Requirements
Since the majority of oil demand comes from transport, the plan focuses on how to use less oil getting people and goods from A to B, drawing on concrete measures that have already been put to use in a diverse range of countries and cities.
The short-term actions it proposes include reducing the amount of oil consumed by cars through lower speed limits, working from home, occasional limits on car access to city centres, cheaper public transport, more carpooling and other initiatives, and greater use of high-speed rail and virtual meetings instead of air travel.
Notably, many of these can be implemented and agreed quickly – and pace is necessary here. The IEA notes that advanced economies account for almost half of global oil demand. Many of them, including the largest energy consumers, are required as members of the IEA to have oil demand restraint plans ready as part of their emergency response measures, so one would hope contingencies might already exist.
Most of the proposed actions require changes in the behaviour of consumers, supported by government measures. How and if these actions are implemented is subject to each country’s own circumstances; in terms of their energy markets, transport infrastructure, social and political dynamics and other aspects.
This is crucial for corporates, who may wish to invest in strategic intelligence to predict how their governments will react to the IEA recommendations. Much, for now, remains a guessing game.
The IEA says several of the measures can be implemented directly by other layers of government; such as state, regional or local, or just voluntarily followed by citizens and corporates, enabling them to save money while showing solidarity with the people of Ukraine.
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Long-Termism
The IEA report notes that reducing oil use must not remain a temporary measure. Sustained reductions are important not only to improve countries’ energy security but also to tackle climate change and reduce air pollution.
IEA believes governments have all the necessary tools at their disposal to put oil demand into decline in the coming years, and the report sets out the key ones to achieve this goal, including hastening the adoption of electric vehicles, raising fuel economy standards, boosting alternative fuel supplies, accelerating heat-pump deployment, and producing and consuming plastic more sustainably.
All these are key sustainability wins and elements that will grow the new green economy so required by modern business to align capitalism and planet more closely. Of course, the measures may affect business in other ways; making logistics more challenging by reducing motorway speeds for example.
What’s clear, in a time of uncertainty, is that agility and forward thinking are key. After two years of a still present pandemic, it appears another set of massively challenging business circumstances are upon us.