Urban Mobility Green Paper Chengdu 2014
Launch innovative mobility to drive growth and urban well-being!
Urban Mobility Green paper Chengdu 2014
Launch innovative mobility to drive growth and urban well-being! SYNTHESIS
Michelin Challenge Bibendum milestones 7 Editorial «Daring and innovating together to rediscover the pleasure of mobility.» 9
CONTENTS Executive summary «Daring to transform transportation for the good of everyone» 12 «Mounting societal demand that calls for game changers!» 15
1 GAME CHANGERS
1/ 1 Setting ambitious CO2 reduction targets and implementing the relevant 23 economic instruments 1/ Preventing developments with devastating consequences 23 2/ Addressing an unprecedented challenge! 25
3/ Implementing CO2 emission reduction solutions 25 4/ Recommendations on economic instruments and urban mobility 27
1/ 2 Implementing ultra-low emission zones with enhanced road safety measures 29 and appropriate infrastructure and vehicles 1/ Limiting transport-related pollutant emissions 29 2/ Reducing air pollutants, congestion and accidents 30 3/ Introducing low emission zones (LEZs) followed by ultra-low emission zones (ULEZs) 31 4/ Recommendations on the rules for setting up and entering enhanced road safety zones 34
1/ 3 Developing door to door transport solutions for people, 35 with corresponding web-based applications 1/ Five developing areas for door to door solutions 35 2/ Implementing three solutions on a priority basis 41 1/ 4 Reinventing innovative last-mile logistics systems 44 1/ The figures speak for themselves but so much still needs to be done 44 2/ Devising a proper urban logistics strategy 46 3/ We recommend developing and combining three priority solutions 47 1/ 5 Mobilizing private investment for sustainable transport infrastructure 49 and innovative mobility services 1/ Key sustainable transport infrastructure funding instruments 51 2/ Funding innovative mobility services 52 3/ Recommendations 55 2 ACTIONABLE LEVERS 2/ 1 Innovative mobility ecosystems 59
1/ Four ecosystems to meet ambitious global CO2 reduction targets 60 2/ Introducing LEZs and ULEZs to promote the development 63 of appropriate infrastructure and vehicles 3/ Ecosystems for developing door to door transport solutions for people, 63 with corresponding web-based applications 4/ Innovative ecosystems for last-mile logistics 69 5/ Mobilizing private investment 71
/ 2 The winning technologies of tomorrow 74 2 1/ Developing intelligent transport systems 75 2/ Moving from driving assistance systems towards automated transit systems 78 and autonomous road vehicles 3/ Optimizing multimodal mass transit systems 79 4/ Routinely using low energy and very low emission solutions 80 2/ 3 New economic instruments 86 1/ Introducing effective economic instruments 88 2/ Promoting new mobility business models 91 3/ Recommendations 94 2/ 4 Targeted public policies 98
1/ Developing policies to reduce global CO2 emissions 100 2/ Facilitating the establishment of ULEZs 101 3/ Encouraging and connecting door to door solutions 102 4/ Coordinating the organization of last-mile logistics 104 5/ Encouraging private funding 105 2/ 5 Rolling out the five game changers on a massive scale 107 1/ Reducing local pollution 108 2/ Reducing CO2 emissions 109 3/ The impact on growth and employment 112 4/ Quantifying the combined impact of the game changers 117
As a next step, laying the groundwork for an innovative urban mobility ecosystem 118 Conclusion 120 Acknowledgments 121 Sponsors and participants 122
Launch innovative mobility to drive growth and urban well-being!
CHENGDU 2014 GLOBAL SUMMIT Michelin Challenge Bibendum Milestones
The story of this mobility Green Paper began in 1998 with an intuition of Edouard Michelin and his closest associates. They foresaw at the time that the future of transportation would be increasingly shaped by technical, industrial and service cooperation between key players. Michelin Challenge Bibendum, gathering together vehicle manufacturers, equipment makers and energy suppliers from the world over around the challenge of energy transition and city/vehicle reconciliation, gave concrete form to this vision. Ever since, biennial meetings have highlighted the innovations to promote.
