The future of the car: climate change and availability of petroleum

The 1963 Buchanan report shows that the problems associated with the prevalence of the car are not new. However, towards the end of the 20^th century two issues emerged that have brought into question the sustainability of modern civilisation’s continued reliance on the petroleum fuelled car as the dominant form of personal transport. The first issue is the growing threat from anthropogenic global warming and the need to reduce greenhouse gas (GHG) emissions from combustion of fossil fuels, including the combustion of petroleum based transport fuels. The second issue relates to the uncertainties surrounding the future supply and price of petroleum based liquid fuels (Newman, 2009; Urry, 2008).

Road transport’s contribution to Greenhouse Gas emissions There is very strong scientific evidence that human activities, including the combustion of fossil fuels, are contributing to the warming of the Earth’s

atmosphere and oceans (IPCC, 2007b, pp. 100-102, 390-393). There is also strong evidence indicating that this warming will result in adverse impacts on: (1)

freshwater resources and their management; (2) ecosystems, food, fibre, and forest products; (3) coastal systems and low-lying areas; (4) industry, settlements and society; and (5) human health (IPCC, 2007a).

Because of its almost total reliance on the use of petroleum as a source of energy, the road transport sector is a major source of GHG emissions. At a global level, in 2005, road transport was estimated to produce 10.7% of all GHG emissions.

Globally, road transport ranks after energy supply, industry, fires, forest clearing etc., and agriculture as a source of GHG emissions (Figure 1.6). In 2005, 60% of all global GHG emissions were in the form of CO2 emissions from fuel combustion, with road transport responsible for 17% of all CO2 emissions (Figure 1.7)

(International Transport Forum, 2010).

Road transport has a greater role in the production of New Zealand’s GHG emissions contributing 18.3% of gross GHG emissions, which is higher than the

9

global average of 10.7% (Figure 1.6)⁶. After agriculture, road transport is the second highest producer of GHG emissions (Figure 1.8). If the methane and nitrous oxide emissions from the agriculture and waste sectors are excluded, the road transport sector becomes the single largest source of GHG emissions in New Zealand. The relatively low level of GHG emissions from the energy supply sector reflects the high level of renewable electricity generation in New Zealand (Ministry for the Environment, 2011).

Figure 1.6: 2005 Global GHG emissions by source (est. 45,400 Mt CO2e) ⁷

Source: International Transport Forum (2010)

6 The total GHG emissions profile in Figure 1.8 are for New Zealand’s gross GHG emissions and exclude the GHG emissions from land use, the effect of land-use change and forestry. In 2009, increased forestry resulted in a net uptake of GHG emissions from this sector.

7 CO2e is carbon dioxide equivalent. This measure is used to compare emissions from various greenhouse gases by converting the non-CO₂ greenhouse gases to the equivalent amount of carbon dioxide on the basis of their global-warming potential (GWP).

10

Figure 1.7: 2005 Global CO2 emissions from fuel combustion (est. 27,000 Mt)

Source: International Transport Forum (2010)

Figure 1.8: 2009 Gross New Zealand GHG emissions by source (est. 67.5 Mt CO2e)

Source: Ministry for the Environment (2011)

11

Figure 1.9: 2009 New Zealand CO₂ emissions from fuel combustion (est. 31.5 Mt)

Source: Ministry for the Environment (2011)

Precise estimates of the GHG emissions from the LPV fleet are not available due to difficulties in allocating the amount of diesel fuel used between LPVs, light

commercial vehicles, and heavy commercial vehicles (K. Hammond; Ministry of Economic Development, personal communication, November 25, 2010). The MoT provides an estimate that is derived from its own LPV fleet model. They estimate that, in 2009, 62.7% of road transport CO2 emissions were from the LPV fleet, but, by 2010, this level had increased to 65.5%. These figures should be treated with some caution as estimates of total CO2 emissions from the all road vehicles differ between those produced by the MoT and those produced by the Ministry of Economic Development (MED) and published in New Zealand’s national GHG inventory report (Ministry for the Environment, 2011)⁸.

