Recently, the question has been raised about the extent to which fuel demand has been affected globally with the growing proliferation of electric cars, and many countries tend to support them in various forms, whether with financial incentives or infrastructure projects, up to legislation and laws.
Within this framework, Norway stands out as a model to illustrate the impact of the spread of these cars on the fossil fuel market, as the Scandinavian country is considered a pioneer country, to a large extent, in the field of electric cars, in light of its relentless pursuit to dispense with traditional fuel cars through the generous tax exemptions it offers. And various incentives, with a commitment to the transition to clean energy and achieving carbon neutrality.
Norway’s advantages have led it to go a long way in eliminating traditional internal combustion engine cars much more quickly than its neighbours. For example, these advantages contributed to making the cost of Tesla’s battery-powered Model Y competitive with the cost of Toyota’s RAV4. Gasoline engine.
On the other hand, most countries cannot afford to move as quickly as rich Norway, as the country’s government estimates that various support measures cost it about $1.8 billion annually in lost revenue, according to what was seen by the specialized energy platform.
Is the demand for fuel rising?
For its part, the International Energy Agency believes that the rest of the world is moving in the same direction, which raised the demand for fuel extracted from oil to a peak before the end of the decade.
“In Norway, sales of new electric vehicles have increased from 3% in 2012 to nearly 80% in 2022,” said Kristina Bo, general secretary of the Norwegian Electric Vehicle Association.
“I think the rest of the world should learn from this and realize that this change will happen,” she added.
New models of imported electric cars on the dock in Oslo. Photo courtesy of Bloomberg
After years of subsidies, more than a fifth of Norway’s car fleet now runs on batteries. As a result, fuel demand and gasoline use have fallen by 37% since 2013, according to data from the European Statistics Office (Eurostat).
Many other countries have also seen demand for fuel decline as their cars become more efficient, but Norway has outperformed them due to its more generous financial incentives for electric cars. bloomberg (Bloomberg) July 7.
Analysts say that abandoning oil has been more difficult for other types of transportation.
Although electric cars accounted for 23% of the kilometers traveled in Norway in 2022, diesel still accounts for 43% of the distance traveled.
“The heavier trucks, which have not seen widespread adoption of electric drivetrains for technical reasons, still mostly run on diesel,” said Oyvind Solberg-Thorsen, director of the Norwegian Road Federation.
It should be noted that fuel demand, specifically diesel consumption in Norway, is only 10% below its 2015 peak and has not yet shown a steady downward trend, with demand rebounding since 2020, according to data from Statistics Norway.
“If you want to drive a truck, operate a mining machine and get things done in the global economy, you need diesel,” said Bjarni Schildrup, chief commodities analyst at Swedish banking company SEB.
Low per capita oil consumption
Norway’s per capita oil consumption has fallen by nearly a quarter since 2002, Bloomberg estimates, using data from the World Energy Institute’s Statistical Review.
This consumption is still higher than many of the country’s neighbors, as overall fuel demand has fallen faster even without widespread adoption of electric vehicles, according to a report seen by the specialist energy platform.
Tesla’s ultra-fast charging points at Ollival Stadium in Oslo. Photo courtesy of Bloomberg
Norway’s fuel demand has proven to be resilient, in part, because its population has grown by about 1% annually since 2008, which is faster than its neighbours, said Bjarni Schildrup, chief commodity analyst at Swedish banking company SEB.
Norway is a rich country. Consumers own the money to spend on cars and vacations, as well as the oil, shipping and huge industry sectors that use petroleum products.
“We are surrounded by different products and systems, which means we need oil derivatives, as there is no easy alternative,” said Norwegian Minister of Oil and Energy, Terje Asland.
He added, “Therefore, we will still need oil for industrial purposes, even if we stop using fossil fuels in the transportation sector.”
Electric cars are not a panacea
Norway’s experience suggests that electric cars are not a panacea for carbon emissions, but they can still have a significant impact on fossil fuel consumption.
Battery and fuel cell vehicles have already reduced 1.5 million barrels per day of global fuel and oil demand, about 1.5% of total consumption, according to Bloomberg New Energy Finance’s Electric Vehicle Outlook report.
The report believes that the use of oil in road transport will peak in 2027 in the carbon neutrality scenario.
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2023-07-08 12:41:27
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