Electric vehicles to curb demand

Gasoline demand could rise in the short term at the expense of diesel, before then falling as electric vehicle sales increase

A drive towards electric and driverless vehicles could undermine global gasoline demand in the long term.

Gasoline demand could rise in the short term following the news that some of German firm Volkswagen's (VW) diesel cars were designed to cheat emissions tests, the Platts inaugural light ends conference heard. Diesel's share of Europe's new car market could fall from 50pc to 33pc over the next 10 years, owing to the VW scandal and growing awareness of nitrous oxide (NOx) emissions from diesel vehicles, campaign group Transport and Environment (TE) says. Gasoline's share of the new car market is expected to rise in that period.

But gasoline demand in Europe is forecast to fall in the long term, amid a higher take-up of zero-emissions vehicles (ZEVs), driverless cars and car-sharing devices, ZEV backers told the conference. Improvements in gasoline and diesel vehicle efficiency are insufficient to meet vehicle carbon dioxide (CO2) emissions targets of 75g/km in 2025 and 50g/km in 2030, says TE. These targets can be met only through a rise in ZEVs' market share to 10pc by 2025 and 32pc by 2030, TE says.

Globally, oil use in passenger vehicles could fall from 24mn b/d now to 15mn b/d by 2040, the IEA says. Take-up of electric vehicles is rising substantially, with the global stock — including plug-in hybrid cars — reaching 1.3mn vehicles last year, double 2014 levels, the IEA says. Numbers could rise to 30mn by 2025.

ZEVs have benefited from a drop in the costs of lithium-ion batteries. The cost and performance of such batteries will make ZEVs competitive with internal combustion engine vehicles by 2030, TE says.

But motor fuel producers say the emissions involved in ZEV battery production can reduce the benefits of such vehicles. The manufacture of a battery for a Tesla S electric car produces as much as 14t of CO2, double that produced in the manufacture of the vehicle itself, resulting in total emissions of 21t, according to research cited by European refiners association FuelsEurope. FuelsEurope points to research suggesting a Tesla S produces more CO2 for the first 100,000km of vehicle mileage than a diesel-powered Audi A7, while a Nissan Leaf produces more CO2 for the first 150,000km of vehicle mileage than a Mercedes A-class diesel or gasoline vehicle.

The oil industry argues that further efficiencies in gasoline engines can cut their CO2 emissions by 49pc by 2050 from 2010, while similar efficiencies in electric vehicles will result in only a 9pc decline in the same period. And the steady tightening of air quality standards means that by 2020, most particulate matter emissions from road transport will be independent of engine type, as they will be in the form of non-exhaust emissions from tyres, brakes and road abrasion. Any adjustments to current subsidies for electric vehicles — estimated by FuelsEurope to be around €10,000 ($10,590) per vehicle — could prolong motor fuel demand.

Rons sealed

The use of higher-octane gasoline may provide a short-term solution to meeting the EU's fuel quality directive (FQD) target, requiring a 6pc reduction in the greenhouse gas intensity of fuels used in road vehicles by 2020. Biofuels usage may allow for a 4pc reduction by 2020, and the remaining 2pc could be met through the deployment of higher-octane gasoline with a Ron count of 100-105, compared with the European finished grade gasoline standard of 95 Ron, the European Fuel Oxygenates Association (EFOA) says.

High-octane gasoline improves engine efficiency, reducing fuel consumption and CO2 emissions. If high-octane material's share of the gasoline market rose to 80pc, CO2 emissions could fall by an amount equivalent to up to 4.7pc of light-duty vehicle CO2 emissions by 2040, according to one US study cited by the EFOA.