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Electric Buses Damaging the Oil Industry

Electric Buses Oil Industry

Approximately seven years ago in Belgium, electric buses were seen as a laughing stock at an industry, when the Chinese manufacturer BYD Co. showed an early model of the product.

Impact of Electric Buses on the Oil Industry: A Transformative Challenge

“Everyone was laughing at BYD for making a toy,” recalled Isbrand Ho to Bloomberg, the Shenzhen-based company’s managing director in Europe. “And look now. Everyone has one.”

All of a sudden, buses with battery-powered motors are of serious importance with the potential to revolutionize city transport—and add to the forces reshaping the energy industry. With China leading the way, making the traditional smog-belching diesel behemoth run on electricity is starting to eat away at fossil fuel demand.

The numbers are enough to make your eyes jump out of your head. In an article by Bloomberg, China had about 99 percent of the 385,000 electric buses on the roads worldwide in 2017, accounting for 17 percent of the country’s entire fleet. Every five weeks, Chinese cities add 9,500 of the zero-emissions transporters—the equivalent of London’s entire working fleet, according Bloomberg New Energy Finance.

All this is starting to make a noticeable reduction in fuel demand. And because they consume 30 times more fuel than average sized cars, their impact on energy use has become much larger than the passenger sedans produced by companies from Tesla Inc. to Toyota Motor Corp.

The article in Bloomberg stated that, for every 1,000 battery-powered buses on the road, about 500 barrels a day of diesel fuel will be displaced from the market, according to BNEF calculations. This year, the volume of fuel not required could rise 37 percent to 279,000 barrels a day, due to electric transport including cars and light trucks, about as much oil as Greece consumes, according to BNEF. Buses make up about 233,000 barrels of that total.

“This segment is approaching the tipping point,” stated Colin McKerracher, head of advanced transport at the London-based research unit of Bloomberg LP. “City governments all over the world are being taken to task over poor urban air quality. This pressure isn’t going away, and electric bus sales are positioned to benefit.”

China is ahead on electrifying its fleet mainly since it has the world’s worst pollution problem. According to Bloomberg, with a growing urban population and rocketing energy demand, the nation’s legendary smogs were responsible for 1.6 million extra deaths in 2015, according to non-profit organisation Berkeley Earth.

About 10 years ago, Shenzhen was a classic example of a booming Chinese city that had given little environmental consideration. Its smog became so notorious that the government selected it for a pilot program for energy conservation and zero emissions vehicles in 2009. Two years later, the first electric buses rolled off BYD’s production line there. And in December, all of Shenzhen’s 16,359 buses were electric.

BYD had 13 percent of China’s electric bus market in 2016 and put 14,000 of the vehicles on the streets of Shenzhen alone. It’s built 35,000 so far and has capacity to build as many as 15,000 a year, Ho said to Bloomberg.

BYD estimates its buses have racked up 17 billion kilometres (10 billion miles) and managed to save 6.8 billion litres (1.8 billion gallons) of fuel since they began ferrying passengers around the world’s busiest cities. That, in Ho’s opinion, adds up to 18 million tons of carbon dioxide pollution avoided, which is approximately equivalent to what 3.8 Million cars produce in a year.

“The first fleet of pure electric buses provided by BYD started operation in Shenzhen in 2011,” Ho said by phone to Bloomberg. “Now, almost 10 years later, in other cities the air quality has worsened while—compared with those cities—Shenzhen’s is much better.”

Other cities are starting to take notice. Paris, London, Mexico City and Los Angeles are among 13 authorities that have committed to only buying zero emissions transport by 2025.

London is slowly transforming its fleet. Currently four routes in the city centre serviced by single-decker units are being shifted to electricity. There are plans a foot to heavily invest in cleaning its public transport networks, including retrofitting 5,000 old diesel buses in a program to ensure all buses are emission-free by 2037.

According to the article, Transport for London refused the opportunity to speak to Bloomberg, due to the rules regarding engaging with the media ahead of May local government elections.

Those goals will have an impact on fuel consumption. London’s network draws about 1.5 million barrels a year of fuel. If the entire fleet electrifies, that could possibly displace 430 barrels a day of diesel for each 1,000 buses going electric, reducing U.K. diesel consumption by about 0.7 percent, according to BNEF.

Across the U.K. there were 344 electric and plug-in hybrid buses in 2017, and BYD is hoping to be selected to supply more. It has partnered with a Scottish bus manufacturer to provide the batteries for 11 new electric buses.

Falkirk-based manufacturer Alexander Dennis Ltd began manufacturing electric buses in 2016 and has quickly become the European market leader with more than 170 vehicles operating in the U.K. According to Bloomberg, more work is on the horizon, with London’s transport authority planning a tender to electrify its iconic double-decker buses, Ho said.

“The tech is ready,” Ho said. “We are ready, we have our plants in China, and Alexander Dennis in Scotland is geared up for TfL. Once we’re given the word, we are ready to go.”

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