Over the weekend the Washington Spectator published my essay, Diary of a Transit Miracle, recounting the arduous march of NYC congestion pricing from a gleam in a trio of prominent New Yorkers’ eyes at the end of the 1960s, to the verge of startup at the upcoming stroke of midnight June 30, the startup time announced by the MTA last Friday.
Landing page for this post’s original version.
I’m cross-posting it here — the third post on the subject in this space in the past 12 months (following this in December and this post last June) — because the advent of congestion pricing in the U.S. is “a really big deal,” as a number of friends and colleagues have told me in recent weeks. As my new essay makes clear, charging motorists to drive into the heart of Manhattan isn’t just a rejection of unconstrained motordom, it’s a new beachhead in “externality pricing” — social-cost surcharging — of which carbon taxes are the ultimate form.
The essay features two governors, two mayors — one of whom I served a half-century ago as a lowly but admiring data cruncher — a civic “Walter Cronkite,” a Nobel economist, raucous transit activists, a gridlock guru and yours truly, plus a cameo appearance by Robert Moses. It includes footage of the historic 1969 press conference in which Mayor John Lindsay and two distinguished associates enunciated the core idea of using externality pricing to better balance automobiles and mass transit that animated the arduous but ultimately triumphant congestion pricing campaign.
— C.K., April 29, 2024
Diary of a Transit Miracle
A miracle is coming to New York City. Beginning on July 1, and barring a last-minute hitch, motorists will soon pay a hefty $15 to enter the southern half of Manhattan — the area bounded by the Hudson River, the East River and 60th Street.
An anticipated 15 percent or so of drivers will switch to transit, unsnarling roads within the “congestion zone” and routes leading to it. The other 80 or 90 percent will grumble but continue driving. That is by design. The toll bounty, a billion dollars a year, will finance subway enhancements like station elevators and digital signals that will increase train throughput and lure more car trips onto trains.
The result will be faster, smoother commutes, especially for car drivers and taxicab and Uber passengers, who will pay a modest surcharge of $1.25 to $2.50 per trip. Drivers of for-hire vehicles will benefit as well, as lesser gridlock leads to more fares.1
The miracle is three-fold: Winners will vastly outnumber losers; New York will be made healthier, calmer and more prosperous; and that this salutary measure is happening at all, after a half-century of setbacks.
Obstacles to congestion pricing
Congestion pricing, as the policy is known, faced formidable obstacles even beyond the difficulty inherent in asking a group of people to start forking over a billion dollars a year for something that’s always been free.
Congestion pricing also had to contend with: an ingrained pro-motoring ideology that casts any restraint on driving as a betrayal of the American Dream; a general aversion to social-cost surcharges (what economists call “externality pricing”); exasperation over the region’s balkanized and convoluted toll and transit regimes; and, of late, a decline in social solidarity and appeals to the common good.
The advent of congestion pricing in New York is, thus, cause not just for celebration but wonderment. How did this wonky yet radical idea advance to the verge of enactment?
Origins
The trail begins in the waning days of 1969, when newly re-elected mayor John Lindsay recruited two well-regarded New Yorkers to devise a plan to fend off a 50 percent rise in subway and bus fares.
William Vickrey, a Canadian transplant teaching at Columbia and a future Nobel economics laureate, was a protean theorist of externality pricing. New York-bred mediator Theodore Kheel was admired as a civic Walter Cronkite for his plain-spoken common sense.
Lindsay, too often dismissed as a lightweight, understood mass transit as key to loosening automobiles’ spreading chokehold over the city. He had made combating air pollution a pillar of his first term and was fast becoming an exemplar of urban environmentalism. From his municipal engineers, Lindsay knew that technology to clean up tailpipes still lay in the future. A transit fare hike that would add yet more vehicles to city streets imperiled his clean-air agenda.
The triumvirate proposed a suite of motorist fees to preserve the fare. Their program ― higher registration fees and gasoline taxes, a parking garage tax, doubled tolls ― though mild in today’s terms, threatened powerful bureaucracies and their auto allies. Newly dethroned “master-builder” Robert Moses opined that Kheel, in his zeal to save the fare, had “gone berserk over bridge and tunnel tolls.”2 The program went nowhere.
L to R: Kheel, Lindsay, Vickrey. Click arrow to view (please excuse two brief garbled passages toward end).
