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Breaking the Ice: Mapping a Changing Arctic

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Mapping A Changing Arctic

A Changing Arctic

Breaking the Ice: Mapping a Changing Arctic

The Arctic is changing. As retreating ice cover makes this region more accessible, nations with Arctic real estate are thinking of developing these subzero landscapes and the resources below.

As the Arctic evolves, a vast amount of resources will become more accessible and longer shipping seasons will improve Arctic logistics. But with a changing climate and increased public pressure to limit resource development in environmentally sensitive regions, the future of northern economic activity is far from certain.

This week’s Chart of the Week shows the location of major oil and gas fields in the Arctic and the possible new trade routes through this frontier.

A Final Frontier for Undiscovered Resources?

Underneath the Arctic Circle lies massive oil and natural gas formations. The United States Geological Survey estimates that the Arctic contains approximately 13% of the world’s undiscovered oil resources and about 30% of its undiscovered natural gas resources.

So far, most exploration in the Arctic has occurred on land. This work produced the Prudhoe Bay Oil Field in Alaska, the Tazovskoye Field in Russia, and hundreds of smaller fields, many of which are on Alaska’s North Slope, an area now under environmental protection.

Land accounts for about 1/3 of the Arctic’s area and is thought to hold about 16% of the Arctic’s remaining undiscovered oil and gas resources. A further 1/3 of the Arctic area is comprised of offshore continental shelves, which are thought to contain enormous amounts of resources but remain largely unexplored by geologists.

The remaining 1/3 of the Arctic is deep ocean waters measuring thousands of feet in depth.

The Arctic circle is about the same geographic size as the African continent─about 6% of Earth’s surface area─yet it holds an estimated 22% of Earth’s oil and natural gas resources. This paints a target on the Arctic for exploration and development, especially with shorter seasons of ice coverage improving ocean access.

Thawing Ice Cover: Improved Ocean Access, New Trading Routes

As Arctic ice melts, sea routes will stay navigable for longer periods, which could drastically change international trade and shipping. September ice coverage has decreased by more than 25% since 1979, although the area within the Arctic Circle is still almost entirely covered with ice from November to July.

RouteLengthIce-free Time
Northern Sea Route4,740 Nautical Miles6 weeks of open waters
Transpolar Sea Route4,179 Nautical Miles2 weeks of open waters
Northwest Passage5,225 Nautical MilesPeriodically ice-free
Arctic Bridge3,600 Nautical MilesIce-free

Typically shipping to Japan from Rotterdam would use the Suez Canal and take about 30 days, whereas a route from New York would use the Panama Canal and take about 25 days.

But if the Europe-Asia trip used the Northern Sea Route along the northern coast of Russia, the trip would last 18 days and the distance would shrink from ~11,500 nautical miles to ~6,900 nautical miles. For the U.S.-Asia trip through the Northwest Passage, it would take 21 days, rather than 25.

Control of these routes could bring significant advantages to countries and corporations looking for a competitive edge.

Competing Interests: Arctic Neighbors

Eight countries lay claim to land that lies within the Arctic Circle: Canada, Denmark (through its administration of Greenland), Finland, Iceland, Norway, Russia, Sweden, and the United States.

There is no consistent agreement among these nations regarding the claims to oil and gas beneath the Arctic Ocean seafloor. However, the United Nations Convention on the Law of the Sea provides each country an exclusive economic zone extending 200 miles out from its shoreline and up to 350 miles, under certain geological conditions.

Uncertain geology and politics has led to overlapping territorial disputes over how each nation defines and maps its claims based on the edge of continental margins. For example, Russia claims that their continental margin follows the Lomonosov Ridge all the way to the North Pole. In another, both the U.S. and Canada claim a portion of the Beaufort Sea, which is thought to contain significant oil and natural gas resources.

To Develop or Not to Develop

Just because the resources are there does not mean humans have to exploit them, especially given oil’s environmental impacts. Canada’s federal government has already returned security deposits that oil majors had paid to drill in Canadian Arctic waters, which are currently off limits until at least 2021.

