• 4 minutes Drone attacks cause fire at two Saudi Aramco facilities, blaze now under control
  • 7 minutes China Faces Economic Collapse
  • 13 minutes Oil Production Growth In U.S. Grinds To A Halt
  • 15 minutes Iran in the world market
  • 18 minutes Ethanol, the Perfect Home Remedy for A Saudi Oil Fever
  • 1 hour USA Wants Iran War -- Shooty Shooty More
  • 3 hours Collateral Damage: Saudi Disruption Leaves Canada's Biggest Refinery Vulnerable
  • 9 hours USA : Attack came from 'Iranian soil'. Pompeo to release 'evidence'.
  • 25 mins Experts review drone damage . Say Saudis need to do a lot of explaining.
  • 15 hours Never Bring A Rapier To A Gun Fight
  • 2 hours Yawn... Parliament Poised to Force Brexit Delay Until Jan. 31
  • 18 hours Bahrain - U.S.: Signed Deal To Buy Patriot Missiles
  • 20 hours One of the fire satellite pictures showed what look like the fire hit outside the main oil complex. Like it hit storage or pipeline facility. Not big deal.
  • 18 hours Trump Will Win In 2020 And Beyond..?
  • 19 hours How OPEC and OECD play their role in setting oil price in light of Iranian oil sanction ?? Does the world agree with Iran's oil sanctions ???
  • 17 hours Democrats and Gun Views
Alt Text

Banks Battle For The Aramco IPO

The battle between investment banks…

Alt Text

Rystad: Low Prices To Send Oil Services Market Into Recession

Following three consecutive years of…

Vanand Meliksetian

Vanand Meliksetian

Vanand Meliksetian is an energy and utilities consultant who has worked with several major international energy companies. He has an LL.M. from VU Amsterdam University…

More Info

Premium Content

China’s Very Ambitious Transportation Revolution

The proverb goes that when China coughs, the world catches the flu. The unprecedented economic development of the world's most populous country has led to a steep increase in national and personal wealth. An obvious beneficiary of economic growth is the automotive industry. Car ownership has grown to almost 58 per 1000 citizens and, currently, approximately 340 million vehicles are on Chinese roads, including 250 million cars.

China's policies regarding its domestic automotive industry will have a profound effect on national and international suppliers. Beijing intends to replace its internal combustion powered car fleet by 2050. The gradual shift will significantly impact two industries: the automotive and energy sectors.

Beijing's motivations

The historical economic development of China has led to industrialization and a severe pollution problem. The Chinese population is becoming increasingly vocal in its displeasure vis-á-vis the Communist party regarding the state of the environment. Beijing, therefore, has announced a ‘war on pollution’' to clean the sky, soil, and water towards acceptable levels. Phasing out conventional vehicles in favour of new technologies such as EVs fits into this agenda.

Furthermore, Chinese policymakers also intend to improve the Asian country's energy security. China surpassed the U.S. in 2017 to become the largest importer of oil in the world. Despite the focus on EVs and other technologies, most cars are still powered by petroleum products. Dependence on foreign producers is a significant risk due to severe price hikes and supply disruptions. Related: Hong Kong Billionaire Loses $20 Billion In Canadian Oil Sands

Technological leadership is also on Beijing's mind. The ‘Made in China 2025' strategic plan highlights the need to become a vital producer of the technologies of the future, which includes EVs. According to Hidetoshi Kadota of Nissan Motor, “production of EVs without Chinese-made parts is already no longer possible.” By reducing the incentive for conventional cars, Beijing intends to motivate companies to start investing in new technologies to power 'China’s national policies.

The implications

Currently, automobiles account for 42 percent of China's oil consumption. Reducing the use of petroleum products will significantly impact the global oil sector. According to researchers at Stanford University, peak oil will occur around 2035, after which consumption will decrease gradually. The replacing of China's conventional vehicles by EVs or hydrogen fuelled vehicles will impact global consumption. Therefore, peak oil could come earlier than anticipated.

The shift towards competing technologies is already impacting alternative sectors such as the mining industry. The production of batteries require large volumes of, amongst other, lithium and cobalt, which can be found in a limited number of countries. Increasing demand could push up prices.

Besides the obvious economic consequences, China could also become more engaged on a political level. To secure a steady flow of resources, Beijing’s presence in resource-rich countries will grow comparable to its interests in the oil industry.  

From planning to execution

The sheer size and importance of the automotive industry in China require a meticulously planned transition. The disparity between the level of economic development of the coastal regions compared to less developed areas such as the western province of Xinjiang, adds another layer of complexity.

These and other challenges complicate China's ability to leapfrog into the 21st century with new technologies. Beijing will, therefore, probably maintain a multi-tiered phase out plan under which regions and cities are divided into four tiers based on economic development and level of pollution.

First, in line are the big metropolises with a severe pollution problem and substantial economic output. Second, regional capitals and cities in China's ‘Blue Sky 'War' areas could receive the necessary attention such as Xi'an, Chongqing, and Chengdu. Lastly, it will be the turn of the economically less essential and sparsely populated regions such as Tibet. 

China's island province Hainan has already become a green pioneer with extended plans to transform its car fleet. The area plans to phase out conventional cars entirely by 2030. However, it is highly unlikely that the mainland will follow suit due to the size of the country.

By Vanand Meliksetian for Oilprice.com

More Top Reads From Oilprice.com:




Download The Free Oilprice App Today

Back to homepage



Leave a comment
  • Rudolf Huber on August 27 2019 said:
    Yeah right. China has a double problem. The smaller one is that they recognize that their poisoning the air cannot continue forever. Sort of - if their money-making machine should ever suffer from that then they won't care too much anyhow. But the bigger worry is that China is utterly oil dependent. They need imports - lots of it. And they know that a potential US naval embargo would have disastrous consequences for them. So, they want to get off this as good as they can. Running vehicles on coal (thats what EV's get there) might be a solution for them. Besides, their economy has hit a snag and creating artificial demand in order to keep its machine busy is no strange thing to China.

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News
Download on the App Store Get it on Google Play