The national inventory data indicates that GHG emissions from road transport increased by 65.9% from 7.47 million tonnes CO2e in 1990 to 12.34 million tonnes CO2e in 2011. MED’s most recent projections indicate that the GHG emissions from road transport will continue to increase, but not as rapidly as in the past. This view

8 The method used in this study to estimate the GHG emissions from the LPV fleet is described in chapter 5.

12

is based on the expectation that the growth of the LPV fleet will be slower due to vehicle ownership per capita approaching saturation levels (Ministry of Economic Development, 2011c). Depending on the future economic growth path, MED considers that, by 2040, GHG emissions from road transport will be between 0.9%

and 29.3% higher than the levels in 2010 (Figure 1.10). As part of their forecast, MED have incorporated electric vehicles (EVs) into the LPV fleet, but they consider that the demand will be limited and that, by 2030, they will account for only 5% of all road transport VKT. This is a more conservative estimate of EV uptake than indicated by the results of this present study, and most of the other New Zealand studies that are discussed in section 8.5.1.

Figure 1.10: New Zealand historic and forecast GHG emissions from road transport: 1990 to 2040

Source: Ministry of Economic Development (2011c)

The importance of petroleum

If LPVs are the dominant form of personal mobility in New Zealand, then the

internal combustion engine vehicle (ICEV) has been the technology that defines the LPV. In 2010, 99.88% of the LPV fleet was powered by an internal combustion engine (ICE) using either petrol or diesel as fuel. This almost total reliance on

petroleum as an energy source for personal mobility increases to 99.92% if CNG and LPG fuelled ICEVs are also included (Figure 1.11). These proportions remained constant over the period 2005 to 2011 (New Zealand Transport Agency, 2011).

13

Figure 1.11: Percentage of New Zealand light passenger vehicle fleet by fuel type in 2011

Source: New Zealand Transport Agency (2011)

This high reliance on one type of LPV engine technology and one type of fuel is a global phenomenon. It is estimated that, in 2008, 94% of world’s road transport (LPV and heavy vehicles) was fuelled by petrol or diesel, 3% by natural gas, 2% from liquid and gaseous biofuels, and 1% by electricity (Trigg, 2010).

The future availability and cost of petroleum

In November 2010 Fatih Birol the chief economist of the International Energy Agency (IEA), stated that the age of cheap oil was over and that the best that could now be achieved is to implement policies that would slow the increase of oil prices (Kurczy, 2010). More recently, however, the IEA view has changed in response to the rapid expansion in world output of light tight oil through the use of horizontal drilling and hydraulic fracturing techniques, and the increased production of natural gas liquids and other types of unconventional oil. However, the future of the global supply from these sources remains uncertain as noted in the 2012 World Energy Outlook:

Unconventional resource estimates are less reliable than those of

conventional resources, as they have generally been less thoroughly explored

14

and studied, and there is less experience of exploiting them (International Energy Agency, 2012, p. 100).

Despite these uncertainties, the IEA remains of the view that the price of oil will continue to rise irrespective of any future developments in oil supply and demand (International Energy Agency, 2012).

However, other commentators still consider these recent developments in the ‘oil patch’ as unsustainable and the implications of the “peak oil” hypothesis remain a valid concern (Hughes, 2013). The concept of peak oil was first proposed by M.

King Hubbert in 1956 when he argued that the production of all finite resources, such as petroleum, will approximately follow the shape of the bell curve, first increasing to a peak and then shifting to an irreversible decline (Hubbert, 1956).

The peak oil model rests on the expectation that, once the easiest fields to find and access are utilised, the increasing demand for oil will have to be met from oil fields that are more expensive to access and, on average, are smaller in size and are of lower quality (Guilford et al., 2011). As the size of the new discoveries has declined in recent decades, the ability to maintain the excess ‘swing production’ capacity has diminished and new supply has now become ‘just in time’ to meet growing demand (Campbell and Laherrere, 1998; Hamilton, 2009; Skrebowski, 2011). In recent years, when there has been an outage or disruption to supply, the price must rise rapidly to reduce demand. Murray and King (2012) concluded that global oil production capacity was sufficient to manage such events until 2005.

Those using Hubbert’s methods have been criticised for being too pessimistic and for not adequately taking into account improvements in exploration and production technologies. Critics highlight that a number of forecasts using these methods have been proven wrong (IHS Cambridge Energy Research Associates, 2010; Smil, 2006;

Hamilton, 2012).

