Global oil use could peak as early as 2025, with this peak and subsequent decline driven primarily by the accelerating adoption of electric vehicles (EVs).[i] EV adoption is predicted to accelerate further in the next few years, rising from just below 5% of new car sales to approximately 100% by 2040. According to McKinsey, a shift in consumer behaviour will play a large role in the phaseout, with increased use of public transportation and ride-sharing platforms likely to lower total mileage driven by personal cars. Initial expenses for EVs may stay high, but electric vehicles’ costs will still decrease long-term. The upfront cost of an EV varies by vehicle size and country, but it is presently 30 to 90 per cent higher than an Internal combustion engine (ICE) vehicle.[ii] By 2025 in Europe and 2030 in the United States, EVs will have lower overall ownership costs than ICE vehicles if net-zero is achieved by 2050. LV have also highlighted the long-term savings possible with a comparison between a Nissan Leaf and Ford Focus showing a £3254 saving over three years and a £7066 saving by the 4th year of ownership; these savings are made across average annual running costs.[iii]
Despite the merit of a 2025 peak in global oil use and an important shift to BEVs, the Global Energy Perspective still predicts that global average temperature, based on the current trajectory, will exceed the 1.5℃ global temperature rise target (set out in the Paris Agreement).[iv]
McKinsey climate change scenarios
The UK’s Climate Change Committee (CCC) highlights in its 6th carbon budget, aimed at ensuring that Paris agreement targets are met, that electrification as an abatement strategy will account for the largest share in CO2 reduction.[v]
Types of abatement strategy for the CCC’s 6th carbon budget
But it is not just electrification of surface transport that will play a role in emission reduction; electrification as a replacement for gas use, specifically, the CCC set out that adoption of heat pumps as an alternative to gas boilers must aim to be 15.3 per 1000 people per year in the UK by 2030.[vi] Heat pump installations rose from 10.8 million in Europe in 2010 to 21.8 million in 2020, around a 2-fold increase over a decade.[vii] Meanwhile, according to the European Environment Agency (EEA), the new registrations of BEVs in Europe more than doubled between 2019 and 2020.[viii] The disparity in pace demonstrates the opportunity for growth.
All of the McKinsey scenarios suggest that global gas demand will rise by 10% in the next decade. This does not negate the positive changes leading to a decline in global oil use, but it does show how valuable the adoption of heat pumps could be.
With global gas demand set to rise, understanding the primary uses and potential replacements is vital. According to the UN, the majority of household energy use can be attributed to heating; by extension, heating of commercial spaces also accounts for a significant portion of energy use.[ix] 87% of UK respondents for Statistica’s winter property heating survey said that gas is the primary source of heating.[x] Shifting towards more climate-friendly methods of heating is supported in the UK by the boiler upgrade scheme; this scheme sees £450m in funding to replace up to 90,000 boilers in the UK in homes and non-domestic properties.[xi] Installing a heat pump now would place you ahead of the trend; some projections suggest that by 2027, more than 500,000 installations per year could be completed and over 1,000,000 by 2030.[xii]
The Russian invasion of Ukraine has seen European reliance on Russian gas exacerbate the energy crisis. This has been recognised as an opportunity by the Biden administration to assist in European reduction in gas use; the National Resource Defence Council’s managing director for government affairs said:
“The administration isn’t just sending LNG” … “They’re also trying to share advanced technology, like heat pumps and solar and wind infrastructure, and helping with enhanced weatherization. These strategies will still take time, but they do have the potential to help the E.U. reduce its dependence on Russian energy—which will ultimately help Ukraine.”[xiii]
[ii] Ibid
[iii] LV- Electric Car Cost Index
[iv] Ibid
[vi] Ibid
[viii] EEA- New registrations of electric vehicles in Europe
[x] Statistica- Energy & Environment
[xi] BBC- Heat pumps: How do they work and how do I get one
[xii] Heat pump association- Delivering net zero: A roadmap for the role of heat pumps
[xiii] NRDC- How We Can Help Europe End Its Reliance on Russian Gas
Oscar is a recent graduate with a background in earth science. He is currently studying an MSc focussing on disaster responses, emergency planning and community resilience. His postgraduate research project will assess the link between climate crisis risk perception and attitudes to green energy projects. “Adapting to the climate crisis through the pursuit of net zero requires community engagement and understanding. Zero Carbon Academy’s goals closely align with this approach and I’m excited to have the opportunity to research and communicate a variety of topics relating to our environment and sustainability”.
