The scale of China’s change over the decade is impressive, but what is even more remarkable is that the pace of change is accelerating rapidly. From 2019 to 2024, there was a noticeable increase in electric vehicles on the roads. The air is clearer, and the streets are quieter. Most recently, it is clear that electric vehicles (EV) of all kinds are now the preferred mode of transportation, just 12 months on.
Furthermore, when visiting a showroom for a relatively new EV company, I was told that the EV was a lifestyle choice and that Chinese consumers seek entertainment from their vehicles. For this, they expect a high level of digital connectivity that allows them to integrate automation into their busy lifestyles, with the ultimate goal, sometime soon, being an autonomous driving level that allows the ‘driver’ to get on with their life. This experience, along with my reflections on the pace of change, has made me realise that, at least in China, peak oil demand may already have happened, and the rate of demand destruction could accelerate in the country that is the world’s largest oil importer.
In China, the sustainable energy transition is seen as an opportunity to revitalise a stagnating economy. The clean tech sectors—solar, wind, and EVs—are key drivers of growth alongside digitalisation and AI. They also reduce reliance on oil imports and will limit the role of natural gas in the energy mix. Therefore, the rapid electrification of the economy will bring multiple benefits: it improves energy security by lowering fossil fuel imports, improves the environment for China’s people by reducing air pollution, helps China meet its recently increased climate change targets, and stimulates innovation and economic growth.
China’s leaders clearly believe that becoming the world’s first ‘electrostate’ will enable the country to compete with the world’s longest running ‘petrostate,’ the US. EVs are no silver bullet, and it should be caveated that the growth in China is following the same pattern of the government stimulating investment, resulting in massive overproduction and falling prices, with many of the 200 or so EV makers sure to go bust. The question is how many and who will survive. It is incredibly wasteful but will leave a globally competitive industry with a few key players.
End of oil
The pace of change in China serves as an early warning that the shift away from fossil fuels and carbon-intensive products might happen more rapidly than forecasts by organisations such as OPEC and the IEA in their latest current policies scenario suggest.
The Gulf states have long recognised the need to prepare for the end of the oil era. For some, this has come early due to depleted reserves. For others, the hope is that their low lifting costs and low carbon intensity will give them a competitive edge in a declining market when it arrives. However, they are also making significant efforts to cut fugitive emissions and improve energy efficiency in their energy-heavy societies. This benefits their businesses, but it will come as a shock to domestic consumers, who are accustomed to subsidised prices for their gas-guzzling vehicles.
A look at some of the classic Middle East petrostates shows some have very limited solar panels on their flat rooftops. Things just do not add up. It is clear that some petrostates are poorly prepared for an accelerated decline in demand for oil and its products, and that—far from an opportunity—the sustainable energy transition poses an existential threat to their economic model and way of life. Sooner rather than later, drastic times will call for drastic measures.
No doubt there is much complexity in the energy transition now underway, but also it should be noted that there are shifts in the balance of power away from those who export fossil fuels towards those who seize opportunities in investing in a low-carbon future. Indeed, there is still substantial fossil fuel demand to meet, and that may require ongoing investment to match supply with decreasing demand. However, the overall direction is clear, and the pace of change seems to be quickening.
Michael Bradshaw is professor of global energy at Warwick Business School, UK and a researcher at the UK Energy Research Centre. To read Outlook 2026 in full, click here.
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