Transport is at the centre of worldwide oil demand. Of the 100 million or so bpd consumed globally, around 65% goes on transport.
Electric vehicles (EVs) are threatening around 25 million bpd of oil that are used by passenger and light vehicles.
So far, EVs are being held in check by range and charging concerns. While incremental improvements to batteries are slowly adding to EV driving range, charging times are still an issue. It takes around 15 minutes for even the highest-end vehicle chargers at commercial charging stations to provide 80% of a battery’s capacity. When you’re competing against two minutes to fill a conventional car, this is nowhere near fast enough. And that is an extreme rate. Most chargers are much, much slower.
An EV’s lower range also means you need to charge more often. A new ICE car gets about 40-50 mpg, translating to an effective range of 650 km. EVs come in around 200-400 km, which translates to more frequent charging, and more time lost.
In the end, convenience is a prime determining factor for the pace of technology adoption. While the ability to charge at home overnight is touted as an attractive feature of an EV, it is irrelevant when you are far from home with a low battery. And anyway, in Europe at least, the majority of consumers do not have off-street parking in which to charge an EV.
This landscape makes Battrion’s new battery technology, which we cover in this month’s InnovOil, interesting. Most EV batteries use graphite anodes made of horizontally aligned graphite flakes. The lithium ions must migrate their way around these flakes. Horizontal graphite flakes make for longer slower pathways for those ions, slowing down charge times. Battrion aligns the flakes vertically, giving lithium ions a shorter route, so charging time falls.
Oil demand from cars is set to remain broadly flat as falling demand in the West is balanced by rising demand in the rest of the world. However, the global oil industry will not see its single biggest customer disappearing overnight. NB Research’s forecasts are still only pointing to around 60 million pure electric EVs, less than 5% of the 1.8 billion cars in service, by 2030, displacing a modest 1 million bpd of demand, a volume that is likely to be absorbed by increased demand from other sectors.
Marine bunker fuels account for a much smaller slice of the oil market – around 4 million bpd – but that market will transform steadily as regulators have their way. The IMO’s emissions regulations are forcing shipowners to move quickly to reduce SOx emissions. One solution is to replace fuel oil with LNG. In this issue we also cover the largest dual-fuelling project to date – conversion of the container ship Sajir to dual fuel. While there are still other technologies available to deal with SOx emissions (scrubbers or cleaner fuels), the Sajir conversion could be the start of a trend that will erode another, albeit smaller, market for oil.
The pace at which new approaches displace oil from transportation will be dictated by a combination of regulation, price and technological change. The last of these three arrives in small, low-profile steps. Read about those first here, in InnovOil.