Expanding Mobility Continues to Drive Global Demand Growth

After participating in the Fuels For 2020 conference in Turnberry Scotland this September I left with one overarching conclusion.  Mobility is going to keep increasing and while the emissions resulting from all that moving around are going to improve we are not going to see a reduction in carbon emissions anytime soon.   Three days of a packed agenda covered a wide range of topics very few of which should have had any direct connection to electric vehicles or battery technology, yet every single one ended up being inextricably connected to the topic of the day.

I recall industry conferences and gatherings back in 2000 where no matter the agenda all anyone talked about was the internet.  Then in 2010 everything was connectedB70EFC48-AABF-4DF9-A836-824EDC44B1F3 to the new app economy being born with the huge sales of smartphones.  What has become obvious in the last year is that EV’s and everything associated with them have for our industry at least taken on this same status as the overpowering theme that every presenter must address or risk being left out of the conversation.

A presentation by an esteemed geologist from a nearby university on fracking and shale gas reserves in the UK did indeed talk about those reserves but there was a shadow, a strange light to each statistic.  Every prediction, forecast, and conclusion was delivered with new caveats and conditioning statements that were heard over and over.  Essentially all forms of the fundamental question of, “When EV’s are adopted at x rate over y years what happens to our industry?”

Despite all of the attention each speaker was also consistent that while the transportation market will go through tremendous change over the next 20 years oil demand likely will not peak globally until 2035 or later.  Meaning that for the next 15 years the demand for oil will still be growing each year.  Demand will decline in the US, EU, and Japan, but these declines will be offset by continued increases in Africa, Asia, and the rest of the world.

IMG_2026What is going to improve dramatically are the emissions of pollutants such as NOx, SOx, and particulates.  Unlike the carbon dioxide emissions that may create fatalities in the future these are the pollutants that kill today and they are going to improve dramatically in the next few years.  One of the reasons is the fallout from Volkswagen’s “Dieselgate” debacle where the promise of clean diesels was revealed to be a falsehood.  Nick Molden of Emissions Analytics presented on his company’s real life measurement of emissions of actual vehicles driving on actual roads by real live drivers.

The results were stunning, the average emissions of diesel vehicles “compliant” with EU 6 regulations were six times the regulatory limit.  Someone in the audience broke the stunned silence that met Nick’s comments by joking that maybe that’s why it was called EU “six”.   Funny, but tragically so when one considers the health impacts.  Ironically while most of these vehicles are in Europe it was an American investigation that revealed the fraud and not a single vehicle’s certification has been pulled in the EU to date.  Mr. Molden’s firm has produced a useful measurement called the Equa Index and published a free tool on the web to check your own vehicles performance at http://www.equaindex.com.

The global shipping industry is finally starting their conversion to low sulfur fuels moving off of Heavy Fuel Oil (HFO) to Ultra Low Sulfur Fuel Oil (ULSFO) a fuel that hardly exists today.  This conversion of between 4 and 5 million barrels per day of fuel that is 50,000 ppm sulfur to fuel that is 5,000 ppm sulfur is going to impact the refining industry, the shipping industry, and air quality globally.

While emissions are improving dramatically for each mile of transportation delivered the overall growth in demand for transportation is still expanding.  This lead to another consistent conclusion.  From academic researchers to industry forecasters there was consensus that it’s going to get warmer. Regardless of the Paris agreement, that the US has now pulled out of, each speaker was quietly resigned to a warmer planet.

This event may have been held at the Trump Turnberry resort, but there were no “climate deniers” in this crowd, just clear eyed realists. Despite the fact that engine efficiency is growing a little every year and that batteries are becoming cheaper with each new factory expansion overall carbon emissions are not headed down anytime soon.

Increases in mobility have lead to increased freedom, growing opportunity, and expanding economic prospects for the past 200 years.  These benefits will continue to increase with the adoption of autonomous vehicles, car sharing, and an increasingly electrified fleet world wide.  I believe the increased transparency of real life emissions along with declining costs per mile of mobility delivered point to a better transportation future for all of us, but we are clearly in a race.  A race to harvest those benefits while producing lower emissions as we transition to a more sustainable electrified future that is going to take decades of innovation and investment to deliver.

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