The fear of what will happen to Nigeria if the world moves beyond oil seems to be becoming a reality as electric cars outsold fossil fuel vehicles for the first time in Norway last month.
On numerous occasions, Nigeria’s depleting oil reserves have been extensively discussed as the unrelenting reduction without replacement had become worrisome however this fears are becoming real as Norway recorded 8.4 per cent share of sales in March which was “historically high.”
The announcement from the Norwegian Electric Vehicle Association makes it the first time that more than half of the cars sold in the Norwegian market were fully electric.
Why electric car is gaining momentum in Norway?
Norway is the world leader in the sale of Electric Vehicles (EVs). According to estimates by the International Energy Agency (IEA), in 2017 it accounted for 39 percent of the market share of EVs, far ahead of Iceland in second place with 14 percent.
The Scandinavian country is popularly known for providing big incentives to boost electric car sales, waiving hefty vehicle import duties and reducing sales and registration tariffs while owners of electric vehicles are also allowed to circulate on bus lanes and are exempted from road tolls.
In 2018, the market share rose to 49 per cent, above Iceland’s 19 per cent and Sweden’s 8.2 percent as Tesla’s Model 3 accounted for almost half of the 10,732 zero-emission vehicles registered in Norway in March.
To further strengthen its drive for renewables, the Norwegian government has outlined plans to see only zero-emission vehicles sold in the country by 2025.
What other countries are doing right?
Apart from Norway other countries are also strengthening their commitment towards renewables with the UK pledging half of all new cars to be hybrid or electric by 2030.
Although the move angered environmental campaigners however it was welcomed by the car industry, the UK revised its “Road to Zero” plan and stopped short of a complete ban on the circulation of petrol and diesel vehicles in 2040.
Also, Germany is trying to respond to a diesel emissions cheating scandal that has engulfed the auto industry in the last three years by boosting electric car sales. Government subsidy schemes have helped lift sales but even so, Germany accounted for less than 2 per cent of total EV sales last year.
The European Union has agreed to cut carbon dioxide (CO2) emissions from new cars by 37.5 per cent by 2030. Car-producing nations including Germany, the Netherlands and Denmark, have sought laxer time limits.
Implication for OPEC members
In the event that oil disappears due to lower demand which could lead to access excess supply, Organization of Petroleum Exporting Countries (OPEC) nations such as Algeria, Venezuela and Nigeria, with no plans to diversify away from fossil fuel production as the core of the national economy will be left vulnerable to harsh economic reality.
However the reverse is the case for OPEC leader Saudi Arabia and its Gulf allies who have spent the past few decades investing their oil profits in massive sovereign wealth funds prepped for a “rainy day” in the desert. These states will be able to exploit the savings to keep it together as they spearhead internal economic revolutions without oil.
Implication for Nigeria
The challenge for Nigeria is not necessarily what happens now, but what happens when the oil price crashes to its barest minimum with increasing attractiveness to produce electric cars from Europe to America and Asia.
A majority of these advanced countries are also considering a ban on the sale of gasoline-powered cars, which could lead to lower oil demand which could in turn lead to excess oil supply, a situation that will automatically crash oil price.
Despite massive oil revenue from higher oil prices, Nigeria is still contending with infrastructure deficit, epileptic power, low foreign exchange reserves and poor living standard.
Africa largest oil producer also imports refined petroleum from foreign companies to meet her daily needs, owing to insufficient refining capacity as corruption and nepotism ruined the country’s four refineries.