Prototypes have demonstrated that tomorrow’s mobility will be multi-technological and in harmony with the environment, even as the need to tailor innovations to new societal expectations and the new emerging markets is becoming ever more urgent. To this end, a «Think Tank» was set up, leading to a series of publications on the issue of «safer», «cleaner» and «connected» mobility.
The 10th Michelin Challenge Bibendum in Rio de Janeiro (2010) marked a turning point when Brazilian President Lula, in his introductory address called for the mobility of tomorrow to also be «affordable» and «accessible». In Berlin the following year, ever-growing numbers of participating companies and public and international institutions realized that simply «thinking tomorrow’s mobility» no longer suffi ced and that fi eld experiments were needed to prepare for the global roll-out of the most signifi cant innovations. To address this, it was essential to work with different entities, including private companies, public authorities, startups, international organizations, academia, and so on. The «Think and Do Tank» was born and its scope broadened to multimodal mobility.
The primary benefi t of this system is the integration of new mobility players to the Michelin Challenge Bibendum’s global Community of Interest so as to share a common vision and enable concerted action on product and service innovations. That was the goal of the fi rst Green Paper presented at Chengdu, China in November 2014. Its unveiling marked a new era of co-innovation bringing together new mobility players such as telecom operators, internet communities, information and communication technologies and startups developing new business models. Chengdu also marked the increased presence of international bodies and players from the fi nancial and academic sectors.
The fi rst version of the Green Paper has sparked so many constructive comments and criticisms that we wanted to take them into account. Hence this new version - called the Urban Mobility Green Paper / Chengdu 2014 - with its sharp focus on a shared vision of sustainable mobility developments as well as priority actions embodied by our fi ve «Game Changers». Extremely positive international reaction to this collective publication on primarly urban mobility now encourages us to widen our scope of investigation to include long distance multimodal transport. This will form the subject matter of a forthcoming publication in which all our readers are invited to participate actively!
http://michelinchallengebibendum.com contact : [email protected]
@MichelinCB
Michelin Challenge Bibendum
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Daring and innovating together to rediscover the pleasure of mobility.
The mobility of people and goods brings freedom, growth and access to education, health, jobs and friendship. In short, life!
Safe, clean, connected, accessible and affordable: this is how we describe the modern mobility that the new generations in a rapidly changing world are calling for, a world which we strive to make more open and confident.
That is the goal of this Green Paper. It points the way to new forms of mobility, reconciling its global expansion with humankind’s evolving and deepest needs.
Let’ approach these innovations with conviction! And let’s place our trust in the vibrancy of a market driven by society’s true priorities!
This document calls for concerted and resolute action. It is the fruit of collective intelligence and seeks to combine audacity and common sense to support the growth of tomorrow’s mobility in the service of economic and human development. Several hundreds of renowned experts from the private and public spheres have debated this issue from all angles and agreed on its compelling relevance.
Pollution, congestion, worsening climate change and so on, are not inevitable. On the contrary, modern transport solutions and digital technologies are the springboards for building a new mobility economy and greater pleasure - individually as well as collectively - out of everyday life.
Yes, it is doable! Let’s get this message across. Much education is to be done and we must be up to the task.
At stake is humankind and its future, so let’s get to work.
