Switching to battery powered electric vehicles will save the Global South over $100 billion annually by Mildred Tuhaise
Nations in the Global South risk becoming a dumping ground for used internal combustion engine (ICE)vehicles, unless governments adopt policies to seize the benefits of the electric vehicle revolution, warns a report from the financial think tank Carbon Tracker .
If governments in the Global South lock themselves into using ICE vehicles, they will remain dependent on fossil fuel imports. Currently, nations in Africa spend $80 billion a year on transport fuels, 2.5% of the continent’s GDP.
But countries can break this dependency by setting policies that support a move to fully electric battery-powered vehicles. (BEVs). This shift would save nations in Asia, Africa, and South America over $100 billion annually on fuel imports, cut their trade deficits, end their dependency on offshore refining, and create new jobs in industries of the future.
As the chart below shows, nations which lack refining capacity to meet domestic transport fuel demand experience significant capital and foreign exchange outflow. If countries pivot their fleet to electric, these vehicles could be powered inexpensively using domestically generated renewable power, assuming the correct policy environment and industrial strategy is in place.
Ben Scott, Senior Automotive Analyst at Carbon Tracker, and author of the report said: “The Global South’s reliance on internal combustion engine vehicles, and dependency on fossil fuels, holds back the region economically. They can boost their domestic economies by incentivising a shift to electric vehicles and kick start a positive cycle that brings faster electrification, a smart grid, and increased production and use of renewable energy. All these changes will reduce dependence on foreign nations.”
The new report, Driving Change: How Electric Vehicles can rise in the Global South, recommends several policies governments can use to incentivise a shift to BEVs and creation of a domestic BEV sector – Used Car Import Bans, Age Restrictions, Emission Standards, Age Based Excise Duties, eliminating tariffs on electric cars, &supporting domestic production, sales and recycling of BEVs.
Driving Change highlights how a switch to BEVs can open new economic opportunities in the BEV value chain, including mineral mining, manufacturing, sales, logistics, servicing, infrastructure creation, and material recycling.
About Carbon Tracker
The Carbon Tracker Initiative is a not-for-profit financial think tank that seeks to promote a climate-secure global energy market by aligning capital markets with climate reality. Their research to date on the carbon bubble, unburnable carbon and stranded assets has begun a new debate on how to align the financial system with the energy transition to a low carbon future.