Transportation systems are transforming rapidly. Vehicle electrification, digitalisation, policy changes, and new customer preferences are driving this transformation.
According to the International Energy Agency (IEA), decarbonising the transportation sector in line with the Paris Agreement goals will require annual investments of nearly $1.1 trillion in 2050, up from $150 billion in 2020.
Businesses of all stripes and colours can capitalise on this market opportunity while contributing to create a more sustainable world. Fleet decarbonisation, facilitating data sharing and creating sustainable commuting policies are impactful levers in this transition.
Mobility provides access to employment, education, healthcare and leisure, and is a key indicator of economic vitality and human well-being. Lack of mobility during the Covid-19 pandemic has contributed to a sharp economic slowdown, and many mobility service providers, including public transit authorities, have seen revenues decline.
Despite the dip over the last year, demand will rebound; most acutely in urban regions. Nearly 2.5 billion additional people will live in urban areas by 2050. Consequently, passenger mobility demand is expected to increase by almost 163 per cent between 2015 and 2050 and 250 per cent for freight transportation.
The challenge ahead will be to absorb this growth while minimising its adverse impacts. Urban sprawl, personal car ownership, unreliable and sparse public transit coverage, and lack of alternative mobility options exacerbate these challenges. Transportation contributes nearly 24 per cent to global carbon dioxide emissions, with 75 per cent coming from road transportation. Particulate emissions from road transportation are a major cause of urban air pollution, contributing to 4.2 million excess deaths per year, a significant majority of whom are pedestrians and cyclists. Congestion on US roads alone contributes to upwards of $160 billion in losses annually. Finally, transportation systems in many parts of the world are inequitable and inaccessible, negatively affecting women, the elderly and people from marginalised communities.
We must redesign our transportation systems to be clean, safe, accessible and efficient.
Significantly, urban transportation needs to meet Paris Agreement goals. Recently, the IEA proposed that no new internal combustion engine (ICE) cars be sold after 2035, if we are to limit global warming to 1.5°C. Sales of zero-carbon heavy trucks for freight must reach 50 per cent by 2035.
However, switching to zero-carbon vehicles alone is not enough to meet decarbonisation targets. We must think holistically to decarbonise the entire transportation value chain and redesign urban spaces that can enable this transition. Businesses will play a major role in driving this change.
The World Business Council for Sustainable Development (WBCSD) is working with Microsoft and other companies to harness technological and business model disruptions, and behavioural trends for a sustainable mobility future for all. Guided by the Sustainable Development Goals, Paris Agreement targets and our vision of a world in which more than nine billion people can live well, within planetary boundaries by 2050. WBCSD delivers business solutions to some of the most challenging sustainability issues. Our Transforming Urban Mobility (TUM) programme convenes leading businesses across the mobility value chain to develop collaborative solutions that help companies advance their own sustainability transition, and play a leading role in advancing sustainable urban mobility in cities around the world. Historically, much of the data in the transportation sector originated from transportation surveys. New near-real-time data from vehicles, smartphones, on-street sensors, banking and payments systems have helped birth new technological offerings. Advanced cloud services and platforms to collect, merge and process data, and artificial intelligence that can help generate new insights from this data will be game-changers.
A sustainable mobility future is likely to take the form of progressively more intelligent transportation systems underpinned by a ‘nervous system’ that coordinates, facilitates and governs sharing of data. Such systems will coordinate multiple actors, supply and demand to achieve sustainable mobility goals, generate economic value and improve transportation experiences.
Data sharing enables multiple use cases necessary to deliver sustainable mobility. Notable among these is mobility-as-a-service (MaaS). MaaS facilitates a transition away from personal car usership by offering a seamless interface to discover, book and pay for multimodal transportation options such as public transit, shared bicycles and cars, and scooters. While so far, MaaS has fallen short of its potential, a fully integrated offering can help avoid additional trips, offer convenient and enjoyable transportation options, and nudge customers towards sustainable options.
Besides MaaS, frictionless data sharing can unlock multiple other use cases for both passenger and freight transportation. This includes enabling dynamic access and speed management through geofencing, dynamic mobility demand and capacity management, and enabling freight asset sharing for improving transportation efficiencies.
Well-orchestrated policies will be critical to shape future data-sharing ecosystems, realise shared value for the public and private sectors, and achieve the desired sustainability outcomes. WBCSD TUM’s member companies – with Microsoft in a leading role, in collaboration with the Sustainable Urban Mobility for All (SuM4All) and the International Road Federation, developed actionable guidance for policy makers to enable data sharing.
Additionally, Microsoft and its partners can play an important role in shepherding the industry towards creating new technology solutions and advocating for changes in business practices, policies and regulations that can enable the creation of a trustful, ethical, secure and innovative data-sharing ecosystem.
Falling cost of batteries, shifting customer preferences, and policy changes are accelerating vehicle electrification. Automotive original equipment manufacturers are introducing new electric vehicle (EV) models to cater to different passenger and freight mobility needs. While at present, the upfront cost of EVs is higher compared to ICEs, further decline in battery costs is expected to help EVs reach price parity by the mid-2020s for all light and medium vehicles. However, EVs are much cheaper to operate because of their lower maintenance costs and higher efficiency.
Electrifying business fleets represents a huge opportunity to accelerate EV adoption and cut emissions. A successful fleet electrification programme will require businesses to rethink their internal processes, including procurement, capital project planning, fiscal budgeting and operations.
A reliable charging infrastructure is also essential for accelerating EV adoption. Real estate companies, electric utilities and the transportation sector need to collaborate to identify means to capture the value from such an integrated approach.
While electrification eliminates tailpipe emissions, nearly half of a vehicle’s life cycle emissions can be attributed to material extraction, component manufacturing and assembly. Businesses also need to take responsibility for Scope 2 and 3 emissions from automobiles, including during vehicle usage and retirement. As a first step, advanced measurement frameworks, data collection methodologies, and data processing can help map emissions from various processes and identify priority measures.
Commuting has a significant impact on congestion in cities, leading to wasted time in traffic and negatively affecting people’s well-being. Businesses can have a massive impact by making their employees’ transportation more sustainable.
Collaboration between businesses and cities can create solutions that benefit all. For example, businesses can commit to tangible actions ranging from simple solutions, such as installing bike racks, to more complex ones, such as providing shuttle services for employees, installing charging stations or instituting flexible work from home policies. WBCSD’s Corporate Mobility Pact allows businesses to take leadership toward addressing commuting challenges in cities. This Pact also creates a forum for business and city leaders to ideate other solutions for sustainable mobility.
The public sector too will need to play a substantial role in designing accessible and equitable cities. Partnerships and strong collaborations across sectors and roles will be critical in driving this change. With transformation at this scale, pace and scope, no individual or entity can go it alone. Businesses that invest in partnerships with like-minded organisations are most likely to succeed in the long run.
Aman Chitkara is manager for mobility at the World Business Council for Sustainable Development
This article was originally published in the Summer 2021 issue of The Record. To get future issues delivered directly to your inbox, sign up for a free subscription.
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