The writing on the wall

Author Ben Winkley

Volkswagen is struggling to apply the brakes to the emissions scandal, with the company admitting this week that some 800,000 of its cars could be affected by the under-reporting of fuel use and emissions.

Volkswagen is struggling to apply the brakes to the emissions scandal, with the company admitting this week that some 800,000 of its cars could be affected by the under-reporting of fuel use and emissions.

This story broke in the US but has greater ramifications in Europe, where drivers love diesel. Data from FuelsEurope show that while EU gasoline demand fell by 17pc in 2009-14, demand for diesel fell by just 3pc over the same period — and the continent’s refinery investments are aimed at boosting its production. Around 39pc of OECD Europe refinery output is diesel, compared with around 19pc for gasoline. Recent stronger refining margins have encouraged production growth.

But even before the Volkswagen scandal broke, some of Europe’s leading automotive and refining figures wrote an open letter to European politicians in defence of diesel. That’s because diesel is facing a squeeze, as the emissions focus shifts from restricting carbon dioxide to tackling nitrogen oxide.

In France, for instance, diesel is being looked on askance. Taxes are being raised and Paris has experimented with diesel-free days after a miasma darkened the City of Light. There are calls for something similar in London. But diesel’s share of the French motor fuel market is so entrenched that it will take years to unravel — Total expects it to be still above 80pc in the 2030s.

Indeed, there is a broad agreement that the end of oil products’ dominance in road fuels is some way off. In BP’s Technology Outlook, published this month, chief executive Bob Dudley said: “In terms of energy’s end use for transport, liquid fuels, including biofuels, are likely to continue as the major source of transport fuel for at least the next 30 years. They will be used more efficiently as vehicles and engines become lighter and smarter.”

French petroleum industry association Ufip agrees, saying it can’t see any major shift away from oil out to 2030.

Even Toyota, the carmaker at the forefront of the evolution beyond gasoline, says it will be at least 2050 before it is no longer selling gasoline-powered vehicles.

But here’s the thing — all these very interested parties find themselves able to put a timescale on this move. They acknowledge that the clock is ticking, that it’s not a matter of if it stops but when. And that acknowledgment, inasmuch as it is bound to influence investment decisions, makes the clock wind down even quicker.

An underlying message of the Volkswagen situation is that the public dislikes greenwash. Political decisions are increasingly being made with an eye on public health, and consumers are being encouraged to change their habits. Chinese moves to promote sales of smaller cars are likely to lend impetus to a small but growing electric and hybrid car sector. Total production of electric and hybrid automobiles in China in January-September this year was twice the number of a year earlier.

How the road-fuel market looks post 2050 depends in a large part on which technology wins favour. Which will be the Betamax and which the VHS of the new fuel revolution? Toyota, for example, isn’t looking at electric cars as its future, but at hybrids and fuel cells. Improved battery life could be a game-changer. The possibilities range from the possible, such as natural gas vehicles, to the utterly conceptual, like these autonomous, on-demand pods.

For now, the Volkswagen scandal reflects much more badly on the company than on diesel. If Volkswagen can rescue its reputation as a company that pursues advancement through technology (or ‘vorsprung durch technik,’ as they say in Germany, to coin a phrase) then it could be at the forefront of a post-diesel world. In the longer run, it’s looking pretty grim for diesel.

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