Dr. Patrick Oliva Michelin Challenge Bibendum Chairman
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EXECUTIVE SUMMARY
SYNTHÈSE EXECUTIVE SUMMARY
Daring to transform transportation for the good of everyone
Today, demand for mobility is growing around All of this means that working together to build the world. People expect safer, easier, healthier new mobility models is a valid objective. and more pleasant solutions. These demands Based on its international expertise and wide-ranging are especially strong in cities, where demographic experience, the Michelin Challenge Bibendum pressure is causing the main economic, social community recommends that this process focus and environmental challenges of the future to on five game changers. To deliver the desired converge. innovation and improved quality of life outcomes, These trends concern every mobility stakeholder. these priorities should be acted on together. This means that we have to: Health has become a top priority, with a focus
on reducing stress, noise, pollution and accidents. Set ambitious global CO2 emissions reduction objectives for all anthropogenic activities over The issue of greenhouse gases is also the medium and long term; implement the relevant becoming critically important, raising questions economic instruments in transport. about the energy transition in transportation and energy efficiency. Implement ultra-low emission (ULEZ) that will also be high safety zones in urban areas. This will While aware that their appeal depends help to shift behavior to more efficient intermodal in large part on the efficiency of their transport transport and encourage the use of electric mobility systems, cities often lack the public financing solutions, with the corresponding vehicles and needed to meet the challenge of modern mobility. infrastructures. At the same time, congestion is becoming Provide creative door to door solutions for the bane of both society and the economy. people. They will build on the currently available And the need for much more inclusive station-to-station solutions, strengthening social ties mobility is rising, in particular to support economic and creating opportunities for innovation, including growth and job creation. through relevant web-based applications.
14 Re-organize urban last-mile freight delivery Introduce just the right number of targeted systems, a sector that is expected to experience public policies to support the emergence of new considerable growth but which has not yet completed solutions; create the conditions for broader, fair its technological and ecosystemic changeover. competition; stimulate individual and collaborative initiatives and set ambitious objectives. Promote private investment in transport Together, these policies will drive faster growth infrastructure and innovative mobility services in the mobility market. to fund the capital investments demanded by the massive deployment of these recommended Lastly, because the need for mobility will solutions. necessarily increase and the challenges involved are already immense, we need to focus on large While most of the tools needed to meet these scale, coordinated roll-out of the five game EXECUTIVE SUMMARY objectives are already available, albeit often changers. on a small scale, five actionable levers should take priority: Today, when expectations are changing and new Encourage the emergence of innovative technologies can be effectively harnessed, we have ecosystems, to support the development of new a window of opportunity to initiate radical change. mobility products and services. These ecosystems The development of the five game changers will should be able to break across the traditional have a significant impact on the reduction of local boundaries between the public and private sectors pollution and CO2 emissions. In this area, the initial and drive development of profitable business quantitative simulations show that it is possible models, capable of serving as many people for the transportation sector to move close to as possible. Affordability and profitability must the International Energy Agency’s +2°C scenario be reconcilied. in 2100. What’s more, at a time when the world’s urban population is rapidly growing, investment Support tomorrow’s winning technologies, in innovative solutions and CO2 pricing instruments particularly in areas required by modern trans- are the surest way to drive business development portation modes, such as electrical power supply, in the transportation sector. information and communication technologies, automation techniques, intelligent transport In light of the environmental benefits to be reaped, systems (ITS), and large database management. simulations show that a free fall in economic activity induced by the game changers we propose Facilitate the introduction of new economic to introduce in the structural foundations of instruments, including those with carbon pricing the current transport system must not be feared. mechanisms. Such instruments will create financing opportunities for sustainable mobility and a different economic rationale.