In total, the Government of Canada returned US$327 million worth of security deposits, or 25% of the money oil companies pledged to spend on exploration in the Beaufort Sea. In addition, Goldman Sachs announced that it would not finance any projects in the U.S.’s Arctic National Wildlife Refuge.

The retreat of Western economic interests in the Arctic may leave the region to Russia and China, countries with less strict environmental regulations.

Russia has launched an ambitious plan to remilitarize the Arctic. Specifically, Russia is searching for evidence to prove its territorial claims to additional portions of the Arctic, so that it can move its Arctic borderline — which currently measures over 14,000 miles in length — further north.

In a changing Arctic, this potentially resource-rich region could become another venue for geopolitical tensions, again testing whether humans can be proper stewards of the natural world.

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Energy

Mainstream EV Adoption: 5 Speedbumps to Overcome

The pace of mainstream EV adoption has been slow, but is expected to accelerate as automakers overcome these five critical challenges.

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Mainstream EV Adoption: 5 Speedbumps to Overcome

Many would agree that a global shift to electric vehicles (EV) is an important step in achieving a carbon-free future. However, for various reasons, EVs have so far struggled to break into the mainstream, accounting for just 2.5% of global auto sales in 2019.

To understand why, this infographic from Castrol identifies the five critical challenges that EVs will need to overcome. All findings are based on a 2020 survey of 10,000 consumers, fleet managers, and industry specialists across eight significant EV markets.

The Five Challenges to EV Adoption

Cars have relied on the internal combustion engine (ICE) since the early 1900s, and as a result, the ownership experience of an EV can be much more nuanced. This results in the five critical challenges we examine below.

Challenge #1: Price

The top challenge is price, with 63% of consumers believing that EVs are beyond their current budget. Though many cheaper EV models are being introduced, ICE vehicles still have the upper hand in terms of initial affordability. Note the emphasis on “initial”, because over the long term, EVs may actually be cheaper to maintain.

Taking into account all of the running and maintenance costs of [an EV], we have already reached relative cost parity in terms of ownership.

—President, EV consultancy, U.S.

For starters, an EV drivetrain has significantly fewer moving parts than an ICE equivalent, which could result in lower repair costs. Government subsidies and the cost of electricity are other aspects to consider.

So what is the tipping price that would convince most consumers to buy an EV? According to Castrol, it differs around the world.

CountryEV Adoption Tipping Price ($)
🇯🇵 Japan$42,864
🇨🇳 China $41,910
🇩🇪 Germany$38,023
🇳🇴 Norway$36,737
🇺🇸 U.S.$35,765
🇫🇷 France$31,820
🇮🇳 India$30,572
🇬🇧 UK$29,883
Global Average$35,947

Many budget-conscious buyers also rely on the used market, in which EVs have little presence. The rapid speed of innovation is another concern, with 57% of survey respondents citing possible depreciation as a factor that prevented them from buying an EV.

Challenge #2: Charge Time

Most ICE vehicles can be refueled in a matter of minutes, but there is much more uncertainty when it comes to charging an EV.

Using a standard home charger, it takes 10-20 hours to charge a typical EV to 80%. Even with an upgraded fast charger (3-22kW power), this could still take up to 4 hours. The good news? Next-gen charging systems capable of fully charging an EV in 20 minutes are slowly becoming available around the world.

Similar to the EV adoption tipping price, Castrol has also identified a charge time tipping point—the charge time required for mainstream EV adoption.

CountryCharge Time Tipping Point (minutes)
🇮🇳 India35
🇨🇳 China34
🇺🇸 U.S.30
🇬🇧 UK30
🇳🇴 Norway29
🇩🇪 Germany29
🇯🇵 Japan29
🇫🇷 France27
Global Average31

If the industry can achieve an average 31 minute charge time, EVs could reach $224 billion in annual revenues across these eight markets alone.

Challenge #3: Range

Over 70% of consumers rank the total range of an EV as being important to them. However, today’s affordable EV models (below the average tipping price of $35,947) all have ranges that fall under 200 miles.

Traditional gas-powered vehicles, on the other hand, typically have a range between 310-620 miles. While Tesla offers several models boasting a 300+ mile range, their purchase prices are well above the average tipping price.

For the majority of consumers to consider an EV, the following range requirements will need to be met by vehicle manufacturers.