Moses was right to be alarmed. From a City Hall podium on Dec. 16, 1969, Mayor Lindsay showcased Kheel’s and Vickrey’s respective reports, “A Balanced System of Transportation is a Must” and “A Transit Fare Increase is Costly Revenue.” (Click link in still photo above to view 27-minute video.) The trio propounded a new urban doctrine rebalancing automobiles and public transportation: “Automobiles are strangling our cities… Starving mass transit imposes costs that are difficult to measure, yet real… Correcting the fiscal imbalance between transit and the automobile is key to enhancing our environment and quality of life…”
Their remarks set generations of urbanists on course toward congestion pricing.
Setbacks
Quantifying those precepts became my research agenda 40 years later. In the interim, two creditable attempts to enact congestion pricing crashed and burned.
The central element of Lindsay’s 1973 “transportation control plan” was tolls on the city’s East River bridges, a measure designed to eliminate enough traffic to satisfy federal clean-air standards. Though the plan’s formal demise didn’t come until 1977, in legislation written by liberal lawmakers from Brooklyn and Queens, the toll idea never stood a chance. Electronic tolling was 20 years away, and adding stop-and-go toll booths seemed more likely to compound vehicular exhaust than to cut it.
Three decades later, in 2007, Mayor Michael Bloomberg asked Albany to toll not just the same East River bridges but also the more-trafficked 60th Street “portal” to mid-Manhattan. Predictably, faux-populist legislators saw Bloomberg’s billionaire wealth as an invitation to denounce the congestion fee as an affront to the little guy.
The mayor may have hurt his cause by presenting congestion pricing primarily as a climate and pollution measure. The pollution rationale was no longer compelling in the way it had been in Lindsay’s day, as automotive engineers had slashed rates of toxic vehicle exhaust ten-fold. Appeals tied to global warming also fell flat; remember, congestion pricing contemplated that most drivers would stay in their fossil-fuel burning cars.
This isn’t to say that congestion pricing confers no climate benefits. Rather, the benefits are subtler ones that can be hard to convey to voters, such as making climate-friendly urban living more attractive. A further benefit may come as congestion pricing demonstrates the unique power of externality pricing, as explained below.
From the Rubble
Even as Bloomberg’s toll plan was faltering in Albany, new loci of support were germinating in the city.
Changing times demanded not just the intellectual leadership of think-tanks like the Regional Plan Association and the good-government Straphangers Campaign, but gritty, grassroots transit organizing. Enter the newly-minted Riders Alliance.
2017 subway handbill exemplified new militancy targeting Gov. Andrew Cuomo for failing transit.
As subway service began cratering in 2015, the inevitable result of budget-raiding by a skein of governors, the Alliance posted crowd-sourced photos of stalled trains and jammed platforms alongside demands for improved service from “#CuomosMTA.” Before long, the papers were pointing the finger at the governor not just in “Why Your Commute Is Bad” explainers but in tear-jerkers like the Times’ May 2017 classic, “Money Out of Your Pocket”: New Yorkers Tell of Subway Delay Woes.
The drumbeat was deafening. Cuomo finally blinked. On a Sunday in August 2017, he phoned the Times’ Albany bureau chief and handed him a scoop for the next day’s front page: Cuomo Calls Manhattan Traffic Plan an Idea ‘Whose Time Has Come’.
The “traffic plan” was congestion pricing.
Data Cruncher
Two months later, Cuomo’s staff summoned me to the midtown office of the consulting firm they had retained to “scope” congestion pricing ― essentially, to compute how much revenue tolls could generate. They wanted to see if an Excel spreadsheet model I had constructed and refined over the prior decade could aid their scoping process.
The model was called the Balanced Transportation Analyzer, a name bestowed in 2007 by Ted Kheel.
Ted, in his nineties, had recruited me to determine whether a large enough congestion toll could pay to make city transit free. The idea worked on paper but foundered politically. Nevertheless, Ted saw in my Excel modeling a way to capture phenomena like “rebound effects” (motorists driving more as road space frees up) and “mode switching” between cars, trains, buses and taxicabs, that he and Prof. Vickrey had identified in their 1969 work but lacked the computing ability to quantify.
