1 big thing: EVs face headwinds in major markets...
Policy changes in the U.S. and China could slow electric vehicle growth enough to prompt major energy forecasting bodies to change their estimated timeline for a global oil demand peak, according to Rapidan Energy Group.
Why it matters: Passenger vehicles account for roughly a quarter of worldwide oil demand. So the uptake of electrification and other technologies is one of — though far from the only — forces that influence the wider demand picture.
The big picture: The consultancy's updated "decarbonization policy tracker" looks carefully at what's happening in China, the world's largest auto market and the global leader in EV deployment.
- One major thing happening in China's complicated market is that subsidies for EVs with more than 250 miles of range will fall 50% to $3,600 per car, and "subsidies for lower-range vehicles are being similarly reduced." But Rapidan emphasized that other important changes are afoot too.
- "China is easing certain licensing restrictions that have made it nearly impossible for car buyers in large cities to purchase an internal combustion vehicle," a summary of the report notes.
The combined effect will likely slow, or even reverse, what has been rapid EV sales growth there, Rapidan said.
Meanwhile, in the U.S., Rapidan says Trump administration plans to weaken Obama-era fuel economy and emissions rules will also affect EVs.
- Part of that plan would revoke California's special authority to implement rules that a number of other states follow.
- "[T]he future of the [zero-emissions vehicles] program — through which states have set sales mandates for electric vehicles — is unclear as the Trump Administration moves forward with its plan to revoke California's waiver to set independent tailpipe emissions under the Clean Air Act," Rapidan notes.
The intrigue: Analyzing the future of oil demand is a rough and uncertain thing and estimates vary. Even when it comes to cars alone, changes in the efficiency of internal combustion vehicles is very important, even as EVs get lots of attention.
- The International Energy Agency sees oil use in passenger cars peaking as soon as the mid-2020s, even as overall global demand rises slightly through 2040.
- But when they model climate-friendly scenarios for the global energy transition, the overall peak arrives far sooner.
The bottom line: "Because of the changes occurring in the U.S. and Chinese vehicle markets, Rapidan Energy Group sees the following 6–12 months as a period during which projections of peak oil demand may be adjusted by the major forecasting agencies," they said.