The world needs to invest $400 billion annually in green technologies to curb carbon emissions from the transportation sector, says a report.
Global transportation and fossil fuels are inextricably linked, it said. Currently, more than 60 percent of the 87 million barrels of oil consumed daily powers the world’s transportation system.
A total of $400 billion investment is needed annually to reduce oil consumption in the transport sector, it said. The figure is minuscle compared to the $740 billion spent annually by countries in global oil subsidies or the global transport industry’s annual income of $4,500 billion.
The report proposes two-pronged approach to reduce dependency on oil: The first one involves establishing regulation for fuel tax and carbon fees and setting performance standards, which the market can meet, independent of the technology choice.
The second one entails supporting technology-specific policies chosen based on each country’s own competitive advantage.
For instance China, whose $15 billion investment pledge in electric vehicles, coupled with a tight-knit collaboration between the government and private enterprises, aims to put 5-10 million electric vehicles on road by 2020.
In Brazil, biofuels power 20 percent of the country’s entire transportation system. It continues to support the development of biofuels with a $2.5-billion support in tax breaks and other incentives annually.
The report also calls for the governments in the Middle East to rethink their fossil fuel consumption for transport and mobility.
‘The Middle East needs a whole new approach to mobility and public transport,’ said Fadi Majdalani, vice president of Booz & Company, ‘current emission levels are simply not sustainable,’ he added.
Though oil will continue to be the dominant fuel for transportation over the next 20 years, innovative partnerships among business, government, academia and civil society markets are accelerating technology development of alternative sources, said John Moavenzadeh, head of mobility industries at the World Economic Forum.