Ted’s philanthropy enabled me over the next decade to expand, test and update my transportation modeling. With a hundred “tabs” and 160,000 equations, the “BTA” can instantly answer almost any conceivable question about New York congestion pricing, as well as these two central ones: how much revenue it will yield, and how much time will travelers save in lightened traffic and better transit.3
The BTA model aced its 2017 audition and became the computational engine for the congestion pricing legislation the governor’s team enacted into law in 2019. Its impact has been even broader.4 “Having the model helped make the case with the public, journalists, elected officials and others,” Eric McClure, director of the livable-streets advocacy group StreetsPAC, wrote recently, in part by helping congestion pricing proponents push back on opponents’ exaggerated claims of disastrous outcomes and their incessant demands for special treatment. The model may also have influenced the detailed toll design adopted by the MTA board earlier this year, which hewed close to the toll design I had recommended last summer.5
The BTA also provided sustenance during congestion pricing’s seven lean years ― the 2009-2016 period in which the torch was kept lit by a new triumvirate known as “Move NY” ― traffic guru “Gridlock” Sam Schwartz, the very able campaign strategist Alex Matthiessen, and myself. The model helped our team evangelize congestion pricing’s transformative benefits to elected officials and the public. This, I believe, was a key element in mustering the critical mass of support that ultimately swayed not one but two governors.
The Hochul Factor
New York Lieutenant Governor Kathy Hochul’s ascension to governor in August 2021 could have been congestion pricing’s death knell. The toll plan was adrift in the federal bureaucracy, and its latter-day champion Andrew Cuomo had exited in “me-too” disgrace. His successor, from distant Buffalo, wasn’t beholden to New York or congestion pricing.
Hochul, who as governor controls city and regional transit, could have disowned congestion pricing as convoluted, bureaucratic and tainted. Instead, she became a resolute and enthusiastic backer. Her spirited support, both in public and behind the scenes, became the decisive ingredient in shepherding congestion pricing to safety.
Why the new governor went all-in on congestion pricing awaits a future journalist or historian. Had she spurned it, the opprobrium from downstate transit advocates would have been intense; but there doubtless would have been cries of “good riddance” as well. Vickrey, Kheel and Riders Alliance notwithstanding, it’s not clear how closely New Yorkers — including transit users — connect congestion tolls to improved travel and a better city.
What makes Hochul’s embrace especially impressive is that congestion pricing is, in a real sense, an attack on a jealously guarded entitlement: the right to inconvenience others by usurping public space for one’s vehicle. The classic lament about entitlements’ iron grip is that “losers cry louder than winners sing.”6 Yet in this case, it seems, potential losers — actual and aspiring zone-bound drivers — are being out-sung by transit interests seeking, in Kheel’s 1969 words, a better balance between public transportation and automobiles.
Credits and Prospects
Let us now praise Andrew Cuomo’s crafting of the legislation that teed up congestion pricing’s successful run.
Rather than specifying a dollar price for the tolls, or a precise traffic reduction, his 2019 bill established a revenue target: sufficient earnings to bond $15 billion in transit investment — which equates to $1 billion a year to cover debt service. This device trained the public’s focus on the gain from congestion pricing (better transit) instead of the pain (the toll). Equally important, with this deft stroke, any toll exemption that a vocal minority might seek would mathematically trigger higher tolls for everyone else. The effect was vastly heightened scrutiny of requests for carve-outs.
Which cities will follow on New York’s heels? No U.S. urban area comes close to our trifecta of gridlock, transit and wealth. Sprawling Los Angeles or Houston, or even Chicago for that matter, might be better served by more granulated traffic tolls than New York’s all-or-none model.
Perhaps Asia’s megalopolises will be swept up in our wake. In the meantime, my focus will be on the holy grail of externality pricing: taxing carbon emissions. Every economist knows that the surest and fastest way to cut down on a “bad” is by taxing it rather than subsidizing possible alternatives. Yet that approach remains counter-intuitive and even anathema to nearly everyone else.
A huge and important legacy that New York congestion pricing could provide is to prove that intelligently taxing societal harms need not be electoral suicide. This proof could help unlock a treasure-trove of prosperity-enhancing pricing reforms including, most prominently, robust carbon taxing.
The author, a policy analyst based in New York City, worked in Mayor Lindsay’s Environmental Protection Administration in 1972-1974. He met Bill Vickrey in 1991 and worked closely with Ted Kheel from 2007 to 2010.