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Mounting societal demand calls for game changers! The demand for safer, easier, healthier and more With the rise of information and communication
pleasant mobility continues to rise, particularly in technologies, people are gradually taking back EXECUTIVE SUMMARY cities where economic, social and environmental control of their mobility choices. The growing use challenges are concentrated. of new digital applications enables more effective and less stressful urban travel and promotes stronger This demand can take multiple forms, including social ties. Digitization is allowing human ingenuity to optimizing existing assets and private vehicle parks express itself and people to adjust to the constraints which are seldom used. Often latent, it frequently of mobility imposed upon them by poorly integrated expresses itself with the launch of a new mobility transport systems. New schools of thought about service or a technological innovation. behavioral and conventional economics, as well as experiments in «nudge» theory, are making better Each mobility player has specifi c expectations use of people’s behavior and individual initiative to regarding the transportation of people and goods: invent smarter and less resource-intensive mobility. We now know that it is possible to ease urban Citizens are now demanding better living conditions congestion while preserving individual freedom and in urban environments and for ways to reduce appealing to personal responsibility, without relying the time spent on daily commutes and trips. upon the power of the state or the law maker. More Congestion, environmental pollution, accidents, than the cities, it is the people who are becoming noise and stress are reaching critical levels. «smarter». The situation is not getting any better despite Strong demand for new door to door transport tangible improvements over the last 15 years in car solutions that complement the predominantly effi ciency and urban fl ow management. Overall, station-to-station solutions of today also provides travel remains tedious and costly, especially for those great growth opportunities for the mobility market. on a low income. As a result, innovative solutions to the multiple trave- Yet mobility is vital for citizen-consumers. Indeed, ling needs of the public must systematically factor in access to education, jobs, healthcare, food and thus convenience, customization, safety, accessibility and a better quality of life depends on it. affordability, pleasure, permanent connectivity, use rather than ownership, and so on.
17 Companies need more efficient and better-managed Public authorities know that the ability to move transport. That is because they too bear the economic people and goods will, in the future as it has consequences of transport-related externalities in the past, drive much of the economic growth such as unnecessary fuel consumption due to and, therefore, the jobs and well-being of their congestion, wasted time, accidents, employee stress, constituents. But they are also aware that transport etc. In search of growth and optimum satisfaction growth has been, up until now, responsible for for their stakeholders, they are now readier than the rise in negative externalities such as congestion,
ever to sign up to innovative sustainable mobility urban pollution, road accidents and CO2 emissions.
programs, provided the legal and regulatory As regards CO2 emissions, gradual awareness of framework is dependable, consistent and stable. the catastrophic impacts of climate change gives cause for hope that the Paris Conference of Vehicle manufacturers and their suppliers have the Parties (COP 21) in 2015 will result in concrete made considerable efforts in the last few years measures to tackle this critical issue for humankind. to improve the efficiency of combustion engines, That said, sustainable mobility development calls reduce fuel consumption and offer a number for higher, and now urgent, investment in in- of alternative energies. The connectivity and IT frastructure and maintenance. The later such revolution is opening up new, unprecedented investment decisions are taken, the greater avenues of progress and innovation, while drawing the costs incurred. However, national governments in new players from other industries. The response alone cannot fund the development of solutions to global mobility challenges will be effective only to multiple mobility challenges, especially as many if all players manage to cooperate and integrate of them face gaping budget deficits due, among their skills and know-how in the development of other things, to the rising cost of their energy new services. This includes cooperation among bills and their dependence on fossil fuels. Increa- industries, public authorities, startups, consultants, singly, therefore, they are trying out new economic academics, etc. Developing increasingly sophisti- instrument mixes and calling for partnerships with cated and complex solutions that improve urban the private sector. They are expecting regional and logistics efficiency equiresr just such an approach. local (city) authorities, in turn, to assume greater responsibility for resolving issues of congestion and pollution.
18 Indeed, cities are taking up the slack. While results Startups, consultants and academics also represent so far are mixed, it is demonstrably clear that major sources of innovation. They are able to think courageous and innovative decisions do pay off. differently and come up with new technologies, The establishment of low-polluting emission zones redesigned economic tools and new business is a case in point. Cities realize these zones offer models. Academics are undoubtedly central players a triple benefi t: reduced congestion and stress, in the new mobility ecosystems due to of their scientifi c, lower emissions of local pollutants and of CO2, economic and sociological knowledge, as well as and improved safety and quality of life. City authorities their experimental know-how. Experiments are are becoming increasingly proactive in encouraging essential to validate proposed solutions before their transport providers to become mobility inte- a large-scale roll-out. This is especially true when grators offering perfectly seamless mobility solutions designing interconnected and combined solutions «from city center to airport». Today’s municipalities for specifi c cities or population segments (women, must become enlightened transport managers in suburban residents, vulnerable groups such as their own right because their constituents will the elderly, the young, the disabled, etc.). EXECUTIVE SUMMARY increasingly blame them for any urban mobility The success of future, citizen-led mobility initiatives management failures. That is why they seek to create will depend on a proper understanding of these new ecosystems that will provide them with winning society-driven demands. technological solutions and the appropriate economic instruments. Almost 3 billion people will be converging to cities over the next 35 years. It is abundantly clear that access to mobility for all will not be achieved by simply scaling up existing transport solutions that have reached their limits. We need game changers!
