November Report: Summary of Global Low Carbon Fuel & Vehicle Initiatives

When I talk about “low carbon fuels and vehicles” or “LCFVs” what am I really talking about and why should it matter to you?  Let me explain.  Despite a prolonged period of low crude oil prices, citizens and policymakers in many countries have never been more serious or committed to combating climate change in all sectors, including transport. Transport currently contributes 23% of energy-related GHG emissions and 20% of energy use and is expected to double by 2030, according to IEA. Passenger transport accounts for nearly 60% of total transport energy demand, and 60% of this is in OECD member countries. Decarbonizing transport is a major challenge with some advocates calling for a single solution (electrification). The reality is that multiple strategies will be required to achieve this with the understanding that fossil fuel demand will remain in place for some time.

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GHG emissions are increasing, and so is transport-related air pollution. After all the oil and car industries have done to clean up fuels and vehicles over the last 20+ years, air pollution is actually worse than ever in some parts of the world as more and more people with growing incomes buy cars. The global car fleet is expected to double in the next 20-25 years. And with oil prices so low, people are driving more than ever.

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Air pollution mitigation, except for in extreme cases (like China) has been completely overshadowed by climate change, but the consequences are much more immediate and even alarming.

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That’s where low carbon fuel and vehicle (LCFV) initiatives come into play. These kinds of initiatives are targeted to reduce conventional fossil fuel demand and/or the demand for the internal combustion engine primarily in an effort to reduce GHGs and air pollution, but also as a tool toward economic development and energy diversification as well. These kinds of initiatives are shown in the figure below.

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Countries are now responding with initiatives requiring biofuels blending, electrification, other alternative fuels and tough fuel efficiency standards, among other measures.  Many countries, as shown below, are adopting these kinds of measures in response to their Paris Agreement commitments.

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Why should you care about LCFVs, other than perhaps, your own industry and/or product?  Simple. You can’t understand the full competitive landscape by only watching what’s happening in your own industry – you need to understand the full landscape to assess both opportunities and threats. If you are a refiner, biofuels or alternative fuels producer, you need to understand what’s happening in global fuel economy and ZEVs to assess strategic threats and opportunities. If you are a refiner or an auto company, you need to watch biofuels, ZEVs and fuel economy – everything to assess strategic threats and opportunities. Refiners need to watch impacts to fuel demand globally, while the auto/engine industry and their OEMs needs to watch movements that impact both fuel and auto demand.

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That’s what this site, and this product is about: helping you understand the landscape and assess strategic opportunities and threats to your business. This presentation, the November report, summarizes the current state of play for LCFVs, including biofuels, fuel economy and zero emission vehicles, with analysis on what’s driving these initiatives. Upcoming reports will delve more deeply into these topics.