Responding to high fuel prices, in part a result of Russia’s murderous invasion of Ukraine, is a hot topic all around the world right now. In response, the International Energy Agency (IEA) are calling on countries to cut oil usage within four months, noting that measures such as just cutting fuel taxes “do not address the broader strains affecting the market“. As such, they’ve put out a great 10-point plan of ‘immediate actions‘ for how to reduce oil usage, and many of them are things we’ve long advocated for.
In the face of the emerging global energy crisis triggered by Russia’s invasion of Ukraine, practical actions by governments and citizens in advanced economies and beyond can achieve significant reductions in oil demand in a matter of months, reducing the risk of a major supply crunch, according to new analysis released by the International Energy Agency today.
These efforts would reduce the price pain being felt by consumers around the world, lessen the economic damage, shrink Russia’s hydrocarbon revenues, and help move oil demand towards a more sustainable pathway.
If fully carried out in advanced economies, the measures recommended by the IEA’s new 10-Point Plan to Cut Oil Use would lower oil demand by 2.7 million barrels a day within four months – equivalent to the oil demand of all the cars in China. This would significantly reduce potential strains at a time when a large amount of Russian supplies may no longer reach the market and the peak demand season of July and August is approaching. The measures would have an even greater effect if adopted in part or in full in emerging economies as well.
The new report also includes recommendations for decisions to be taken now by governments and citizens to transition from the short-term emergency actions included in the 10-Point Plan to sustained measures that would put countries’ oil demand into a structural decline consistent with a pathway towards net zero emissions by 2050.
Since the majority of oil demand comes from transport, the IEA’s 10-Point Plan focuses on how to use less oil getting people and goods from A to B, drawing on concrete measures that have already been put to use in a diverse range of countries and cities.
Some of those we’re already seeing here in New Zealand such as the government’s announcement to cut public transport fares in half. We also continue to see a lot of people working from home due to COVID but many of the other suggestions, like car-free Sundays, are things we should be looking to do even if fuel prices and emissions weren’t an issue.
The IEA have also put out this graph of the worldwide impact they expect these initiatives could have if enacted – note that the y-axis has been fixed so the reduction isn’t quite as dramatic as it appears on the graph.
While the IEA see these as short-term measures – the total reduction in usage is only around 6% – they also recognise that these are a path for the future too
Looking further ahead, this report also suggests a path for countries to put oil demand into structural decline in the medium term, building on measures already included in economic recovery packages introduced to deal with the impacts of the Covid-19 pandemic. Adopting the immediate and longer-term recommendations would put the countries on track for a decline in oil demand consistent with what is required to reach net zero emissions by 2050.
Reducing our reliance on oil while simultaneously making our cities better places to be and improving our wider transport system is a big win-win situation. When does the government start on the points above not yet started?
Meanwhile here in NZ, yesterday the government confirmed the details of the public transport subsidy and drop in Road User Charges
In addition to the 25 cents a litre cut to Fuel Excise Duty for three months the Government can now confirm:
- From 1 April to 30 June 2022, funding will be provided for local government to implement half price public transport fares covering core public transport services, Te Huia and Capital Connection train services, and Total Mobility services for those with long-term impairments who are unable to use public transport.
- From Late April to late July 2022, Road User Charges will be cut by 36 percent across all legislated rates.
“The confirmation of the Road User Charges discount and full scope of the public transport fare reduction will support New Zealanders through the global energy crisis caused by the war in Ukraine,” Michael Wood said.
For public transport they also note:
- Non-core public transport services not covered by the scheme are typically commercial services that operate outside of the Public Transport Operating Model without any funding from the National Land Transport Fund, such as the Waiheke, Devonport, and Rakino ferry services in Auckland, the Wellington Cable Car). It also excludes commercial services such as KiwiRail’s tourism services, Cook Strait ferry services, and inter-regional buses
- The discount is estimated to cost approximately $36.5 million across three months.
It will be interesting to see how Auckland Transport deal with the Devonport and Waiheke fares given they’re now also integrated into HOP even though they’re run commercially – speaking of which, whatever happened to the review of their exclusion by the Ministry of Transport. That should have been a one-day job to say those services can no longer be exempt.
On the Road User Charges, it’s interesting that it will see a 36% drop while fuel taxes drop by 32%, is this another case of trucks not paying their fair share? The government also say this drop will cost approximately $170 million over the three months, depending on uptake.