November 1, 2017
I find myself thinking globally again – and as we enter the waning days of 2017, I encourage you to join me.
My motivation to take this mental journey is easy to identify – in early November, I traveled to beautiful Buenos Aires to help deliver the first NACS Fuels Summit Latin America. First of all – if you have not been to Buenos Aires, I strongly recommend it. Beautiful city, wonderful people, great food and entertainment – and if you are lucky, you just might stumble upon a tango show in the middle of an outdoor café on a Thursday afternoon. (Yes, it happens.)
More relevant, however, at the Fuels Summit we were joined by 75 individuals hailing from ten different counties and representing fueling operations in more than 15 nations. It was a wonderful experience. My entire career has been focused in the United States and it is so easy to adopt a U.S.-centric philosophy, but once you begin to engage with others around the world your perspective begins to change and you realize how small the world is and how interconnected we all are. This Fuels Summit helped do that for me, and I hope it inspired our attendees to likewise think beyond their business and markets to consider the global developments that can affect them in the long term.
The other factor that is motivating me to think globally is our most recent publication – “Global Initiatives: Assessing Current and Future Global Initiatives on Fuels and Vehicles.” This report, written by Tammy Klein of Future Fuel Strategies, is a comprehensive assessment of international, national and local regulatory initiatives that seek to shape the future structure of the transportation sector. Tammy also joined us in Buenos Aires and delivered a compelling presentation summarizing the myriad initiatives that are under development around the world – setting the tone for the rest of the conference.
Recent headlines have led many to consider what impact regulatory initiatives in other countries might have on local markets. Most often, people are asking – “Can that happen in my country?” Most telling are announcements by France, the United Kingdom, California and China to ban internal combustion engines after a certain date in the future. These are shocking announcements to many and may or may not have long-term consequences for global markets.
For example, both France and the U.K. seem to exempt hybrids from their bans – which means that internal combustion engines paired with a battery propulsion system and running on liquid fuels will remain viable even after implementation of the proposed programs. Further, these two markets combined do not wield much influence over the global auto market. (See August 2017 blog – Dog Parks and the Global Transportation Market)
China, however, is another issue all together. In 2016, China accounted for more than 30% of global light duty vehicle sales. Should this country actually transition from internal combustion engines to electric drivetrains, the automobile manufacturing industry might be financially compelled to accelerate the production of EVs not just for China but for other markets as well.
But these are just some of the latest developments in the global effort to address transport-related greenhouse gas emissions, local air pollution and congestion. Klein’s report that we released this month dives into a variety of other topics. For example, did you know that:
- Almost 60 countries have developed or will be developing biofuels programs such as blend mandates and fiscal incentives.
- More than 40 countries have implemented or plan to implement mandatory GHG emission/fuel economy standards.
- More than 20 cities and/or countries have taken actions to ban or limit the use of internal combustion engines.
- At least 13 countries have programs to support zero emission vehicle markets.
- The vast majority of countries have mandated a reduction in the sulfur content of diesel fuels and implemented light duty vehicle emissions reduction programs.
As the world’s countries consider how to address transport-related issues, they will look to other nations for examples of regulations that might work for their markets. NACS has a philosophy regarding global engagement – there are no unique issues, but at any given time nations are in different stages of an issue’s lifecycle.
The Fuels Institute looks at global regulatory initiatives and trends because they can be good indicators of where the market may be heading. It is clear from “Global Initiatives” that biofuels programs remain the most popular tool for nations to address their transport-related issues, but as these come under attack, governments are looking at alternatives. Clearly, not every initiative will address each issue – but as we prepare to welcome nearly 2 billion more people by 2040, the pressure to take action is mounting.
Of course, not all factors affect all markets equally. Population growth will not be consistent across the globe. Africa’s population is projected to double by 2050 while Europe may contract by nearly 5%. Will these population shifts have a major impact on where cars are sold? Will the distribution of light duty vehicle sales look different in 2050 compared with 2016? Will Africa be the growth market of the future, and if so, will the regulatory initiatives of more developed economies find homes within the African continent or will they evolve along more traditional lines of mobility?
These are factors that will help shape the future of the transportation market. In order to prepare for tomorrow, we have to look beyond our own walls. By understanding the motivations behind and implications of regulatory initiatives throughout the world, we are better able to anticipate what might happen tomorrow.
So, please join me and start thinking about the world around us – it is not a very big place and there is so much to learn. A great place to start is with our report, “Global Initiatives.”
The future will be shaped by the complex relationship between governments and markets. If they can work together, the result could be a beautiful tango that ushers in a more effective transportation sector. If they remain at odds, this tango will quickly erode to resemble a high school dance party – and if you remember those, it wasn’t pretty.