Endnotes
- The new passenger surcharges of $1.25 for taxicabs and $2.50 for “ride-hails” (principally Ubers) apply to trips touching the congestion zone. These will be partially offset by lower fares owing to shorter wait-time charges due to faster travel speeds.
- Quote is from Moses’ August 23, 1969 guest essay in Newsday, “Is Rubber to Pay for Rails?” (not digitally available).
- The current version of the BTA is publicly available at this link: (18 MB Excel file).
- See Fix NYC Advisory Panel Report, Appendix B, 2019.
- A Congestion Toll New York Can Live With, July 2023, by Charles Komanoff, co-authored with Columbia Business School economist Gernot Wagner.
- As pronounced by University of Michigan economist Joel Slemrod, in Goodbye, My Sweet Deduction, New York Times, by Eduardo Porter and David Leonhardt, Nov. 3, 2005.
This is a special guest editorial from Katusa Research.
The U.S. nuclear power industry is about to experience its biggest shift in decades. The White House plans to announce new executive orders that could make the Nuclear Regulatory Commission (NRC) largely powerless. These orders let the Department of Energy (DoE) and Department of Defense (DoD) skip the NRC’s strict rules. This will speed up the construction of new nuclear power plants.
For over 5 decades, the NRC has been the main government agency overseeing nuclear plant safety and licensing. But many experts and industry leaders say the NRC’s complicated rules and slow approvals have stopped new nuclear plants from being built.
The NRC’s licensing process has grown from a simple 50-page document to an overwhelming 1,100 pages. The last approved reactor needed about 12,000 pages of paperwork. It also had millions of supporting documents.
Because of these heavy rules and outdated 1970s standards, the NRC hasn’t approved any new nuclear plant designs since 1978. Former NRC Commissioner Jeffrey Merrifield said the agency “doesn’t know when to stop” with new regulations. This is a major reason why new nuclear projects struggle to move forward.
Why Both Political Parties Support Nuclear Energy
For the first time since President Nixon, both Democrats and Republicans agree on supporting nuclear power. Democrats want nuclear energy to help fight climate change and reach net-zero carbon goals. Republicans see it as vital for U.S. energy independence and creating new jobs.
Nuclear power is key to 3 big goals for the U.S.:
- Nuclear Exports. The U.S. can regain leadership in exporting nuclear technology, which is expected to be a $1.9 trillion global market by 2050. Currently, China and Russia control two-thirds of this market.
- National Security. Nuclear power supports the supply chain for nuclear weapons and is crucial for defense.
- Energy Security. Nuclear energy offers a reliable, self-sufficient power source, helping reduce dependence on foreign energy.
Because of these reasons, Congress has passed multiple laws over the past decade to force the NRC to update and speed up its licensing process. But progress has been slow.
Other countries like Canada and the UK have already updated their nuclear approval systems. Canada is investing heavily in next-generation nuclear technology to amplify its clean power supply.
In 2024, the U.S. Congress passed the ADVANCE Act, which pushes the NRC to modernize. It aims to make reviews for advanced nuclear reactors simpler and faster. Still, the NRC has struggled to implement these changes.
Power Shift to the Department of Energy and Defense
The new executive orders will shift power away from the NRC and give more control to the Department of Energy and the Department of Defense. Both agencies strongly support nuclear energy and have large budgets to back new projects.
In 2022, the DoE started a $6 billion Civil Nuclear Credit Program. It aims to extend the life of current reactors and support new types of nuclear reactors. It’s also giving $1.5 billion to reopen the Palisades nuclear plant—the first such reopening in U.S. history. The DoE’s former secretary, Jennifer Granholm, said the U.S. needs to triple its nuclear reactors by 2050.
The DoD also uses nuclear power for its massive energy needs and owns mobile nuclear reactors. It can take risks that private companies cannot and has a budget that could fund enough nuclear power to cover 85% of U.S. electricity demand.
The DoD and DoE plan to team up and invest in advanced nuclear reactors. They aim to connect a new reactor to the grid in 3 years.
Why This Could Be a Historic Moment
These moves could kickstart a nuclear renaissance in the U.S., similar to the scale of the Manhattan Project during World War II. The government has signed contracts with companies to build advanced reactors by 2029. Billions of dollars in funding are expected to flow to this sector.
Experts believe this push will lower the cost of nuclear energy by about 60%, making it more competitive with other power sources. This could open new doors in uranium mining, nuclear fuel production, infrastructure, and nuclear tech investment.
