A new report from the Intergovernmental Panel on Climate Change published on April 13 finds that the transportation sector is set to be the fastest growing source of greenhouse gas emissions out of all major energy sectors. Emissions from cars, trucks, planes, and ships could rise by 71% over the next several decades from 2010 levels.
Most of the demand will come from emerging economies and rising incomes in countries like China, India and Brazil. As consumers make more money, they will purchase cars for the first time. For example, in China, per capita GDP hit $10,661 in 2014, up from $3,614 a decade ago, according to Bloomberg. Car sales will grow by 4% worldwide in 2014 alone, hitting 70.2 million. By 2020, the annual car market could expand by 27%.
This means that global oil demand could remain very robust for decades, and absent major increases in supply or strong gains in efficiency, prices could jump as a result. Unlike the electric power sector, where renewable energy is much further along and could begin to capture a significant share of the market, transportation fuels are almost entirely dependent on crude oil.
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The IPCC report says that cities are at the heart of the problem, as well as the opportunity. Transportation already accounts for about one-quarter of global greenhouse gas emissions, and with millions of people set to get into cars for the first time, cities could become choked in traffic, resulting in greater pollution and rising energy consumption. But with better urban planning, cities could reduce emissions and oil consumption by incorporating larger populations into denser areas, centered around mass transit.
The IPCC report concludes that there are significant institutional, legal, financial, and cultural barriers in place that could prevent the world from reining in the problem of rising transportation pollution.
By Charles Kennedy of Oilprice.com
Charles is a writer for Oilprice.com