In the face of the uncertainties surrounding the future of global oil supplies, commentators and governments of oil importing nations are framing the issue in terms of energy security (Ministry of Economic Development, 2011b; House of

15

Commons: Energy and Climate Change Committee, 2011; Obama, 2011;

Commonwealth of Australia, 2011; Hirsch et al., 2005). EVs are one of the means that have been proposed for reducing reliance on imported petroleum, although this is not a major focus of the Australian, United Kingdom, United States, and New Zealand national energy strategies. Most of the focus is on the development of their nation’s domestic energy resources so as to displace imports of petroleum. In the case of New Zealand, the development of oil and coal resources is listed as a key element of the first policy priority in the Government’s 2011 Energy Strategy (Ministry of Economic Development, 2011b).

The effect of peak oil on GHG emissions

The peak oil model, if confirmed, could be taken to imply that there will be rising prices leading to a decline in LPV use, which would result in reduced GHG emissions and less urgency to implement other mitigation measures. Nel and Cooper (2009) have argued that the remaining fossil fuel resources would be sufficient to raise the global temperature by no more than 1^oC above levels in 2000⁹. However, their analysis has been criticised for not taking into account the potential non-linear effects associated with climate change, for using a low value for climate sensitivity, and not adequately taking into account the impacts of using unconventional fossil fuels (Zecca and Chiari, 2010).

Work by Kharecha and Hansen (2008) concluded that even if oil resource estimates based on the peak oil theory are correct, it will still be necessary to constrain the use of coal and unconventional fossil fuels to avoid dangerous global warming.

Hughes and Rudolph (2011) and Verbruggen and Marchohi (2010) argued that the uncertainties around the climate system, as highlighted by Hansen et al. (2007), and the potential for use of unconventional fossil fuels such as heavy crude and tar sands, warrant the implementation of more proactive GHG emissions reduction policies, and it should not be assumed that resource scarcity will achieve these reductions.

9 Nel and Cooper (2009) include coal and natural gas resources in their analysis.

16 The peak car travel phenomenon

There is emerging evidence that, in a number of cities and regions in the developed world, the amount of VKT by LPVs has plateaued. It has been suggested that these events may indicate that, in developed countries, the demand for travel by car may be approaching saturation (Millard-Ball and Schipper, 2011; Newman and

Kenworthy, 2011).

Some have argued that this levelling off in VKT reflects the effects of recent economic conditions, and that once economic growth returns the growth of VKT will resume (Glaister, 2011). This argument does not seem to be supported by data, which shows that VKT ceased to increase in the United States in 2005, in some Australia cities in 2004 (Newman and Kenworthy, 2011), in the United Kingdom in 2000 (Metz, 2012), and in New Zealand in 2007 (Ministry of Transport, 2012b) all before the start of the economic recession in 2008.

The reasons why there might be a changing trend in LPV VKT in these developed countries remain uncertain and a number of possible causes have been proposed.

Newman and Kenworthy (2011) argued that the decline in VKT may be in part due to societal changes that are causing a movement of people away from the suburbs back into urban centres. The changes could be in response to the adverse effects of ever increasing commuting times as the result of ongoing urban sprawl. They also argue that another reason could be an aging population whose children have grown and left home are now attracted to living in vibrant urban communities. Other reasons that have been suggested are: (1) improvements in public transport systems in Australia and the United States; (2) the impact of higher fuel prices; (3) the saturation of daily travel needs in the context of current levels of car

ownership, public transport availability, and vehicle speed limits (Metz, 2010); (4) increasing income inequality; and (5) declining interest in cars among the young who increasingly use handheld devices and social media for social networking functions that were previously undertaken by car (Cohen, 2012).

So far the plateau in LPV VKT has been only documented in some developed countries and this decline must been seen within the context of growth in

17

ownership of all types of road vehicles in India, south Asia,Southeast Asia, and China. For these regions, it is estimated that annual growth rates of road vehicle ownership will be between about 5 and 12% for the period 2009–2020. As a

consequence, the global number of all types of road vehicles, in 2020, could be 50%

higher than in 2009 (Keshavarzian et al., 2012).