Welcome back. Another area of very important progress in energy efficiency is transportation. This is a topic that is hotly debated because everybody is interested in cars and the future of the car industry or what kind of cars we will be driving in the future. Transport accounts for a fifth of global energy demand. So it's very significant and it is the bulk of oil demand, specifically, although not the only important sector for oil demand, and it also accounts for 25 percent approximately of CO2 emissions. So improving efficiency in transport is extremely important for the future. The demand for transport services has been growing systematically and we expect that it will be growing in the future. There is a contest battle if you wish between increase the efficiency and increase demand for the services of the transport industry, and that is difficult to predict. There are some people who believe that the possible electrification of the car fleet will make a lot of difference, but this is contested by many by the International Energy Agency in particular, that believes that improving the efficiency of internal combustion engines may be as important as improving shifting from internal combustion engine to electric cars. In fact, efficiency in transportation can be improved in many ways. When we speak of passenger transportation, first of all, the many ways the best solution is to shift from private to public transport or making greater use of car pooling, in other words, having more passengers per car instead of having lots of car with a single passenger. Then we can improve the efficiency of cars with internal combustion engine, which can be achieved not only with improved engines but also simply shifting to smaller and less heavy cars. There has been a tendency of late towards larger and heavier cars on average and that of course entails greater consumption. So a shift in efficiency may simply mean and be achieved through opting for smaller and lighter cars. Finally, there is a possibility of shifting from diesel or gasoline to other fuels such as LPG or compressed natural gas, there can be a shift to hybrid vehicles, there can be a shift of course to battery electric vehicles, so pure electric vehicles. But also the possibility of relying on hydrogen and fuel cells is considered by some in also in the industry. For example, Toyota is pushing for this technology. For overland cargo that is trucks, one can shift from road transport from lorries to rail and use more trains, this is possible to have a shift from diesel to LNG trucks and even to electric trucks especially in fleets serving limited geographical spaces with facilitation for recharging. For air transport we can speak of improved engines and improve the aerodynamics there has in fact been great improvement in the efficiency of airplanes. Finally, for maritime transportation, we can shift from fuel oil which is normally used in maritime transportation to LNG or even nuclear for a larger ships, all of which tells us that we can improve the efficiency but not quite eliminate emissions from the sector. If we focus in particular on cars, the future perspective is complicated by the trend towards autonomous driving cars the possibility that in the future cars will be able to drive themselves and also by the rapid development of car-sharing that is availability of generally smaller cars for short time rental in urban environments. So how the different propulsion technologies will interrelate with use trends, and how this interaction will take place? It's very difficult to predict, and it is important to understand that there is a multiplicity of paths that can deliver the outcome. So this is why relying on price signals may be superior to attempts to pick winners. The tendency that we have seen in some countries to decide that from a certain date on, all new cars sold needs to be electric. This is probably a mistake because it is a way of choosing one specific technology, and it's not clear at all that this technology is the best solution under all circumstances, we should rather give a price signal and let the final consumer decide what is best for him. Total consumption of energy from cars is the result of two contrasting trends. On one hand, there is an increase in a inactivity that is an increase in total miles or kilometers traveled, total number of cars and on the other hand, there is an improvement in efficiency and the shift from internal combustion engine to electric vehicles. These two forces essentially balance each other, and the expectation is that the demand for energy for private transportation will remain essentially unchanged. On the right side of the chart, you can see that the International Energy Agency assumes that there will be very significant improvement in the mileage of internal combustion engine cars and there is nothing terribly revolutionary about that. These are levels of efficiency that are already Normal and implemented in the European market not elsewhere, and also there is a shift from internal combustion engines to electric vehicles. So the two trends together will take place for goods transportation trucks, we will have an increase in the consumption of energy because the increase in activity which is expected out growth is more important than the expected improvement in efficiency and the shift from diesel to other fuels. So in total, we expect an increased demand for petroleum products from the goods transportation segment. In discussing the benefits of introducing electric vehicles, especially battery electric vehicles, we need to take into account the fact that there are many forces. In particular, it is important to keep in mind that battery electric vehicles tend to be large and heavy just simply because of the weight of the batteries, if these entrenched as to be guaranteed. So this slide compares a Tesla which is a large battery electric vehicle with a large internal combustion engine car and a small lighter internal combustion engine car, and the calculation takes into account the emissions that are generated in the production process, that's the first row, and there you can see that the Tesla generates many much more emissions than an internal combustion engine car be large or small. It is affected by the number of miles or kilometers that car will travel in its lifetime and where it is used because electricity itself is not necessarily generated from clean sources so if it is generated from fossil fuels use of an electric vehicle sill entails some emissions through the increased demand for electricity. When everything is considered and put together, you reach the conclusion that Tesla will generate in total, emissions significantly lower than a large internal combustion engine car but higher then small lighter internal combustion engine car. This conclusion would be reinforced if we assume that these cars do not travel for as many miles as it is assumed here, they travel fewer miles and in this case the advantage of the Tesla is further reduced. It would be improved if we assume that all electricity comes from decarbonized sources. If the Tesla is used in an environment in which all electricity is clean, then there are no emissions associated with driving a Tesla around and that would improve the look for the battery electric vehicles. The bottom line is that, is it convenient to have a battery electric vehicle? It depends. It depends on the conditions in the specific location, it depends on whether the alternative is a large heavy internal combustion engine, or perhaps a smaller lighter internal combustion engine. So we need to have an open mind and accept that there is no technology that is likely to be absolutely always superior but each technology has strong and weak points.
