IEA projects that EV adoption could lead to nearly $100B fuel tax shortfall by 2030

IEA projects that EV adoption could lead to nearly $100B fuel tax shortfall by 2030

According to a recent report from the International Energy Agency (IEA), the increasing adoption of electric vehicles (EVs) could lead to an approximately $100 billion fuel tax shortfall by the year 2030.

The report by IEA, the world’s top energy watchdog, has come in the wake of the fact that governments across the world are launching clean fuel initiatives and subsidies for green vehicles to promote the use of EVs by an increasing number of people.

Going by the IEA’s estimates, based on the condition that EVs will account for nearly 30 percent of new car and truck sales by 2030, governments will apparently have to forgo $92 billion in revenues from duties imposed on conventional fuels.

However, as opposed to the IEA’s projections, a more conservative outlook based on current and announced policies by governments indicates that the revenue which is likely to be lost from fuel taxes will be around $47 billion in 2030, with barely 2.6m b/d of petrol and diesel expected to be displaced by electricity.

Meanwhile, with regard to the fuel tax shortfall likely to be caused by increased EV adoption, the IEA said in its report that the notable increase in the estimate of forgone revenues for the 2030 timeframe suggests that “alternative taxation systems” will be needed by the governments “to retain sufficient income to invest in and maintain infrastructure, as well as to cover externalities from road transport.”