Can electric vehicles shift the energy transition into gear?

At COP28, the world pledged to phase out fossil fuels and accelerate the energy transition in line with the targets agreed at COP21, otherwise known as the Paris Agreement.

But if the world is to even come close to hitting decarbonization goals then we need to think bigger, scale up our current ambitions, and rapidly set about achieving them. As a report from COP28, the International Renewable Energy Agency, and the Global Renewables Alliance starkly highlighted, the amount of renewable energy generation capacity needs to triple, while the efficiency of end use energy consumption has to double by 2030, to achieve net zero by mid-century. So, how can we ensure this happens?

Of all end use energy sectors, global transport is one of the largest. According to DNV’s Transport in Transition report, lorries, planes, trains etc. are responsible for a quarter of global greenhouse gas (GHG) emissions, with passenger vehicles making up the largest segment of that. Cars and vans account for as much as 46% of transport emissions and 10% of the world’s total emissions.

But the route to decarbonization for much of the transport sector is clear – electrification – and DNV forecasts that electricity will power nearly 80% of the world’s vehicle fleet by 2050.

We are currently in the throes of an electrification revolution for road transport. Countless steps are being taken to incentivize people to transition away from internal combustion engines in favor of electric vehicles (EVs), as advancements in battery densities and electric motor technologies sweep the transport industry.

Despite its wealth of oil and gas resources, one region already making great strides in the adoption of EVs and associated technology is the Middle East.

As calls for decarbonization grow, Middle Eastern countries, particularly the UAE and Saudi Arabia, are moving away from fossil fuels, towards a much greener future. Part of this move involves a substantial uptick in the development of an EV supply chain.

According to a 2023 report from Mordor Intelligence, the EV market in the Middle East is projected to be worth USD 7.65 billion by 2028, up from USD 2.7 billion today.

The UAE has set out an ambition for at least 10% of all its road vehicles to be powered by electricity by 2030. To achieve this, EV drivers in the country currently benefit from free registration, free parking, and a reduction in charging and toll fees.

Indeed, policy will play a large role in how EVs are adopted worldwide, and forward-thinking strategies such as these will be effective in bringing the public on side.

Middle Eastern countries are also beginning to invest more heavily in their own EV economies, which will allow them to become leaders in this area. One such country, Saudi Arabia, has announced its intentions to rapidly expand its bourgeoning EV market and aims to manufacture and export more than 150,000 electric cars a year, beginning in 2026.

In addition to the EV pipeline, the Middle East is also developing more futuristic electric-powered technologies.

Dubai’s public transport infrastructure will soon be taking off, in more ways than one, as it seeks to become the first city with a commercial electric aerial taxi service and vertiport network, thanks to the launch of flying drone taxis, planned for 2026.

Up-and-coming technologies such as this, coupled with the scaling of EV adoption worldwide, will do wonders for reducing transport emissions.

However, nothing worth doing is ever easy.

Research carried out by DNV forecasts that 50% of global passenger vehicle sales will be electric by 2033. But for that to come to pass, several roadblocks will need to be overcome, not just in the Middle East, but around the world.

A study from professional services firm Deloitte revealed that one of the largest concerns for potential EV drivers in the Middle East is cost6. But as investments grow and the technology scales, the price of these vehicles is likely to fall. But other major concerns - access to charging points and range anxiety - remain.

To overcome this, suitable charging infrastructure must be put in place, though this can turn into a “chicken and egg” scenario. Consumers are unlikely to purchase an EV if there isn’t a suitable charging model established, and investors are unlikely to invest without proof of a guaranteed return on their investment – which is where policymakers come in.

Like the tactics seen in the UAE, incentives and subsidies, alongside the introduction of low emissions zones and future bans on the sale of new internal combustion engine vehicles, can go a long way in increasing investment into the technology supply chain and accelerating the uptake of EVs.

But assuring EV owners that they will have widespread access to charging stations is still key to increasing market confidence. To this end, governments and technology developers are working to create a network of charging facilities, including rapid charging hubs, lamppost chargers, and bookable overnight charging stations to ensure drivers have easy and convenient access to power sources. Without this infrastructure, drivers are unlikely to make the switch to an EV, ultimately slowing down the transition and increasing the associated costs.

As part of this EV infrastructure rollout, DNV has worked with distribution system operators (DSOs) to meet the challenges that arise as the fleet of EVs swells. This involved a US-based study that measured the relative effectiveness of tools created to reduce peak load impacts from EVs and protect distribution circuits from overloading. Studies like this are important in developing vehicle-to-grid programs that will enable EV batteries for grid balancing.

However, the construction of a resilient and efficient charging infrastructure network is reliant on a sufficient supply chain of battery-grade raw materials. According to the International Energy Agency, an average EV uses six times as many minerals as a typical petrol car. As such, the EV sector will likely become one of the most demanding sectors for critical minerals, particularly lithium, nickel, and cobalt, all of which are used in the fabrication of batteries. 

DNV expects that while there have been concerns raised about the availability of materials in the media, the sustained high prices of critical minerals will incentivize investors to fast-track mining and refining projects. This will eventually reduce the gap between supply and demand.

As we continue down the road to decarbonization, the adoption of EVs will be a critical part of how the world achieves net zero emissions. The scaling of electrification in the Middle East, which is growing constantly, can be an effective blueprint for other regions to follow.

But while the transport sector is just one of many that needs to decarbonize, one thing is very clear - we need to eventually leave fossil fuels in our rearview mirror, and EVs are one of our best tools to achieve just that.


Credits: This article was first published in Oil and Gas Middle East, May 2024

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Mohammed Atif

Mohammed Atif

Market Manager - UAE & KSA