19 Circumstantially sustainable solutions: Value creation potential When users value the benefi t but doesn’t take into account but the business model diffi cult to fi nd transport externalities
Ideal: Improved functionality robustly and convenience sustainable for the user solutions meet all 3 criteria
Environmentally Economically sustainable self-sustaining
No citizen interest, but solutions
are economically and environmentally viable IHS adapted by Michelin
The challenge is to invent positive mobility by information and communication technologies experiences as opposed to managing − poorly and by the changing attitudes of the new for the most part − the day-to-day operation of generations − recommends focusing immediately inadequately integrated transport systems. on fi ve game changers that will radically alter the transport modes of the future. To that end, the «Michelin Challenge Bibendum» community of interest − mindful of the major transformations brought about
20 Set ambitious global CO2 emission reduction targets and implement the relevant economic instruments
GAME Implement ultra-low emission zones with enhanced road safety CHANGERS measures and appropriate infrastructure and vehicles
Develop door to door solutions for people, with corresponding web-based applications 5 Reinvent innovative last-mile logistics systems Mobilize private investment for sustainable transport infrastructure and innovative mobility services EXECUTIVE SUMMARY
These initiatives result in synergies and satisfy We are acutely aware that transportation scena- the signifi cant mobility growth expected in rios in the United States, China and in India are the years to come. They mutually aim to not similar, and are unlikely to be even in 2050! encourage innovation, promote investment in Nevertheless, we are convinced that the fi ve large-scale roll-outs and leverage urban demo- game changers discussed in this Green Paper graphics to stimulate economic activity. will foster, here as elsewhere, the development Taken together, they can help create a mobility of sustainable mobility solutions harmonizing system that redistributes revenues generated economic growth and the future of humankind. from reducing emissions and managing congestion. Erik Grab Vice President, Michelin, Strategic Foresight
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1 GAME CHANGERS GAME CHANGERS introduction
Launching all five game changers today!
The five game changers are able to spur, directly or indirectly, technological or regulatory innovation and facilitate implementation of new business models. All potentially create value.
Indeed, these game changers work in synergy with each other. Implementing one helps to implement the others and boosts their combined effects. By setting
ambitious CO2 reduction targets, we will lower fossil fuel consumption and thereby limit pollutant emissions, especially in urban areas. The creation of ultra-low emission zones (ULEZs) with enhanced road safety measures will thus be facilitated. This, in turn, will help bring to market innovative improvements in the transportation of people and goods, such as new vehicles and services designed to meet the door to door mobility needs of individuals, and an efficient last-mile delivery system with optimized truck loading rates, for example. New business models, and the value they create, will attract private capital when public authorities provide proper regulatory and legal stability and investors are assured of a return on investment in the long term.
Finally, these game changers apply to all modes of transport as part of a multi-modal approach. They target key externalities such as pollutants,
accidents, CO2 emissions, noise and stress. Their simultaneous implementation and technological corollaries will have a positive impact on the convergence of transport systems towards sustainable mobility. A case in point is the large- scale development of electric mobility and intelligent road transport solutions (ITS).
The choice of these five game changers is powerful, simple and realistic. To create a virtuous circle of solutions to global mobility challenges quickly, it is essential to prioritize the multiple responses they engender.
