WEF proposes $400-b annual investment to reduce transport sector oil use

PTI Dubai | Updated on May 11, 2011 Published on May 11, 2011

A $400-billion annual investment is required to achieve 25 per cent penetration of alternative energy sources like electricity, biofuels, CNG/LPG between 2010 and 2030 and reduce total oil consumption in the transport sector by 0.5 per cent per year.

Countries seeking to reduce oil dependency and emissions of their transport sector must support the development, distribution and adoption of new technologies in transport, the World Economic Forum report said.

This can be accomplished through a structured policy approach, strong public-private partnerships, risk hedging and collaborative financing, the report, which has been released in collaboration with Booz & Company, said.

According to the Repowering Transport report, global transportation and fossil fuels are inextricably linked.

More than 60 per cent of the 87 million barrels of oil consumed every day powers the world’s transportation system and liquid fossil fuels account for more than 96 per cent of the current energy supply to the transport sector.

The capital needed is moderate in relation to the $740 billion annual expense on global oil subsidies or the global transport industry’s annual $4,500-billion revenue.

Research found the lack of financing for green transportation is not a matter of capital availability, but rather of uncertainty in the regulatory environment and challenges in assessing the risk involved.

The report’s proposed two-pronged policy approach to achieve energy diversification involves establishing regulation (fuel taxes, carbon fees) and/or setting performance standards that the market can meet independent of the technology choice, while supporting technology-specific policies chosen based on the country’s own competitive advantage.

“Understanding the opportunities and challenges in energy supply across all modes of transport is a highly complex undertaking; this report is the first to provide a comprehensive framework identifying critical enablers and ensuring deployment of the broadest range of technologies,” Mr Nick Pennell, Vice-President of Booz & Company, said in a statement.

As examples, the report features China, whose $15-billion investment pledge on electric vehicles, coupled with a tight-knit collaboration between government and private enterprise, aims to put 5-10 million electric vehicles on the road by 2020.

The report also highlights Brazil’s consistent 30-year policy supporting the development of biofuels, a technology that today powers 20 per cent of the country’s entire transportation system. Brazil continues to support biofuels with up to $2.5 billion per annum of tax breaks and other consumption incentives.

Published on May 11, 2011
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