G-7 Eyes Ambitious Shift to Electric Cars and Away From Oil

by Alberto Nardelli and Josh Wingrove (Bloomberg/Yahoo!) Group of Seven leaders are discussing ambitious plans to shift the balance of car buying away from gasoline to greener vehicles by the end of the decade, as part of a package of measures to combat climate change.

Under one proposal contained in a document seen by Bloomberg, G-7 governments would “strive” to ensure that the majority of all new passenger car sales are not petrol or diesel-powered “by 2030 or sooner.” Countries are divided on how specific the measures should be.

With a day to go before the summit begins, the plans are still in draft form and it’s not clear yet that leaders – crucially including U.S. President Joe Biden -- will endorse the proposed wording on moving away from polluting cars.

A U.S. official declined to say whether the White House supports the drafting under discussion, including whether to set a goal that more than half of vehicles sold in 2030 are non-emitting.

The official said Biden believes in strong investment in electric vehicle markets and the supply chain as a way to tackle climate change and create jobs. But the U.S.’s domestic plan doesn’t go as far as to call for a ban on combustion engine cars.

According to proposed wording in the draft summit communique, leaders would commit to decarbonise their transport sectors throughout the 2020s by accelerating the spread of electric vehicles, and the development of zero carbon trains, buses, shipping and aviation. READ MORE

Excerpt from Bloomberg/Governors' Biofuels Coalition: While there will be a slight recovery through 2023, Europe’s demand for fossil-based liquid fuels — think oil products like gasoline, diesel — as well as biofuels, will never again reach the heights of 2019, according to Wood Mackenzie Ltd., a consultant. The IEA sees it similarly, expecting the continent’s oil demand growth to turn negative in 2025, when it will still be shy of the pre-pandemic level.

Europe’s refining margins have now recovered from the lows of the pandemic, but are still below the five-year average, according to Wood Mackenzie.

Today, biofuels — which help to make fossil-derived products like gasoline — account for a much bigger chunk of Europe’s road fuel demand than electric vehicles. But their market share will only rise slightly this decade, as only so much bio-component can be blended into the liquid fuels used in vehicles’ engines.

In the long run, biofuels’ share of European road-fuel demand is actually set to slump, weighed down by the general decline in liquid fuels as EV’s — backed by EU policy — take an ever bigger piece of the pie.

“The cost of an EV will fall below the price of an internal combustion engine vehicle, on an upfront basis, from the late 2020s,” said David Doherty, oil demand specialist at BloombergNEF. “Consumers will likely adopt EVs en masse over ICE vehicles as a cheaper option.”

The future of other transport sectors is less clear. Uptake of sustainable aviation fuel — a cleaner version of fossil-based jet fuel — is currently extremely low, while hydrogen and electric airplanes are still in the very early stages. The maritime sector is also making slow progress on decarbonization.

Trucking also accounted for about 40% of Europe’s diesel demand before the pandemic hit. That won’t disappear overnight. For the long-distance, high-C02 portion of the sector, hydrogen, or, electric overhead wires are in play as decarbonization solutions, according to Cooper. But a significant chunk of the trucking industry supports liquid fuels. And that bodes well for refiners.

Even with the pockets of demand that remain, Europe’s refiners will still face a barrage of imports from East of the Suez Canal, where new refineries keep getting built. Not only will these plants sell into Europe, they are also likely to eat into the continent’s export markets.

Europe’s refining sector will ultimately be whittled down to the most competitive sites, according to Alan Gelder, vice president, refining, chemicals and oil markets at Wood Mackenzie. Those left will be the plants integrated with chemicals. Facilities in industrial clusters are also set to benefit. READ MORE