A recent Bloomberg NEF report revealed that electric vehicles are partially responsible for cutting global oil use by nearly two million barrels every single day. The report indicates that although electric vehicle adoption is low in most markets, current EV use is already enough to reduce daily oil use by a substantial margin.
Fossil fuels such as oil and coal were instrumental in enabling human industrialization, and they still play a key role in many nations’ energy mixes. Bloomberg NEF estimates that global demand for oil from the road transport segment will peak at around 42.3 million barrels per day in 2023. However, most countries are keen on cutting coal use in the road transport sector and have adopted policies to encourage electric-vehicle adoption.
Electric vehicles will play a key role in enabling the transition from dirty fuels such as oil to renewable energy. Data shows that demand for oil in the transport sector in 2023 has decreased by around 4.1%, or 1.8 million barrels of oil per day, up from 1.5 million barrels daily last year. Furthermore, 720,000 barrels of oil were not combusted in 2023, and the rate of avoided oil consumption will likely accelerate as EV adoption increases.
Interestingly, BloombergNEF notes that battery electric vehicles weren’t wholly responsible for the reduction in daily oil use. Passenger electric vehicles accounted for 23% of avoided oil demand while commercial electric buses represented 13% and commercial vehicles accounted for 3% of avoided oil demand.
Regardless of the cause of avoided oil demand, the result is that less oil is being combusted and carbon emissions are reduced, even if by a small margin. Estimates from BNEF show that the world’s fleet of electric vehicles is cutting annual carbon dioxide emissions by 112 metric tons.
The base-case Economic Transition Scenario from BNEF predicts that battery electric vehicles and fuel cell cars will displace 12.4 million barrels of oil by the middle of the decade. This scenario would see the displacement of an extra 4 million barrels of oil a day by 2035 and the total electrification of the global fleet by 2050.
However, such scenarios depend on the public ditching the internal combustion engine and embracing electric vehicles. Addressing the factors hindering electrification and spurring widespread EV adoption will require substantial investment and cooperation between policymakers and companies in several critical industries. Bloomberg NEF concedes that it will take a long time to electrify the world’s massive fleet of internal combustion engine vehicles and eliminate greenhouse emissions from the road-transport segment.
As many more EV models from entities such as Nikola Corporation (NASDAQ: NKLA) find their way onto American roads, the reduction in daily oil use around the world should keep decreasing and the resultant emissions will drop.
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