Electric vehicles: Is Nigeria ready for disruption of fossil fuel market?

There are signs that Electric Vehicles (EVs) pose a bleak future for the fossil fuel market: Volvo, a Swedish vehicle manufacturer, has committed to fit every car it produces by 2019 with electric or hybrid engines and BMW plans to mass-produce EVs by 2020, offering 12 models by 2025.

A recent report published by the World Economic Forum entitled ‘Electric Vehicles for Smarter Cities:

The Future of Energy and Mobility’, also indicated that Renault plans to produce 20 electrified models by 2022 while Volkswagen will invest up to $84 billion in battery and EV technology to electrify all 300 of its models by 2030.

If these transitional commitments to electric vehicles by manufacturers are not sufficient threats to the fossil fuel market, especially in Nigeria where the economy relies heavily on foreign exchange earnings from oil, commitments from countries to transit to other sources of energy from fossil fuel should rattle any doubter.

The World Economic Forum also revealed in its report that Norway, the Netherlands, France, Germany, UK, China and India have all made announcements indicating their intentions to eventually ban the production and sale of cars that run on fossil fuels. Cities including Athens, Madrid, Mexico City, Paris and Stuttgart have announced plans to ban diesel cars by 2030 or earlier.

China has also set a timeline of capping its carbon dioxide emissions around 2030, and has indicated it plans to ban the production and sale of fossil fuel cars in the near future. Increased electrification of mobility coupled with more renewables in the energy generation mix have become a crucial part of the solution.

These time-based commitments from vehicle manufacturers and countries to edge out fossil fuels from vehicles across the world are all fallout of the 2015 United Nations Climate Change Conference (COP21) agreement in Paris, where many countries and cities announced goals to eventually ban internal combustion engines.

Electric Vehicles
Electric Vehicles

The European Commission also released the Clean Mobility Package in November 2017 to set new CO2 emission standards and guidance for cleaner mobility.

Interestingly, even the Organisation of Petroleum Exporting Countries (OPEC), which Nigeria is a member, is not unaware of the threat posed by electric cars to fossil fuels in the near future.

Last year, OPEC published its World Oil Outlook 2040 and noted the increasing penetration of electric vehicles (EVs), the tightening of fuel emissions standards and the desulphurization in the road transportation, marine and aviation sectors.

The report from the World Economic Forum observed that electric vehicles are proliferating globally at a rapid pace due to decarbonization policies and improving EV costs and performance for customers.

However, the forum is worried that the current trajectories, with an emphasis on vehicles for personal-use and non-integrated strategies for the deployment of charging stations, could limit the benefits that can be generated by electrification of transport.

These developments not only pose danger to Nigeria’s oil-driven economy, but also may likely catch Nigerians unawares in terms of early adoption of electric vehicles.

However, the Nigerian government is not completely unaware of the impending disruptive danger fossil vehicles pose on both the economy and transportation.

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The National Automotive Design and Development Council (NADDC) is at the verge of developing a national policy on electronic vehicles.

In an interview with Daily Trust, Director-General of NADDC, Mr. Jelani Aliyu, said Nigeria will have to begin to look at how the country will introduce and support the electric car technology in terms of being able to produce those vehicles.

“A number of the companies that are interested in Nigeria already have electric vehicle programmes in place or they are looking at going into it. We will have to work closely with them to provide these vehicles in Nigeria,” he said.

Nigeria’s auto policy meant to reduce importation of used vehicles is still in limbo and implementation of the policy has remained unclear.

It remains unclear whether or not Nigerian roads support the use of electric cars but what is certain is that the government is not even discussing changing infrastructure for electric cars.

At a recent parley with journalists in Abuja, the NADDC boss said electric cars are less complex than cars that run on fossil fuels.

On the economic end, Nigeria is preparing for a post fossil fuel era in terms of other sources of foreign exchange earnings.

For instance, the Nigerian Export Promotion Council (NEPC) has drafted the ‘Zero Oil’ plan which aims at replacing oil as the major national foreign exchange earner.

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The NEPC boss, Olusegun Awolowo, said the plan projects that earnings from non-oil exports will jump to $8 billion by 2019 and further leap to $25 billion by 2025.

Awolowo also revealed that the plan aimed at diversifying the country’s export base from exporting raw commodities to value added products, increase participation of SMEs in export trade by 50 per cent, achieve $706 million in non-oil export to the West Africa sub-region and create 1.5 million new jobs in the SME sector by 2020.

The World Economic Forum report recommends that policy-makers will have to advocate for the convergence of local energy, urban and mobility patterns in regards to electrification strategies.

“They should also ensure that city, national and regional policies support and reinforce each other. The energy sector will have to accelerate the path towards a cleaner, more digitalized and decentralized system, yet one that is more connected and customer centric,” the report stated.

The report states that the mobility players will have to consider the opportunities created by new uses and services associated with electric vehicles as decentralized energy resources.

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