A global investment of $400 billion annually is required to achieve 25 per cent penetration of alternative energy sources from 2010 to 2030 and reduce total oil consumption in transport by 0.5 per cent per year, said a report.

Countries seeking to reduce oil dependency and emissions of their transport sector must support the development, distribution and adoption of new technologies in transport through a structured policy approach, strong public-private partnerships, risk hedging and collaborative financing, added the Repowering Transport report released by the World Economic Forum in collaboration with Booz & Company.

Global transportation and fossil fuels are inextricably linked. More than 60 per cent of the 87 million barrels of oil consumed every day powers the world’s transportation system, and liquid fossil fuels account for more than 96 per cent of the current energy supply to the transport sector, the report said.

The capital needed is moderate in relation to the $740 billion annual expense in global oil subsidies or the global transport industry’s annual $4,500 billion revenue.

Research found that lack of financing for green transportation is not a matter of capital availability but rather of uncertainty in the regulatory environment and challenges in assessing the risk involved.

The report’s proposed two-pronged policy approach to achieve energy diversification involves establishing regulation (fuel taxes, carbon fees) and/or setting performance standards that the market can meet independent of the technology choice, while supporting technology-specific policies chosen based on the country’s own competitive advantage.

“Understanding the opportunities and challenges in energy supply across all modes of transport is a highly complex undertaking; this report is the first to provide a comprehensive framework identifying critical enablers and ensuring deployment of the broadest range of technologies,” said Nick Pennell, vice-president of Booz & Company.

As examples, the report features China, whose $15 billion investment pledge in electric vehicles, coupled with a tight-knit collaboration between government and private enterprise, aims to put 5-10 million electric vehicles on the road by 2020.

The report also highlights Brazil’s consistent 30-year policy supporting the development of biofuels, a technology that today powers 20 per cent of the country’s entire transportation system. Brazil continues to support biofuels with up to $2.5 billion dollars per annum of tax breaks and other consumption incentives.

“The report finds that oil will continue to be the dominant fuel for transportation over the next 20 years, but innovative partnerships among business, government, academia and civil society marks are accelerating technology development of alternative sources,” said John Moavenzadeh, head of Mobility Industries at the World Economic Forum.

The report sets out a framework to identify the most useful partnerships at each point of the technology lifecycle.

Successful partnership case studies at the global and country level are featured in the report, including examples from Canada, Sweden, the UK and the US. – TradeArabia News Service