CountryRange Tipping Point (miles)
🇺🇸 U.S.321
🇳🇴 Norway315
🇨🇳 China300
🇩🇪 Germany293
🇫🇷 France289
🇯🇵 Japan283
🇬🇧 UK283
🇮🇳 India249
Global Average291

Fleet managers, those who oversee vehicles for services such as deliveries, reported a higher average EV tipping range of 341 miles.

Challenge #4: Charging Infrastructure

Charging infrastructure is the fourth most critical challenge, with 64% of consumers saying they would consider an EV if charging was convenient.

Similar to charge times, there is much uncertainty surrounding infrastructure. For example, 65% of consumers living in urban areas have a charging point within 5 miles of their home, compared to just 26% for those in rural areas.

Significant investment in public charging infrastructure will be necessary to avoid bottlenecks as more people adopt EVs. China is a leader in this regard, with billions spent on EV infrastructure projects. The result is a network of over one million charging stations, providing 82% of Chinese consumers with convenient access.

Challenge #5: Vehicle Choice

The least important challenge is increasing the variety of EV models available. This issue is unlikely to persist for long, as industry experts believe 488 unique models will exist by 2025.

Despite variety being less influential than charge times or range, designing models that appeal to various consumer niches will likely help to accelerate EV adoption. Market research will be required, however, because attitudes towards EVs vary by country.

CountryConsumers Who Believe EVs Are More Fashionable Than ICE Vehicles (%)
🇮🇳 India70%
🇨🇳 China68%
🇫🇷 France46%
🇩🇪 Germany40%
🇺🇸 UK40%
🇯🇵 Japan39%
🇺🇸 U.S.33%
🇳🇴 Norway 31%
Global Average48%

A majority of Chinese and Indian consumers view EVs more favorably than traditional ICE vehicles. This could be the result of a lower familiarity with cars in general—in 2000, for example, China had just four million cars spread across its population of over one billion.

EVs are the least alluring in the U.S. and Norway, which coincidentally have the highest GDP per capita among the eight countries surveyed. These consumers may be accustomed to a higher standard of quality as a result of their greater relative wealth.

So When Do EVs Become Mainstream?

As prices fall and capabilities improve, Castrol predicts a majority of consumers will consider buying an EV by 2024. Global mainstream adoption could take slightly longer, arriving in 2030.

Caution should be exhibited, as these estimates rely on the five critical challenges being solved in the short-term future. This hinges on a number of factors, including technological change, infrastructure investment, and a shift in consumer attitudes.

New challenges could also arise further down the road. EVs require a significant amount of minerals such as copper and lithium, and a global increase in production could put strain on the planet’s limited supply.

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Visualizing the Range of EVs on Major Highway Routes

We visualize how far popular EV models will take you on real-world routes between major cities, and which are the most cost effective.

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The Range of EVs on Major Highway Routes

Between growing concerns around climate change, new commuting behaviors due to COVID-19, and imminent policy changes, the global transition to electric vehicles (EVs) is well under way.

By the year 2040, sales of electric vehicles are projected to account for 58% of new car sales, up from just 2.7% currently.

But switching from a gasoline car to an electric one is not seamless. With charging and range capacities to consider, and the supporting infrastructure still being slowly rolled out in many parts of the world, understanding the realities of EV transportation is vital.

Above, we highlight 2020 all-electric vehicle range on well-recognized routes, from California’s I-5 in the U.S. to the A2 autobahn in Germany. The data on estimated ranges and costs are drawn from the U.S. EPA as well as directly from manufacturer websites.

The EV Breakdown: Tesla is King of Range

For many consumers, the most important aspect of an electric vehicle is how far they can travel on a single charge.

Whether it’s for long commutes or out-of-city trips, vehicles must meet a minimum threshold to be considered practical for many households. As the table below shows, Tesla’s well-known EVs are far-and-away the best option for long range drivers.

