Electric vehicles, hydrogen and climate

Ola Electric has been busy delivering electric scooters through the last days of 2021 and in the early days of this year, and has also announced that it will open up to fresh bookings soon. Sales of electric two-wheelers in India jumped in 2021 and will set new records this year, as charging becomes easier and petrol becomes dearer. 

Green number plates — reserved for electric vehicles (EVs) — are no longer as rare a sighting as they were two years ago. Every automobile company is working on an electric portfolio. Tata Motors announced the incorporation of a wholly-owned subsidiary for electric vehicles last month. The company’s EV sales (Nexon, Tigor) reached a new quarterly peak of 5,592 units in October-December 2021. They accounted for 5.6 per cent of the company’s passenger vehicle sales during the quarter versus 1.8 per cent in the same period in 2020. 

As many as 15 states in India have dedicated EV policies against only four in 2019. Many offer upfront subsidies for EVs and provide support for charging-infrastructure deployment. 

The most watched EV company in the world, Tesla, managed to deliver a record 308,600 cars in the last quarter of the year, reaching a total of 936,172 for 2021. This was 87 per cent higher than the 2020 number. On the flip side was the recall of 475,000 cars in the US over camera and trunk issues announced last month.

Globally, 2021 for EVs has panned out far better than expected at the beginning of the year. BloombergNEF estimates total passenger car sales last year more than doubled to 6.3 million vehicles, with China and Europe dominating the market, despite the semiconductor shortage playing spoilsport. 

The outlook on the electrification of mobility impacts the outlook for oil demand. If more countries follow the trajectory of Norway — where 65 per cent of all vehicle sales last year are estimated to have been electric, and where only electric vehicles will be sold from 2025 — the dent on oil demand could be fairly substantive. Denmark announcing its intention to make domestic flights fossil-fuel-free by 2030 and similar initiatives being taken up in other sectors could mean a further hit for oil.

$1 billion loan guarantee

The Joe Biden administration’s big boost for electric vehicles may take some time coming, given the hurdles on the Build Back Better legislation, but there is activity in other sectors. The US Department of Energy has revived its loan-guarantee programme, unlocking more dollars for innovative decarbonisation technologies. Last week, it offered a conditional commitment to guarantee a loan of up to $1.04 billion to Monolith Nebraska for a project to convert natural gas into hydrogen (via methane pyrolysis) to be used in the agriculture sector. Carbon black also produced at the site would be put to use in tires, plastic production and other materials. 

The methane pyrolysis process gives off no carbon dioxide, Rob Hanson, Monolith’s co-founder and chief executive officer, was quoted by Bloomberg News as saying. If some of the methane comes from renewable natural gas, supplied by landfills or farms, the process can be carbon-negative, removing more carbon from the environment than it produces. Current processes for making carbon black and ammonia emit greenhouse gases.

“With dozens of active applications under review, and now offering its first conditional commitment in years, the Loans Program Office is poised for additional investments in 2022,” Jigar Shah, director at the Loans Program Office, said in a statement.

Although the office was mostly dormant under former president Donald Trump, it previously provided a $465 million loan to Tesla and a $535 million loan guarantee to Solyndra.

$170 billion loss and damage

The 10 most financially devastating climate events of 2021, including hurricanes in the US, China and India and floods in Australia, Europe and Canada, cost $170 billion in damages, according to a study by Christian Aid, a UK charity. Hurricane Ida, which pummelled the eastern US, cost the economy $65 billion. Floods caused an economic loss of $43 billion in Europe, and over $17 billion in China’s Henan province. The report’s authors estimated damages based on insured losses, meaning the true costs of these disasters are likely to be even higher.

The rising temperatures across the globe have led to some cities appointing heat officers responsible for cooling interventions, especially for vulnerable sections of the population. Miami has one — Jane Gilbert — as do Phoenix, Athens (Greece) and Freetown (Sierra Leone).

The writer is editor – global policy for BloombergNEF. vgombar@bloomberg.net