The EU’s tougher policy on the use of carbon fuels will radically change the oil market and affect Russia’s export potential, Vice-President for strategic development of Lukoil oil major Leonid Fedun told reporters on Monday.
Commenting on the introduction of a carbon tax in the EU, he said that so far oil producers can relax, as the new tax will affect mainly producers of metallurgical products and fertilizers.
“But the bad news is that in 10 years the European energy market in its present form will begin to disappear. That means that the task to reach zero emissions from vehicles by 2035, to drastically reduce emissions from aircraft and ships will lead to the situation when Europe will no longer import the amount of oil, diesel fuel and gasoline it is currently importing,” he said.
“In fact, Russian companies will have to look for new sales markets, realizing that the European market will gradually begin to shrink,” he added.
According to Eurostat, in 2019 Russia supplied almost 27% of all oil consumed there to Europe. In 2011, this figure was 35%.
“Therefore, Russia has about 10 years to restructure its export energy flows, which already needs to be done now,” he said adding that Asia will be the main market Russia should redirect its oil supplies to.
“First of all, it is Asia. Today Asia is working in a different direction. While Europe is cutting coal consumption, in Asia it is, on the contrary, growing. These are countries such as Indonesia, Pakistan, India, Vietnam, Malaysia,” he said. However, China, the world’s second largest oil consumer, also plans to reduce its CO2 emissions, Fedun noted.
“Knowing the Chinese who are very consistently involved in this program, we must also understand this, because around 2030 they are likely to also carry out a carbon tax on fuel suppliers,” he suggested.
Fedun recalled that in Europe in 2020, every fifth car sold had a hybrid engine.
“This trend will continue to expand, since very strict standards are being introduced for emissions – if I am not mistaken, 47 grams per 100 km, this is practically a prohibitive measure, it is one and a half to two liters of consumption per 100 km, which is impossible,” he said.
The European policy of displacing carbon fuels will lead to an increase in the consumption of the hydrogen equivalent.
“They will create a hydrogen refueling system, the European Commission will spend, if I am not mistaken, hundreds of billions of euros on such a system. In the future it looks like hydrogen will begin to displace fuel on a large scale,” he predicted.
The European Commissioned launched the Green Deal project in December 2019, aimed at a transition to a more eco-friendly life in the European Union. Transition to the economy with zero carbon emissions is planned by 2050 but there are no specific calculations by now how to do this in practice. One of measures within the Green Deal framework is to impose a carbon duty on import of goods.
Source: TASS