GDP | Global Development Perspective
Working Paper No. 20.004
March 3rd, 2020
Evaluating the impact of fossil fuel vehicles exit
on the oil demand in China
Ziru Feng, Tian Cai, Kangli Xiang, Chenxi Xiang and Lei Hou
Abstract Vehicle ownership is one of the most important factors affecting fuel demand. Based on the forecast of China's vehicle ownership, this paper estimates China’s fuel demand in 2035 and explores the impact of new energy vehicles under the scenarios of slow, medium, and rapid substitution. The main contribution of this paper is making a more detailed estimation on the main parameters such as the saturation level and growth rate of the vehicle ownership by taking into account the heterogeneity of provinces when using the Gompertz model to forecast the future vehicle ownership. On that basis, the fuel demand of each province in 2035 is calculated. The results show that: ①The vehicle ownership rate of each province conforms to the S-shape trend with the growth of real GDP per capita. At present, most provinces are at a stage of accelerating growth. However, the time for the vehicle ownership rate of each province to reach the inflection point is quite different. ②Without considering the replacement of new energy vehicles, China's auto fuel demand is expected to be 746.69 million tonnes (Mt) in 2035. Guangdong, Henan, and Shandong are the top three provinces in fuel demand due to the economic and demographic factors, with the expected fuel demand of 76.76, 64.91 and 63.95Mt respectively. ③Considering the replacement of new energy vehicles, China’s fuel demand in 2035 will be 653, 615 and 578 Mt respectively under the scenarios of slow, medium and fast substitution. Even under the scenario of slow substitution, the reduction in fuel demand will be 94 Mt, accounting for 26.3% of China's net oil imports in 2016. Therefore, the withdrawal of fuel vehicles will greatly reduce the oil demand and the dependence on foreign oil of China. Faced with the dual pressure of environmental crisis and energy crisis, the forecast results of this study provide practical reference for policy makers to rationally design the future fuel vehicle exit plan and solve related environmental issues.
Key words vehicle ownership; Gompertz model; fuel demand
1. Introduction
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2. Related literature
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3. Methodology
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4. Results and analysis
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5. Robustness analysis of different substitutions
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6. Conclusion
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