Electric Buses Are Eroding Oil Demand

The world’s biggest oil importer—China—is home to 99 percent of all electric buses globally, and as Chinese cities are adding e-buses at a break-neck pace, zero-emission city transportation is expected to remove 279,000 bpd of diesel demand from the market this year, up 37 percent annually, Bloomberg New Energy Finance (BNEF) has estimated.

Every five weeks, cities in China add 9,500 e-buses on their roads, equal to the entire bus fleet of London, BNEF says.

Derided by the auto industry just a few years ago, electric buses are now having more impact on diesel fuel consumption savings than the electric passenger vehicles, because buses consume 30 times more fuel than an average-sized passenger sedan.

“The global bus fleet is still predominantly powered by diesel and CNG, and, with the exception of China, the share of electric buses in the total fleet is minimal,” BNEF said in a recent report on behalf of the C40 Cities Climate Leadership Group.

However, in China, around 17 percent of the bus fleet is already electric, and China is the world’s biggest producer and user of electric buses, according to BNEF.

E-bus demand in China is soaring, pushed up by air quality targets, national sales targets, and supportive subsidies. Large cities like Shanghai and Shenzhen have already stopped buying new internal combustion engine (ICE) municipal buses and are only buying electric ones, BNEF said.

The share of e-bus sales of total bus sales in China increased to 22 percent last year, from just 0.6 percent back in 2011.

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The major reasons for the Chinese e-bus boom are funding; the drive to fight urban pollution; a “blank slate” in building entirely new public transport networks while in the U.S. or Europe cities struggle to find ways to incorporate e-buses into well-established transport infrastructure; and an industrial policy to develop domestic e-vehicle brands that would be competitive abroad.

According to BNEF, globally, the “analysis of battery cost curves indicates that electric buses will reach unsubsidized upfront cost parity with diesel buses by around 2030. By then, the battery pack in the average e-bus should only account for around 8 percent of the total e-bus price – down from around 26 percent in 2016.”

By Tsvetana Paraskova for Oilprice.com

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