UK could save billions by embracing low-carbon transport
A transition to low-carbon transport could reduce global spending on oil and save £232bn a year between 2020 and 2030, according to a new report from economic analysts.
Experts from Cambridge Econometrics suggest that a switch to technologies such as hybrid and electric vehicles (EVs) would significantly reduce global oil prices, allowing oil importing countries to invest additional savings into other parts of the economy.
Cambridge Econometrics director and lead author of the report Philip Summerton said: “Without any further policy changes, oil prices are likely to recover in the long-term, driven by global economic growth and increasing demand for mobility.
“In a world where climate policies are being implemented to drive investment in low-carbon technologies – as governments agreed in Paris – demand for oil will be curbed, and ultimately reduced, leading to lower oil prices than would otherwise be the case."
The conclusions from the new report would be hugely beneficial to the UK - a country which imported 38% of its oil in 2014. The Oil Market Futures analysis suggests the UK could potentially lower its oil bill by £13bn by 2030 with greater support for clean transport.
The report highlights that an increased focus on domestically-produced electricity or hydrogen - to power low-carbon vehicles - could benefit the UK economy to the tune of £5bn and create as many as 19,000 new jobs.
Cheap and temporary
Cambridge Econometrics experts also suggest that the age of ultra-cheap oil will only be a temporary situation, with a prediction that oil prices could rise to $130 a barrel by 2050. However, this figure could be reduced to a reasonable level of around $83 a barrel if governments undertake a positive approach to drive investment for low-carbon mobility.
“Through policy support and technological innovation, we can expect the global economy to be using 11 million fewer barrels of oil per day by 2030 than we would without significant changes to transport technologies,” Summerton added.
“Lower oil prices would benefit oil-importing regions such as Europe by reducing inflationary pressures on consumers, increasing real incomes, and shifting spending towards other goods and services that deliver more value for Europe."
The Oil Market Futures report was released in the build up to the New York climate change agreement on Friday (22 April) which will see 130 countries ratify the Paris deal agreed last December.
The report demonstrates that every country will need to revolutionise the transport sector with ambitious low-carbon mobility polices in order to ensure that global temperature rises are kept well below 2C.
The research from Cambridge Econometrics comes in the same week that green transport group Transport & Environment (T&E) labelled a new European Environment Agency (EEA) report on vehicle carbon emissions figures for 2016 as "hot air".
An initial deal to reduce car emissions was signed by European lawmakers back in February – legislation which technically still allows vehicles to exceed official pollution limits. The European Commission vote was cast in the wake of a political storm in Europe, caused by Volkswagen's admission in September that it cheated US diesel emissions tests.
The emissions scandal seemingly refuses to die down, after Japanese automakers Mitsubishi today (20 April) admitted to falsifying fuel efficiency tests.
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