What This Means for Private Nuclear Companies
The expected executive orders could be a game changer for private companies working on nuclear technology. Startups and energy developers have struggled for years. They deal with long delays, high costs, and complex paperwork to get approval for new nuclear reactors. Some applications have taken more than 10 years and cost hundreds of millions of dollars before a single shovel hits the ground.
With the NRC pushed aside, companies might finally have a faster path to approve and build new designs. This is key for startups creating advanced nuclear reactors and small modular reactors (SMRs). SMRs are smaller, safer, and easier to build than traditional plants.
Now, instead of waiting for NRC approval, companies may be able to work directly with the DoE or the DoD. These agencies are more supportive and flexible. They already have funding programs, partnerships with developers, and a goal to build advanced reactors quickly.
Private firms like TerraPower, X-energy, and Oklo have been waiting for years to move forward. Under the new system, these companies could see faster permits, more government contracts, and easier access to funding. They may even get a chance to work on national defense or grid reliability projects led by the DoE or DoD.
This shift could spark a wave of innovation, job creation, and clean energy development across the country. If it works, it could also encourage more investors to put money into nuclear startups—knowing the government is serious about getting projects built.
The Clock Is Ticking
With the new executive orders expected soon, the nuclear industry and investors have limited time to prepare for this wave of change. Many believe this could be one of the most important energy transitions in decades and offer profitable opportunities for those ready to act.
- READ MORE: What is SMR? The Ultimate Guide to Small Modular Reactors
- RELATED: Live Uranium Prices Today
The post U.S. Nuclear Industry Set for Big Changes as Government Plans to Cut Red Tape appeared first on Carbon Credits.
Svante Technologies, a Canadian carbon capture company, has launched the world’s first commercial-scale gigafactory for carbon capture filters. This is a big step in the fight against climate change.
Located in Burnaby, British Columbia, the facility officially opened in May 2025. The factory will help speed up the use of carbon capture and storage (CCS) technologies by making the production of carbon filters faster and more cost-effective.
With rising global emissions and increased focus on net-zero goals, Svante’s new plant offers a timely solution. The gigafactory is built to capture millions of tons of carbon dioxide (CO₂) every year. It helps industries cut their carbon footprint and meet regulations. As the carbon capture market continues to grow, the facility could help change how industries respond to climate change.
Scaling Up: Inside the Burnaby Gigafactory
The 140,000-square-foot facility, named the Redwood City Gigafactory, is the first of its kind. Svante makes solid sorbent filters. These filters trap CO₂ from factories and even from the air. These filters are then integrated into carbon capture systems used in sectors such as cement, steel, hydrogen, and power generation.
Svante’s filter technology relies on a material called metal-organic frameworks (MOFs). These materials are known for their high surface area and ability to trap gas molecules like CO₂.
Compared to traditional systems, Svante’s filters are lighter, more compact, and faster to produce. They need less energy to regenerate. This leads to lower costs and fewer emissions during operation.
The facility can produce filter modules to capture up to 10 million tonnes of CO₂ each year, according to company estimates. That’s roughly the equivalent of taking over 2 million gasoline-powered cars off the road each year.
The Redwood factory is designed for rapid manufacturing and can scale up production as demand grows. The factory uses automation and digital tools. It also monitors data to boost quality control and cut waste.
Partnerships and Financial Support Fuel Growth
The construction and launch of the gigafactory would not have been possible without strong public and private backing. Svante raised $318 million in total since 2007, including a major $145 million Series E fundraising round in 2022.
Investors include: Chevron New Energies, United Airlines Ventures, Samsung Engineering & Construction, Temasek, GE Vernova, and Breakthrough Energy Ventures.
In addition to private investment, the Government of Canada contributed CA$25 million through its Strategic Innovation Fund. This funding sped up factory construction. It also shows Canada’s commitment to leading in carbon management technologies.
Beyond financing, Svante is also working with several partners to expand its reach. Here are some of their major partnerships:
-
Samsung E&A signed a joint development agreement to build skid-mounted modular carbon capture plants.
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Climeworks, a direct air capture company, is using Svante filters for its next-generation CO₂ removal systems.
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Tenaska, a U.S. energy firm, is working with Svante to develop end-to-end CCS projects that include capture, transportation, and storage of CO₂.