VehicleRange (miles)Range (km)MSRPCost per mile
Tesla Model S Long Range Plus402647$74,990$186.54
Tesla Model X Long Range Plus351565$79,990$227.89
Tesla Model S Performance348560$94,990$272.96
Tesla Model 3 Long Range322518$46,990$145.93
Tesla Model Y Long Range316509$49,990$158.20
Tesla Model X Performance305491$99,990$327.84
Tesla Model 3 LR Performance299481$54,990$183.91
Tesla Model Y Performance291468$59,990$206.15
Polestar 2275443$59,900$217.82
Chevrolet Bolt EV259417$36,620$141.39
Hyundai Kona Electric258415$37,190$144.15
Tesla Model 3 Standard Range Plus250402$37,990$151.96
Kia Niro EV239385$39,090$163.56
Jaguar I-PACE234377$69,850$298.50
Nissan LEAF e+ S226364$38,200$169.03
Audi e-tron Sportback218351$69,100$316.97
Nissan LEAF e+ SV/SL215346$39,750$184.88
Audi e-tron204328$65,900$323.04
Porsche Taycan 4S Perf Battery Plus203327$112,990$556.60
Porsche Taycan Turbo201323$153,510$763.73
Porsche Taycan Turbo S192309$187,610$977.14
Hyundai IONIQ Electric170274$33,045$194.38
BMW i3153246$44,450$290.52
Nissan LEAF149240$31,600$212.08
MINI Cooper SE110177$29,900$271.82
Fiat 500e84135$33,460$398.33

In an industry where innovation and efficiency are vital, Tesla’s first-mover advantage is evident. From the more affordable Model 3 to the more luxurious Model S, the top eight EVs with the longest ranges are all Tesla vehicles.

At 402 miles (647 km), the range of the number one vehicle (the Tesla Model S Long Range Plus) got 127 miles more per charge than the top non-Tesla vehicle, the Polestar 2—an EV made by Volvo’s standalone performance brand.

Closer Competition in Cost

Though Tesla leads on overall range and battery capacity, accounting for the price of each vehicle shows that cost-efficiency is far more competitive among brands.

By dividing the retail price by the maximum range of each vehicle, we can paint a clearer picture of efficiency. Leading the pack is the Chevrolet Bolt, which had a cost of $141.39/mile of range in 2020 while still placing in the top 10 for range with 259 miles (417 km).

Just behind in second place was the Hyundai Kona electric at $144.15/mile of range, followed by the Tesla Model 3—the most efficient of the automaker’s current lineup. Rounding out the top 10 are the Nissan LEAF and Tesla Model S, but the difference from number one to number ten was minimal, at just over $45/mile.

Top 10 All-Electric Vehicles by Cost Efficiency
VehicleCost per mile
Chevrolet Bolt EV$141.39
Hyundai Kona Electric$144.15
Tesla Model 3 Long Range$145.93
Tesla Model 3 Standard Range Plus$151.96
Tesla Model Y Long Range$158.20
Kia Niro EV$163.56
Nissan LEAF e+ S$169.03
Tesla Model 3 LR Performance$183.91
Nissan LEAF e+ SV/SL$184.88
Tesla Model S Long Range Plus$186.54

Higher Ranges and Lower Costs on the Horizon

The most important thing to consider, however, is that the EV industry is entering a critical stage.

On one hand, the push for electrification and innovation in EVs has driven battery capacity higher and costs significantly lower. As batteries account for the bulk of weight, cost, and performance in EVs, those dividends will pay out in longer ranges and greater efficiencies with newer models.

Equally important is the strengthening global push for electric vehicle adoption. In countries like Norway, EVs are already among the best selling cars on the market, while adoption rates in China and the U.S. are steadily climbing. This is also being impacted by policy decisions, such as California’s recent announcement that it would be banning the sale of gasoline cars by 2035.

Meanwhile, the only thing outpacing the growing network of Tesla superchargers is the company’s rising stock price. Not content to sit on the sidelines, competing automakers are rapidly trying to catch up. Nissan’s LEAF is just behind the Tesla Model 3 as the world’s second-best-selling EV, and Audi recently rolled out a supercharger network that can charge its cars from 0% to 80% at a faster rate than Tesla.

As the tidal wave of electric vehicle demand and adoption continues to pick up steam, consumers can expect increasing innovation to drive up ranges, decrease costs, and open up options.

Correction: A previous version of this graphic showed a European route that was the incorrect distance.

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