Driven mainly by environmental and climate change regulatory and global protocols, an inevitable shift is already taking place in transportation technologies and markets. And both the energy and transportation industries have to adopt new business models that take into account future low carbon transportation.
Kenya consumed 6.3 billion litres of petroleum products in 2016 of which transportation fuels (gasoline, diesel, aviation) accounted for about 82 per cent of total. Specifically, the automotive fuels (gasoline, diesel) were 68 per cent of the total demand. Kenya can therefore not escape from any changes that are taking place in global energy and transportation sectors.
The automotive industry is working around the clock to innovate new technologies to reduce carbon dioxide emissions... For some time, vehicle manufacturers have been engaged in research for new technologies to increase fuel-use efficiencies, and to develop alternative non-oil vehicle traction power. These two efforts imply reduced demand for oil, a fact that the oil industry has to contend with and plan for.
The use of electric storage batteries to power electric vehicles (EVs) is one such alternative technology that is fast catching up in the automotive sector. The oil industry has to specifically incorporate in their future business planning, a scenario of accelerated entry of electric vehicles.
A report in the Energy World June publication indicates that the pace of electric vehicles incorporation into the world of everyday transport has gone beyond a concept to a reality that is not showing signs of slowing. It is predicted that the EVs will have reached 35 per cent off all vehicles in the United Kingdom by year 2035.
The message is that, like every emergent technology that has surprised the world with mass adoption, the electric vehicles are on their way coming. We are looking at a case where business driven research and technologies will soon deliver higher capacity and lighter electric batteries to power a mass market of increasingly cheaper electric vehicles.
The EVs will not escape the now familiar “innovation and commercialisation chain”, which is so familiar in other sectors and products . Western companies will research and innovate, while the Chinese wait with ready capital to ultimately mass-produce cheap EVs suitable for an emerging market like Kenya. This is bound to happen. It is a question of how many years from now.
It is also understood that the recent prosecution in the US of esteemed global auto companies for violation of tailpipe exhaust emissions standards, has motivated the automakers to increase their research budgets for the alternative electric vehicles . The cost of meeting stringent clean fuel specifications by refineries is becoming increasingly prohibitive, and this is piling quality standards compliance pressure on automakers.
The energy (electricity and oil) sectors will require to gradually modify their future business models and supply chains to provide for EV battery charging infrastructure that is both efficient and cost effective. The automotive industry will on their part need to re-skill their technicians to handle vehicle electric traction systems.
In Kenya we saw how “fatal” it was for businesses that were slow to notice and adapt to new changes. The fixed-line telephony companies, and banks were caught unprepared by the new providers of digitised communication and cash transaction services. The oil supply chain stakeholders should expect to see emergence of a new crop of EV systems investors offering a stiff challenge to their investments and businesses .
Shifting from oil-use to charged batteries is essentially going from use of high carbon imported oil to locally generated electricity, incrementally coming from low carbon sources like geothermal, hydro, wind and solar. This is a transition carrying both economic and environmental credentials.
For the same reasons , the Standard Gauge Railway should in their long term planning, include conversion to electric traction engines to add value to our economy through use of locally generated green electricity.
As the low carbon agenda continues to shrink the global demand for oil, the industry is already strategically shifting investment emphasis from oil to lower carbon natural gas while increasing their interest and participation in renewable energy research and investments.