US’ move to electric cars could spell doom for oil

President Joe Biden is prioritising a national electric vehicle (EV) charging network under his $2 trillion infrastructure bill, promising to have at least 500,000 of the devices installed across the US by 2030, a move that could further threaten oil.

The United States is rolling out a $174 billion plan to spur the development and adoption of electric vehicles that include money to retool factories and boost domestic supply of materials, tax incentives for EV buyers, and grant and incentive programmes for charging infrastructure.

However, to enable full-scale adoption of EVs, more would have to be done. The US does not have enough EV drivers to make it a viable business yet, and building a network of chargers is complex and but the government is setting the place for private sector participation

The partnership would involve local municipalities, businesses, and utility companies as well as automakers and an emerging group of EV charging companies and may be a tad complex than building a petrol station in a street corner.

But it may take years for the US’ plan to come to fruition. There are about 41,400 EV charging stations in the US, according to the Department of Energy. Fewer than 5,000 are fast chargers. That compares with more than 136,400 gas stations, in the country.

Yet, it shows that how quickly the world is moving away from oil. Though oil prices have seen some recovery following the coronavirus pandemic, the future is still uncertain. Investors and fund managers are prioritising cleaner energy investments, and concerns about climate change is driving opposition to more investments into fossil fuels.

Oil producing countries like Nigeria can leverage gas to develop their companies as the warning signs shows the world is moving away from oil.

“Our world is changing; we are set to add 2 billion more people by 2040 to become 9 billion people on earth. On the back of this and anticipated growth in human prosperity, Energy demand is expected to grow by more than 30 percent. Essentially the world needs more energy but needs it cleaner and cheaper,” said Tony Attah, managing director, Nigeria LNG Limited, at a recent conference.

Experts say a phased implementation of fossil fuel replacement with Compressed Natural Gas (CNG) powered vehicles beginning with government commercial fleet, removal of duties on conversion kits, and a long-term repayment plan for the cost of conversion, are ways to quickly displace petrol with cheaper CNG cars.

While Nigeria is awash with gas, it spends billions of dollars yearly to import Premium Motor Spirit, commonly called petrol, whose sulfur content pollutes the atmosphere. The Federal Government says it wants to change this and has announced commitments to develop a decade of gas.

Analysts have said that the government should replicate the CNG model in used in Benin City to covert thousands of taxis and private vehicles from petrol-powered vehicles to run on Compressed Natural Gas (CNG) for its plan to work.

In January 2010, the management of NIPCO commissioned its first CNG plant and filing station in Benin City with a promise that the new initiative will not only reduce the cost of motorists spent on powering their vehicles but also get value for their money.

One of factors accounting for its success is that it was implemented in a closed system. This means that rather than general adoption, it was started among cab operators and fuelling stations are within a closed-loop which makes it easier to provides support.

Experts say the government should start this with mass transit systems “starting off in a closed ecosystem wherein the buses can fill up at their terminals and along important routes is an effective strategy,” said Clement Isong, Chairman of Major Oil Marketers Association of Nigeria (MOMAN).

A major impediment to the adoption of Natural gas vehicles (NGVs) is the cost of conversion from petrol to gas since the cars were built to run on fossil fuel which can go as high as N350,000.

In Benin City, the taxi drivers were spared this initial capital investment, through a joint venture arrangement between NIPCo and the Nigerian National Petroleum Corporation (NNPC). In 2012, they injected over N17 billion in the provision of CNG infrastructure in a joint venture scheme with the Nigeria Gas Company (NGC), a subsidiary of the Nigerian National Petroleum Corporation (NNPC).

The JV scheme which resulted in the setting up Green Gas Ltd, GGL, led to the completion of eight CNG stations and three conversion workshops in the city of Benin, Edo State. The drivers repaid the loan over time.

Experts say that it could cost billions of dollars to build out a global charging network to accommodate the expected growth of EVs by 2030 but poor African countries like Nigeria can take advantage of their abundant gas resources to build sustainable transport systems using CNG.