The driven consumer and the future of energy
June 19, 2020 | 3-minute read
Canada is starting to reopen in anticipation of a post-COVID world. Local media are commenting on increased vehicle traffic. Daily accident reports are almost back to normal, and congestion is growing. Our collective consumer bounce-back has begun.
Our love affair with cars will play a big role in our post-pandemic energy future. While North America is still adopting a staged recovery, other parts of world can provide insights into what our consumer energy consumption might look like.
In China, single-passenger vehicle trips have already bounced back to near-normal. In April 2020, 2.07 million vehicles were sold, up 4.4 per cent from a year earlier. Traffic data for the first week of June in Beijing and Shenzhen—home to 34 million people combined—shows rush-hour congestion is heavier than during the same period last year. Congestion rates are at or near pre-pandemic levels in cities around the world.
“When it comes to consumers reducing vehicle emissions, “doing the right thing” remains a mantra for change, but we know from our research that the prime motivator is price. While many consumers would like to reduce their emissions footprint, most can’t afford to. For the millions of consumers in Canada that have seen their wallets and bank accounts shrink, this probably won’t be the time for dramatic change.”
Those images on social media of clear skies and fresh air are fading as we return to work. While many employees can continue to work from home, the majority of the workforce lacks that option. Many workers in industries like construction, manufacturing, retail, restaurants, and transportation still need to commute. The scale of the bounce-back in passenger vehicle use remains to be seen.
Expect gasoline- and diesel-powered vehicles to be around for a long time yet. McKinsey forecasts the internal combustion engine could see up to an extra 40 per cent reduction in emissions by 2035. That coupled with the recent drop in gasoline prices will make it difficult to convince consumers to switch to electric vehicles anytime soon. A new gasoline engine vehicle sold today is estimated to have a 20-year road life. That pushes us out to 2040 before the 2 million or so vehicles sold in Canada this year exit the market.
As of the first week of June, U.S. gasoline demand is still 19 per cent below the five-year historical average, but demand is already up nearly 50 per cent from when it bottomed out in April. As the U.S. economy continues to open and people get back to work, gasoline demand will continue to bounce back. Canada is not far behind in that resurgence.
Some cities have taken the lockdown period as an opportunity to nudge change in consumer driving habits. In major cities in Europe, North America, and South America, non-vehicle and cycle-only roads have dramatically increased in capacity. Municipal governments have taken advantage of the lull in vehicle traffic to put permanent road closures in place. The implications for traffic patterns, congestion, and related emissions will become apparent in the coming weeks.
The rapid return to driving highlights a major challenge in addressing climate change. The impact of consumption—emissions—is not always top of mind or understood by consumers. COVID-19 may have increased that disconnect.
Delivery services increased as locked-down people increasingly shopped for goods and services online. Emissions related to last-mile delivery was already a pre-pandemic issue. The United States has seen a 30 per cent increase in e-commerce sales since the outbreak. In Germany, DHL reports parcel shipments have increased from 5.3 to 9.0 million per day. While no data yet exists, emissions related to this rapid growth in online sourced goods and services will have increased substantially.
Will there be any permanent change to consumers’ emissions post-pandemic? The jury is still out. Vehicle traffic will bounce back, but to what level we don’t know. The permanency of increased online shopping and the need for delivery services and related emissions is also not well understood.
When it comes to consumers reducing vehicle emissions, “doing the right thing” remains a mantra for change, but we know from our research that the prime motivator is price. While many consumers would like to reduce their emissions footprint, most can’t afford to. For the millions of consumers in Canada that have seen their wallets and bank accounts shrink, this probably won’t be the time for dramatic change.
If our pandemic actions and post-pandemic decisions are any indication, consumers still have a long way to go to fully embrace decarbonizing our connection to vehicles.