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UK to ban gas and diesel cars by 2040

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Think Progress

BNEF chair Michael Liebreich explains how falling battery costs will turn both the auto and oil industries upside down. CREDIT: Joe Romm/ThinkProgress

BNEF chair Michael Liebreich explains how falling battery costs will turn both the auto and oil industries upside down. CREDIT: Joe Romm/ThinkProgress

The UK will ban the sale of new petrol and diesel cars and vans by 2040 to reduce pollution and improve public health, its government is announcing Wednesday. The UK joins a growing list of countries — including IndiaFrance, and Norway — with similar plans to phase out fossil fuel-burning cars.

Peak oil demand is now in sight thanks to plummeting prices for electric batteries. “Electric cars will outsell fossil fuel-powered vehicles within two decades as battery prices plunge,” Bloomberg New Energy Finance (BNEF) forecasts, “turning the global auto industry upside down and signaling economic turmoil for oil-exporting countries.”

Following the lead set by France, by 2040 the UK will only allow the sale of cars that have zero tailpipe emissions, meaning the ban extends to hybrid vehicles. The UK environment department explained its decision was rooted in concern for public health: “poor air quality is the biggest environmental risk to public health in the UK and this government is determined to take strong action in the shortest time possible.”

A stunning 73 percent drop in lithium-ion battery prices since 2010 have enabled these future bans. BNEF projects this trend will continue for at least two decades, with electric vehicles (EVs) becoming as cheap as gasoline cars by 2025, but then quickly becoming cheaper.

This price flip will lead to a sales flip, with EV sales surpassing those of petrol-powered cars in the 2030s, according to BNEF.

Source: BNEF

Source: BNEF

But the impact on the oil industry will occur much sooner.

The credit rating agency Fitch warned in October that the EV and battery revolutions could “tip the oil market from growth to contraction earlier than anticipated.”

This will lead to an “investor death spiral” as first the smart money — and then everyone else’s — sell off oil company assets (bonds and stocks) currently valued at trillions of dollars.

BNEF pointed out last year that a global glut of just 2 million barrels a day is what triggered the 2014 oil price collapse. They’ve already told investors to expect the big crash in oil by 2028 — and possibly much earlier.

We are reaching peak oil demand faster than anyone expected. No one can predict exactly when the next crash occurs, but Bloomberg has offered this wise advice:

“One thing is certain: Whenever the oil crash comes, it will be only the beginning. Every year that follows will bring more electric cars to the road, and less demand for oil. Someone will be left holding the barrel.”

Source: Think Progress. Reproduced with permission.  

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  • George Darroch

    2040 is far enough away not to require any action by present governments. But it will still cause automakers to realise that they’re only one or two product cycles away from having to have a largely electric lineup.

    • Cooma Doug

      The first time I spoke to anyone at length about solar power and load side load shifting, I was on the phone to a friend in New Zealand. The call cost me 11 dollars.
      I suggest that in 15 years pricing scams in the power industry will also vanish.

  • MaxG

    Why not in 5 years??

    • Mark Roest

      Max nailed it, for one simple reason, sitting on top of all the others addressed above: Stock market prices are driven by expectations of future profits! When the writing on the wall is LED billboards so bright you can’t see the road after you pass them (unless you shade your eyes) there will only be expectations of losses — with perhaps a few people who compulsively short Tesla hanging on in rage and desperation.
      Groups like 350.org and the Paris Accords are systematically attacking the social license of the fossil fuel industry, while the renewable and BEV industries are implacably attacking both its social license and its economic logic, with Tesla leading the charge, sabers held high. In the end, fossil fuel stock valuations will go the way of the tulip craze. The thing we need to do within the 5 years, is to capture the remaining cash reserves and liquidation value, and use them to clean up the messes this industry has made all over our once-pristine planet.

  • GregS

    The Devil is in the details. This plan is more of a vision, and it will remain to be seen what exactly gets legislated.

    There is also a LOT of sloppy reporting going on, including the above link which mentions Volvo will be ditching gasoline cars by 2019, err no, that’s not what Volvo said. They said all they would no longer sell ICE only, and that all their cars would be hybrid or better. Well hybrid encompasses everything from mild hybrid, which might improve your mileage by 1 or 2 mpg, all the way to Plugin Hybrids with 50 miles range that can eliminate 90% of your gasoline usage.