase, car manufacturers have less incentive to invest in other types of vehicle efficiencies. As such, the impact of more EVs on liquid fuel demand is likely to be largely offset.
The projected growth in liquid fuel demand is also partly offset by the increased use of shared-mobility cars, since these are predominantly EVs.
A key uncertainty surrounding the prospects for oil demand is the speed with which sales of electric cars increase over the Outlook. This depends on a number of factors including: government policy, technological improvements and social preferences, and as such is hard to predict with any certainty.
To gauge the significance of this uncertainty, consider an alternative scenario in which governments impose a worldwide ban on the sale of all ICE (and PHEVs) cars from 2040 onwards, with the regulations gradually increasing, such that around a third of all cars sales in 2030 are BEVs, two thirds in 2035 and 100% in 2040.
Under this alternative ‘ICE ban’ scenario, electricity powers around 20% of total passenger car Vkm in 2030 and two-thirds in 2040. This compares with nearly 15% and 30%, respectively, in the ET Scenario.
The ICE ban scenario
The impact of the ‘ICE ban’ scenario on liquid fuel demand depends on the extent to which vehicle emission standards are adjusted in the light of the ban.
If emission standards are unchanged from the profile assumed in the ET scenario, the impact of the ICE ban on liquid fuel demand would be negligible, since the impact of the greater number of EVs would be offset by less investment in other forms of vehicle efficiency.
But assuming emission standards are tightened by a corresponding amount, such that there is no offset from smaller efficiency gains, the ICE ban reduces liquid fuel demand by around 10 Mb/d relative to the ET scenario. Even so, the level of oil demand in 2040 in the ‘ICE ban’ scenario is higher than in 2016.
The relatively small impact of the ICE ban on total oil demand means its impact on carbon emissions is also relatively limited. Even if the electricity used to power the additional EVs is assumed to be generated entirely by renewable energy and so leads to no additional emissions, carbon emissions in the ‘ICE ban’ scenario still increase by 7% over the Outlook, little different from the ET scenario, and far higher than in the ‘even faster transition’ scenario.