How are alternatives to oil growing in comparison to oil consumption?

Introduction

This new trigger started saying that oil production is going to peak, but not for geological reasons as it has been always said, but because we will no longer need oil.

The reasons? The increase in biofuel production and the growth in electric vehicles. But the truth is that oil production is still growing faster than biofuel production and the growth in electric vehicles.

What factors are preventing the switch to renewable energy?

Oil is supplying 33% of all energy and is the world’s primary fuel (Clemente, 2015). World’s industry has gone through a lot of revolutions. The first one, thanks to the steam machine, accelerated the growth of production around the world. But it was in the Second Industrial Revolution, when electricity and OIL started being part of all industries, since that point, the growth in all industries has increased exponentially until present, and it keeps being like that.

But what is preventing us from transitioning from oil needed industries to more ecological ways of producing energy, like biofuel production, solar energy, wind energy, geothermal energy or hydroelectric energy.

Vehicles. The vehicle market exists thanks to derivatives of oil (gasoline and diesel). The amount of cars that need gasoline and diesel is inmense.

It is estimated that over 1 billion passenger cars travel the streets and roads of the world today. (worldometers.info).

In adition, it’s not only that, almost all motors used in industries are diesel.

But if we focus on vehicles, in EEUU, 2015, 16.5 million cars were sold during that year. But only 120000 were electric vehicles. That’s 0.72% of all sales but also becoming the largest electric vehicle market in the world.

(World Oil Consumption, ycharts.com)

As we can see on the chart one of the main problems of transitioning to other energies is that there’s still industries that are starting to use oil. All industry infrastructures around the world are, or are becoming oil required. The economies of scale makes it way cheaper than other options.

There is the need around the world to find solutions, and here is where goverments have to take part of it.

What is the role of law and government in facilitating the transition to alternative energy?

Everyone knows there is the urgent need of transitioning to more ecological energies than oil. But companies can’t lose that much money transitioning, it’s not worth for them to spend millions on a new infrastructure because using oil will still be cheaper for some companies.

The role of law and government is clear in this field. All governments have to create and apply laws, grants, facilities to companies. So it makes it worth for them to transition from oil to renewal energies.

One clear example is the so-called “New Green Deal”. This name is used to describe various sets of policies that aim to make systemic changes. (Dsouza, 2019)

United Nations announced this measures back in 2008.

But EEUU is not the only country trying to make measures in this field, European Union settled back in 2009 a binding target of 20% of the energy consumed in 2020 in Europe had to come from renewable energies. Are they achieving it? Yes, since in 2017 it represented the 17.5%.

Therefore, all EU countries are adopting their own laws according to this European Union plan.

Since the plan created in 2009 is going to be completed, in 2018 the Renewables Energy directives established a new binding renewable energy target. In 2030, 32% of energy must come from renewable energy.

How they control it? Every two years European Union publishes a report where it can be seen the transparency of this project.

Conclusion

Since almost all industries are settled with oil. It’s not worth for them to transition to renewable energies for many reasons, it’s still more expensive than oil, or the cost of transitioning will not be worh in the short-mid term (And companies take this very seriously). So the only solution for this problem is the intervention of governments. It’s seen that the biggest countries or organizations like EEUU, European Union or China are doing big efforts to transition to renewable energies. But can they do more?