Thursday, August 17, 2017 4:49 pm
By Olukayode Oyeleye
News about the emergence and ascendancy of electric cars should typically elicit thrills and ecstasy, mainly for its evident novelty and universal benefits on which everyone everywhere seems to have reached a consensus. There will be losers as well as winners in the unfolding realities. Although it may be too early to say who all the beneficiaries would be and the ramifications of the benefits, the likely losers are clear from the outset and the magnitudes of their losses might begin to manifest sooner than they could predict, however much their optimism and denials fly in the face of forthcoming realities.
To be sure, this disruptive technology, like any other, should leave no one in doubt about the direction the global economy is inclining. Considered for, or in spite of, all the good things it promises, the electric car is a great reason to be apprehensive for some economic blocs, particularly as it marks the twilight for an economy that has thrived on the incumbent auto-technology – the internal combustion engine which is oil-dependent. This is more unsettling because the losers with no buffering or exit plan might enter a phase of unprecedented economic turmoil.
Enough warning signs have lined up all the way through the years, dating back to nearly a decade and-a-half, about the imminent shift in emphasis from petroleum. The oil shock that followed the oil embargo of 1973 was a watershed, triggering great opportunities for innovation, although the shift took well over 30 years before becoming so obvious. The world leaders in technology began work on possible alternatives for a long while. The innovative opportunities have spawned a number of new products which have undergone tests and found good markets prospects.
The shift in attention towards ethanol from corn and sugarcane from the US and Brazil respectively was strategic. For Brazil, in particular, the move was instructive in the sense of diversification of economic base through agriculture despite a burgeoning Petrobras, Brazil’s multinational oil conglomerate. With this tell-tale progress, the era of ethanol as part-replacement for petroleum in automobiles was born.
If that was not enough to send any clear signal to oil-dependent economies, the US-led exploration for shale oil began. All told, unmistakable signs emerged that developed nations of the world, where automobile has become a second nature, might be in for a long haul in their quest for alternatives to petroleum. The growing presence of hydrogen fuel cell cars, despite some strident criticisms on cost effectiveness, needs some keen introspection. As technologies undergo improvements and rise in efficiencies over time, it is a big folly to ignore its place in the unfolding disruption of the status quo in the auto industry.
Just when the hydrogen fuel cell appeared to be the ultimate, a companion innovation of hybrid car came on board, all still pointing away from total dependence on gasoline, even if sparingly. A total departure from petroleum-driven automobile is the electric car, increasingly popular for its greater environmental benefits over hydrogen fuel cell-powered, hybrid or ethanol-compliant cars. The stage is now set for a shift in the centre of gravity from pollution-ridden, combustion engine-powered, car to the environmentally friendly electric car. With this also is a concomitant shift of the centre of gravity of the global economy away from cartel-dominated petroleum-based economies to those producing successor technologies and other allied products.
The march of the auto-industry towards zero-emission over the next two to three decades may be gradual or rapid, but not reversible. This will revalidate the relevance of Nikolai Kondratieff’s postulation of the long wave of technology that was popular sometimes in the last century, first in Europe and later in the US. By the way, the petroleum economy, as it turns out, fits into Kondratieff’s boom and bust cycles as the petrol-dependent economies – after a long period of peak – are now set for a decline into the trough of the long wave.
The assumptions of Kondratieff, the martyr-economist, find expression in the auto industry as well as petrol economy. The implication for the African continent can be enormous as a dampening of the continent’s economy might find a positive correlation with a waning oil economy, as Libya, Angola, Nigeria and Ghana – all combined – suffer untold economic setback. This will affect investment in infrastructure, lead to rising cases of civil unrest, exacerbate emigration as refugees, increase government’s cutback on welfare, food insecurity, poor healthcare funding and, very likely poor education funding.
Poverty rate might rise beyond imagination. Electricity supply might become more unreliable, further putting Africa at a greater disadvantage on the charging and running electric cars, since petrol filling stations will be replaced with electric car-charging stations. The gas-powered systems for electricity supply might provide a little succour, but to a debatable extent for now. The time for African economists and policy experts to act is therefore now.
We live in a world in which the impacts of events elsewhere are instantly felt in far-flung places. The transmission of impacts of electric cars might be insidious, but, surely, it is potent. The various arguments that make the electric car a good case are now on the lips of many influencers of opinion globally. The Sustainable Development Goals (or Global Goals for 2030) have created a good platform for this new thinking to thrive. Issues of environment and sustainable development are now on the front burner, globally.
The Conference of Parties on climate change in Paris in 2015 got countries to make commitments on Nationally Determined Contributions towards slowing down the carbon pollution of the entire globe as well keeping temperature rise at or below 2 degrees Celsius. Rapid gains in battery technology for electric motors favour these goals as, according to America’s National Resources Defence Council, existing electric cars reduce carbon emissions by 54 per cent compared with petrol-powered ones. More troubling is the verdict of the World Health Organisation, that this is the single largest environmental health risk, with outdoor air pollution contributing to 3.7 million deaths a year.
How enduring could China’s purchase of Africa’s oil be in the face of a pressing need to cut down the automobile-induced smog in Beijing or Shanghai? As nations of Europe, America and Asia, which constitute the largest block of petrol consumers for automobile, are turning their back on petroleum-driven car, suppliers of this hitherto prized commodity face a bleak future. What happens, for instance, to Nigeria’s economy when China and India, two big economies regarded as a viable alternative to US as petrol export destination, ditch Nigeria’s oil for electric car?
The unfolding pattern of transformation and development should unsettle policy makers. Since the shift toward environmentally friendly cars will be largely demand-driven (with the rich countries leading the way) and the technology for car making is not prevalent in Africa or Nigeria, the best time to diversify Nigeria’s economy away from oil is now. This is the time for better integration of agriculture into the economy through infrastructure and markets and a time for robust injection of funds, coordination of input supply, better articulation of post-harvest handling of food and greater emphasis on research and development.
We need proactive responses and urgent actions to forestall the adversity that may follow as the future of electric car may dawn on us much earlier than we ever imagined. This may connote the end of the petroleum economy which, though not necessarily abrupt, may be so brutal in impact on Nigeria, Africa or, for that matter, any other oil-dependent economy.
Dr. Oyeleye, a policy analyst, journalist and veterinarian, writes from Abuja