Do oil hubs dream of electric vehicle fleets? Singapore certainly does

Earlier this month, Asia’s largest oil trading hub, Singapore, launched its first electric vehicle-sharing service with 80 cars and 30 charging stations. This will eventually hit 1,000 electric cars and 500 stations with 2,000 charging points.

The service was launched by BlueSG, a subsidiary of France’s Bolloré Group that runs the world’s largest electric car sharing service Autolib in Paris. BlueSG claims the Singapore electric vehicle sharing service will become the world’s second largest.

The fleet is largely meant to fight congestion in an increasingly densely populated city.

But there is another element to the move that’s hard to ignore.

It will introduce electric cars in one of the world’s top oil trading hubs and bunkering ports, a bastion of the fossil fuel industry that also includes one of the largest oil refining centers with a dense concentration of petroleum storage.

The irony is palpable. It’s a bit like Saudi Aramco investing in Tesla or Qatar investing in nuclear power generation. Or shipyards building zero-emission ships to carry crude oil and coal cargoes.

But once you get past the humor, the long-term implications for oil and related businesses are far more serious. The introduction of electric cars is a tacit acknowledgement of the global move towards electrification and away from liquid petroleum fuels in transportation.

The reality is that electric car-sharing services have proven to be the gateway for introducing electric vehicles in new regions.

So while 1,000 EVs is a mere dent in a passenger car fleet of over half a million, the use of Singapore as a test bed for wider deployment in Asia (like it is for new iPhones) is far more significant.

Several studies indicate that populations resistant to new technologies like EVs have opened up when new concepts like electric car-sharing were introduced.

According to a McKinsey & Co report, “as the share of EVs in car-sharing fleets grows, more customers can get familiar with the new technology – potentially leading to an increase in the proportion of prospective car buyers that is open to buying an EV.” It said “new mobility business models” like car-sharing are instrumental in removing barriers to the adoption of electric vehicles.

The International Energy Agency says in its Global EV outlook 2017 that “urban areas are also excellent platforms for the experimentation of novel passenger and freight transport services based on vehicle and ride-sharing concepts or autonomous driving capabilities.”

“Given the high mileage of shared vehicles, these concepts have strong synergies with transport electrification,” it said.

JOINED AT THE HIP

Singapore and the fossil fuel industry have been joined at the hip since oil trading started here in 1891 and it is “the undisputed oil hub in Asia,” according to the city-state’s Economic Development Board, being host to practically every oil trading company of significance and playing an important role in price benchmarks for petroleum products.

In 2015, Singapore imported around 1 million barrels of crude oil per day, around 1% of the world’s demand, and ranked third worldwide for exports of refined petroleum products, according to the US Energy information Administration. It has enough tank farms (including underground salt caverns) to store 23 million cubic meters or 145 million barrels of fuel, enough to meet 1.5 days of global fuel demand.

Still, it won’t be the first oil stronghold to acknowledge the challenge of electrification.

Norway, the largest holder of crude oil and natural gas reserves in Europe -- and dependent on oil and gas for some 15% of gross domestic product -- has the world’s second-largest electric vehicle fleet after China, and the world’s largest per capital concentration of electric vehicles. Meanwhile, Norway’s sovereign wealth fund—the world’s biggest at $1 trillion—has been offloading investments in dirty fossil fuels like coal, and most recently pledged to trim its multibillion dollar holdings in oil majors Shell, ExxonMobil, Chevron and BP.

Singapore could, now that the seeds of electrification have been sowed, increasingly look like Norway, thriving on the legacy oil business in the near term, but hedging its bets on cleaner and futuristic technologies in the longer term.