More than 250 countries, cities and companies have signed a United Nations climate pledge to work to end sales of new gasoline-and diesel-powered vehicles as early as 2035, a move that could have major ramifications for Houston’s oil and gas industry.
Houston and the United States have not signed the pledge announced this week at the UN’s COP26 climate conference in Glasgow, Scotland. Several U.S. states and major cities, however, have signed on, including California, New York and Washington state, as well as Atlanta, Dallas and Los Angeles. Canada and Mexico, America’s closest trading partners, as well as five major automakers — Ford, General Motors, Jaguar Land Rover, Mercedes Benz and Volvo — and ride-sharing giant Uber also signed.
“As representatives of governments, businesses, and other organizations with an influence over the future of the automotive industry and road transport, we commit to rapidly accelerating the transition to zero emission vehicles to achieve the goals of the Paris Agreement,” the pledge states. “Together, we will work towards all sales of new cars and vans being zero emission globally by 2040, and by no later than 2035 in leading markets.”
The decline of the internal combustion engine and corresponding rise of electric vehicles will have significant implications for Houston’s oil and gas industry, which has long relied on growing sales of petroleum-powered cars, trucks and SUVs to drive demand for crude. Transportation accounts for about one-quarter of U.S. energy consumption, and is fueled entirely by petroleum products such as gasoline and diesel.
At the same time, electric vehicle sales are projected to surpass 7 million cars globally this year, more than doubling last year’s sales of 3.2 million, according to a report published this week by Rystad. The Norwegian energy research firm estimates that electric vehicles, including plug-in hybrid vehicles, will account for 1 out of every 10 new vehicles purchased this year.
Electric vehicles’ global market share is expected to hit a record 10.3 percent this year, up from 5.3 percent in 2020. About 7 million of the 69 million vehicles sold this year will be battery-electric or plug-in hybrid electric vehicles, and that number is expected to grow, Rystad said.
S&P Global Platts, an international energy research firm, said it projects that the U.S. will have 21 million electric vehicles on the road by 2030.
Although electric vehicles rely on electricity produced in large part by natural gas power plants, their growing sales and popularity are expected to stunt demand for crude. The International Energy Agency expects that the rise of electric vehicles could reduce global oil consumption by as much as 2.5 million barrels per day by the end of this decade.
The Energy Department in October said the number of gasoline-powered vehicles in wealthy nations could peak as early as 2023, before leveling off and declining slightly through 2050.
Nearly every traditional automaker has introduced an electric vehicle, and many have pledged to replace gasoline-powered vehicles with all-electric versions.
General Motors — the largest U.S. automaker — in January said it would phase out gasoline-powered cars by 2035, the same year California’s ban on sales of new gasoline-powered vehicles takes full effect.
Ford in May unveiled the F-150 Lightning, electrifying the nation’s longtime top-selling vehicle.
And last month, rental car giant Hertz ordered 100,000 Tesla Model 3 cars for its rental fleet, helping to push the Texas automaker past $1 trillion in market value.
EV sales are expected to benefit from President Joe Biden’s recently passed infrastructure bill, which will expand the electric vehicle tax credit by $12,500 for middle-class families and will invest $7.5 billion to build a network of electric-vehicle chargers over five years.
The U.S. saw steady growth in electric vehicle sales in September, boosting the segment to a 4.4 percent share of new vehicles.
“This year’s fourth quarter is set to see a huge increase in the number of EVs sold, mirroring trends from 2019 and 2020, as electric carmakers like Tesla traditionally tend to push out maximum deliveries at the end of the year,” said Abhishek Murali, Rystad’s energy transition analyst. “In addition, buyers are expected to try to take advantage of government incentives before they start being phased out as a result of strong market adoption of EVs.”
By Paul Takahashi STAFF WRITER - Houston Chronical