In Q4 17, the EU announced a suite of policies aimed at encouraging the uptake of electric vehicles under an integrated Clean Mobility Package (CMP). The greater electrification of cars this promises would increase power consumption and, by extension, gas demand.
The proposed new CO2 standards for new cars and vans would require that the average CO2 emissions of all new cars and vans sold will have to be 15% lower in 2025 and 30% lower in 2030 than compared to 2021 levels. Under current legislation, CO2 emissions from the sales of new cars are to come in at a fleet average of 95 gCO2/km by 2020. The new 2030 target for cars would come in around 67 gCO2/km, which is lower than the emissions of a new hybrid vehicle today.
Other parts of the policy proposals are focused on, among other things, facilitating a modal shift to electric vehicles in the EU by supporting the buildout of charging stations and the development of battery technology in Europe.
In the UK car market (as an example), only 17% of models currently on sale had emissions above 150 gCO2/km. Somewhat concerning for the industry is that models currently on offer that will have emissions no higher than the policy target fleet average for 2020, of 95 gCO2/km, only account for 6.2% of the total. Most (76%) have emissions of between 96-150 gCO2/km and, of those, some 42% sit in the 96-120 gCO2/km bracket.
There are two implications of this. First, the manufacturers still have a lot of work to do to develop and market enough models below 95 gCO2/km to have a hope of avoiding fines come 2020, 2025 and 2030. Second, low and ultra-low emissions vehicles such as pure electric vehicles, fuel cell vehicles and plug-in hybrid electric vehicles (PHEVs) will need to be around half of all new car sales by 2030.
In sum, this means that in a scenario where the automotive sector meets the proposed new targets, we think that by 2025 there will be 9 million low-CO2 vehicles on Europe’s streets and 30 million by 2030 (UK included). That would mean 12.7% of the total EU passenger vehicle fleet would be low-CO2 in 2030.
That many electric vehicles, given expected passenger miles, would translate into total incremental transport sector demand for power of 15.5 TWh/y by 2025 and 55.8 TWh/y of power by 2030, on 2017 numbers. Even in 2030, this adds around 2% to total EU power generation.
If the incremental power demand is met by 50% gas-fired generation, then gas demand would be higher by 0.6 bcm in 2025 and by 2.3 bcm come 2030, which compares to current EU gas demand of 500 bcm/y.