At the end of September, the governor of California issued an executive order banning the sale and driving of internal combustion engine cars (which burn fuel or diesel) in the state by 2035. This decision constitutes a major transition in global industry, as it threatens the production of the internal combustion engine car, which was discovered in the early twentieth century.
California is the world's fifth-largest economy. The state also plays a major role in leading economic and social initiatives in the US. Thus, various states are expected to gradually follow California's lead even though they will face anticipated opposition from automobile companies and the conservative right-wing Republican Party, which has widespread support in several states and continues to question and oppose environmental and climate protection policies. Such opposition may delay the transition from internal combustion engine cars to electric cars, but it is unlikely to stop it altogether.
Given the nature of California's urban planning, where there are great distances between suburbs, corporate headquarters, and downtown markets, reliance on vehicles is an essential part of the state's social life, as is the case in most states. Although suburbanization was initially an American phenomenon that picked up pace after World War II, the fact is that this social and urban transition, whereby the middle class moves from major cities into suburbs, has become a global phenomenon.
Why has California undertaken this initiative? The truth of the matter is that the decision is not limited to California alone, since the EU has adopted a similar position with the same date. California is known to be more concerned about the environment and climate change compared to other states. In recent years, particularly 2020, California has suffered from successive massive forest fires stretching over thousands of acres. These fires have been attributed to climate change. State residents have also complained about environmental pollution caused by CO2 emissions from the high number of passenger vehicles being driven on the state's roads.
What is the alternative to gasoline and diesel? The world's largest automobile companies, and some specialized companies, began producing several electric, solar, and hybrid car models years ago. There are already thousands of electric cars on the roads, and their numbers are increasing gradually. There is also potential for hydrogen fuel, but research is still under way to reduce its CO2 emissions since it is produced from fossil fuels (gas and coal).
The major challenge that faced the alternative automobile manufacturing industry was battery storage capacities. There was also the issue of their high prices. Over time, these challenges have been addressed. Now, these cars cost almost as much as traditional cars, and their energy storage capacities have also been increased, which makes them ready to be used for driving over long distances before they need to be recharged. More research is underway to pave the way for further improvements to batteries.
The European Commission has recently adopted the 2030 Climate Target Plan; it has decided to gradually reduce the use of the internal combustion engines in order to cut CO2 emissions by half compared to their 2021 levels, with the aim of reaching zero emissions by 2035 by relying on modern clean vehicles.
It is clear that this important industrial development will have an impact on oil consumption, and thus on the economies of the MENA region, where the petroleum industry is the largest and where some exporting countries depend on oil rents to finance 85-95 percent of their annual budgets. This transition will also gradually reduce investment allocated for the discovery and development of new oil fields. Additionally, decreased demand will make oil prices struggle.
If California's laws are implemented by 2035, several majority right-wing Republican and oil-producing states are expected to delay or oppose adopting similar decisions, until modern clean cars are widely used throughout America. Today, we are already witnessing strong and major opposition in the EU from European automobile manufacturers associations, particularly from the Germans whose largest industrial sector is automobile manufacturing. Therefore, it is expected that when the new decisions are implemented, they will be met with domestic challenges in both the United States and Europe.
Needless to say, there are doubts concerning the ability of developing countries to adopt modern clean cars and rapidly establish new charging stations for electric cars by 2035. Such a move would require substantial investments from the private and public sectors. In most third world countries, there are still no serious indications of a complete transition to modern vehicles. If California and Europe succeed in this move, which will most likely be in favor of the electric car, most world countries will continue to use traditional vehicles for years to come before following suit.
It is true that Ford's Model T quickly replaced horse-drawn carriages in the early 1900s, but in today's world we are dealing with different industrial and consumer variables. First, more than a billion cars are in use all over the world, some of which have an average lifespan of about five years. Second, some countries have limited resources, which makes it difficult for governments to require citizen to purchase new vehicles that perform the same functions of traditional ones. The best way to encourage citizens of third world countries to change their vehicles, regardless of life expectancy, and buy electric or other modern cars, would be through new tax laws, subsidies, or financial incentives.
The year 2035 is 15 years away, and there is a possibility for delays to occur and push the date in which the new vehicles are supposed to take over. What is important for the economies of the Middle East is not the deadline; it is what can be done today.
Responsibility rests with governments and citizens alike. Since the modern automobile industry has become a reality and will sooner or later impact oil consumption, and consequently oil prices and the economies of the Middle East and North Africa, we need to reconsider and change some of our luxury consumer habits and begin to rationalize consumption. Moreover, state institutions must put an end to wasting money, especially the squandering of oil rents in recent years, and combat corruption that costs some countries billions of dollars annually. There is also a need to review the quality and level of education to address global developments. In other words, upcoming changes in the oil industry should be a wake-up call for our societies to reconsider the type of economic development we want for our countries. We must prepare well for a future unlike anything we have experienced since the mid-twentieth century. Our consumption habits, lack of transparency and accountability, quality of education, and an overwhelming number of unproductive government jobs that make institutions inefficient in delivering their services are all factors that must be addressed.
This article was originally published in, and translated from, Asharq al-Awsat.