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BASF signed a commercial agreement to supply Svante with CALF-20, an advanced MOF sorbent used in its filter systems.
These partnerships lower project risk, simplify deployment, and encourage CCS technology use in various sectors.
- READ MORE: Shell, Equinor, and TotalEnergies Expand Northern Lights CCS with $714 Million Investment
Market Drivers and Industry Demand
Demand for carbon capture technology is growing rapidly. According to BloombergNEF, the global market for carbon capture and removal could reach $100 billion by 2030. This growth comes from stricter climate rules, net-zero goals, and rising investment in clean tech.
- If all the planned carbon capture projects are built and running by 2030, they could remove around 279 million tons of CO₂ a year—still just 0.6% of the emissions the world produces today.
For many industries—especially heavy emitters like cement, steel, and oil refining—carbon capture is one of the few practical solutions to reduce emissions. These sectors usually have few choices for using renewable energy. They need solutions that fit into their current infrastructure.
The International Energy Agency (IEA) states that to stay on track for net-zero emissions by 2050, the world will need to capture over 1.2 billion tonnes of CO₂ per year by 2030. Today, only about 50 million tonnes are captured annually.
Facilities like Svante’s gigafactory are crucial to scaling up the supply chain and meeting this growing need.
In the United States, the Inflation Reduction Act has also increased interest in carbon capture. The law boosts the value of the 45Q tax credit to $85 per tonne of CO₂ captured and stored. This financial support has made projects more attractive to investors and energy companies.
Building a Carbon Capture Economy
The launch of Svante’s gigafactory is more than a milestone for the company—it signals a shift in how carbon capture solutions can be delivered. Svante focuses on mass production, modular systems, and global partnerships. This approach aims to make carbon capture cheaper, faster, and more scalable.
CEO Claude Letourneau remarked:
“We’re also proud to launch this transformative manufacturing facility in Canada, which allows us to bring the supply chain to our shores and bring carbon management solutions closer to the needs of emitting industries in North America.”
Also, Svante’s method helps create a carbon market. Here, captured emissions become tradable carbon credits. As carbon pricing rises, expected to exceed $50 per tonne in some markets by 2026, industries may invest more in carbon removal for the long term.
The Redwood facility’s success could lead to new ways to use carbon. Captured CO₂ might be turned into fuels, building materials, or other products. This circular economy model can help industries not only reduce their footprint but also find new revenue streams.
Laying the Foundation for a Cleaner Future
Svante Technologies’ new gigafactory marks a major development in the carbon capture industry. As countries race to meet climate goals, scalable solutions like Svante’s are becoming essential. The Burnaby plant will focus on innovation, teamwork, and quick production. It will be vital in cutting industrial emissions.
By combining advanced materials with modern manufacturing, Svante is helping to make carbon capture more practical and affordable. Its efforts contribute to a growing movement to reduce global emissions and move toward a cleaner, more sustainable economy.
The post Svante Opens World’s First Gigafactory for Carbon Capture in Canada appeared first on Carbon Credits.
Carbon Footprint
How EV Adoption is Reshaping Global Oil Demand: IEA’s 2025 Outlook and 2030 Forecast
For decades, oil was the backbone of global transport. It powered nearly every vehicle, pushing oil demand ever higher. Infrastructure significantly grew around extraction, refining, and distribution. But with mounting concerns over emissions and climate change, the search for cleaner alternatives gained momentum. Electric vehicles (EVs) have emerged as a game changer in this shift.
IEA recently published its Global EV Outlook 2025, where it has predicted,
- By 2030, EVs are set to replace more than 5 million barrels of oil per day (mb/d) globally, with China’s expanding EV fleet making up half of that impact.
Let’s deep dive into this report and understand how the rise of EVs is impacting global oil demand.
The Rise of EVs and Its Impact on Global Oil Demand
By the end of 2024, the global electric car fleet reached nearly 58 million, more than triple the number in 2021. These EVs now make up about 4% of the global passenger car fleet.
The trend is strongest in China, where roughly 1 in 10 cars is electric. In Europe, the ratio is 1 in 20, but growing fast.
The UK, the second-largest car market in Europe, saw EVs take nearly 30% of new car sales in 2024. This rise was driven by the new Vehicle Emissions Trading Scheme, which required 22% of new car registrations to be battery electric or hydrogen fuel cell models.
With flexible credit borrowing allowed, manufacturers achieved nearly 20% EV sales. Norway led with near-total electrification. 88% of new cars sold were fully electric, and another 3% were plug-in hybrids.
As a result, Norway’s oil demand from the road fell 12% from 2021 to 2024. Denmark also saw a big jump, with EVs reaching 56% of new car sales in 2024 and nearly 100,000 units sold.
Meanwhile, Denmark is also seeing strong progress. In the latest figures, the share of electric cars jumped by 10 percentage points, reaching 56%, with nearly 100,000 EVs sold.
Oil Demand Drops as EV Fleet Grows Rapidly
Surge in EVs on roads came heavy on the oil industry. IEA says that electric vehicles slashed oil demand by over 1.3 million barrels per day (mb/d) in 2024.
It was a steep 30% jump from 2023, and the present figures are nearly equal to all the oil Japan currently uses for transportation.
Passenger cars and small vans classified as light-duty vehicles (LDVs) drive most of this shift. Today, they account for 80% of the oil displaced by EVs. By 2030, their share will slightly drop to 77% as electric trucks and buses gain traction.
This is because of the rapidly evolving batteries and stronger charging infrastructure, these heavy-duty vehicles will likely displace nearly 1 mb/d of oil within the decade.
EVs Cut Costs and Boost Energy Security
IEA analysts highlighted that even if global oil prices fall to $40 per barrel, EVs remain cost-effective especially with home charging. This way drivers can continue saving money by switching to electric vehicles.
In China, fast public charging costs about twice as much as charging at home. Yet, EVs still offer better fuel savings than gas-powered cars. As more people choose EVs, countries reduce their oil use and become less vulnerable to price shocks. This shift not only saves money but also strengthens national energy security.
Strong Policies Keep EV Adoption on Track
Although trade tensions, slow economic growth, and oil price drops may hurt overall car sales, these issues affect the market size more than the EV share. In China, steady government support and affordable EV prices continue to drive sales forward.
Meanwhile, in Europe, even though EVs cost more than traditional cars, long-term policies and past crisis responses help keep the market moving.
Additionally, Norway planned to raise taxes on traditional internal combustion engine (ICE) cars and plug-in hybrids (PHEVs) from April. This was meant to boost EV sales and help the country reach its goal of 100% zero-emission car sales by the end of 2025.
The 2025 EV outlook shows strong momentum. Despite economic uncertainty, EVs continue to grow thanks to smart policies, lower battery costs, and better infrastructure. As countries push for cleaner transportation, EVs are helping the world move toward a more sustainable, low-carbon future.
With over 58 million electric cars already on the road by the end of 2024—and more to come—the transition is well underway. This shift not only transforms the oil market but also puts the world on a clearer, more energy-secure path forward.
Global Oil Demand: What the Forecasts Say
We found the latest oil demand forecast in the International Energy Forum’s monthly comparative analysis of the oil market report. It highlights the following:
OPEC
OPEC expects oil demand to grow by around 1.3 million barrels per day (mb/d) in both 2025 and 2026. Almost all this growth will come from non-OECD countries, where demand is expected to rise by 1.2 mb/d each year. In contrast, OECD countries will see only a small increase of 0.1 mb/d annually.
EIA
The US Energy Information Administration (EIA) recently increased its 2025 forecast by 0.1 mb/d compared to last month. It now expects demand to rise by 1.0 mb/d next year. However, this is 0.4 mb/d lower than the estimate made in January 2025. For 2026, the EIA sees demand rising more slowly, by 0.9 mb/d.
IEA
The IEA has a more cautious view. It expects global oil demand to grow by 0.7 mb/d in 2025, even though OECD demand may fall by about 120,000 barrels per day. For 2026, the IEA sees demand increasing by 0.8 mb/d. According to its latest data, average yearly demand growth between 2022 and 2024 was just 0.3 mb/d.
To simplify it, the gap between the highest and lowest global oil demand forecasts is 0.6 mb/d for 2025 and 0.5 mb/d for 2026. These differences highlight the uncertainty that still surrounds future oil demand.
Furthermore, as electric vehicles gain popularity, governments are starting to feel the financial impact. Fuel taxes, which have been a key source of public funding for roads and transport, are shrinking. In 2022 alone, the global shift to EVs resulted in an estimated $9 billion drop in fuel tax revenues.
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