24 1 consumed, CO If alltheearth’s fossilfuelresources were tobe limit theuseoffossilfuelscontainedinearth. preserve ouratmosphere andoceans,wemust munities. To prevent GHGaccumulationand our climate,naturalecosystemsandcom- that irreversible changeswouldoccur, endangering GHGs, thescientifi ccommunityhasmadeitclear steps are nottakentocurbtheaccumulationof in particular. Ifcurrent trends are notreversed and under threat duetothegrowing useoffossilfuels, living beingsonearth.Yet, thisheritagecouldbe a healthyatmosphere are invaluableassetsforall tackling thesituation.Afairlystableclimateand This chaptersetsoutaframeworkforsuccessfully DEVASTATING CONSEQUENCES Setting ambitiousCO 1/ a priceonCO in stabilizingatmosphericgreenhouse gasconcentration.Thiscanbedone.Thefi rststepistoput Climate Change(IPCC)report confi rmsthecriticalnature oftheissue.Thechallengetherefore lies measures. Yet thestatusquoisethicallyirresponsible. The2014Intergovernmental Panelon communityisdraggingitsfeetoverimplementing appropriate it isobviousthattheinternational than ayeartogotheParisCOP21,andinfaceofworryingclimatechangedevelopments, Putting off thenecessarydecisionswillonlycomplicatesolvingproblem. Withlittlemore global warmingto2°Cabovepreindustrial levelsin2100! the 450ppmtippingpointto2050andbeyond,inorder tohaveareasonable chanceoflimiting to agree ontheneedtomaintaingreenhouse gas(GHG)concentrationsintheatmosphere below Since thepublicationofIPCC*reportexpertshavegraduallycome in2007,allinternational economic instruments targets andimplementingtherelevant strong geographicalvariations. rature in2100mightrisefrom 4°Cto6°C,with Given current trends, the averageglobaltempe- by energyconsumption. global growth inthelast40yearshasbeenfueled however, isahugechallenge,sincetwothirds of increase eightfold!Limitingthisconsumption, The IPCCfi ndingisquiteclear−wemustact. Now! PREVENTINGDEVELOPMENTSWITH 2 2 levelsintheatmosphere would . 2 reduction and SF between them,andfl uorinatedindustrialgases(PFC,HFC *For allacronym seeattheendofPaper. such ascarbondioxide(CO the greenhouse effect. Theseincludehighlyactivegases of othermoleculesinouratmosphere contributeto in theatmosphere, includingargon(0.93%).Only0.1% (78%) andoxygen(21%).Othergasesare naturallypresent the atmosphere. Theatmosphere ismadeupofnitrogen this phenomenonisconfi nedtothelowerlayersof does notsignifi cantlyincrease thegreenhouse effect since and planttranspirationcausedbyglobalwarming,however, The riseinwatervaporemissionsfrom soilevaporation of thesolarradiationrefl ecteddowntotheearth’s surface. about 0.4%oftheatmosphere. Itisresponsible for60% The fi rstgreenhouse gasiswatervapor, whichmakesup the more pressing. and foodwillbeaffected fi rst,theglobalchallengeisall ecosystems andhumansocietiestoadapt.Aswater variations, raisingdoubtsabouttheabilityofnatural tuated. Whatisnewandworryingthespeedofrecent The earth’s meansurface temperature hasalwaysfl uc- ozone (O naturally ornot,themore thesurfaceofearthwarms. correlative: themore thesegasesare present, whether the atmosphere’s meantemperature hasbeen highly greenhouse gasconcentrationsintheatmosphere and 6 ). For450,000years,therelationship between 3 ) 8%,methane(CH 2 ) which makes up 25%, ) whichmakesup25%, 4 ) andnitrous oxide(N 2 0) 6% 0) 6% 1 /1 25
GAME CHANGERS 1 / 1
Potential synergies between different The high cost of inaction measures The benefits of acting forcefully and quickly to Anthropogenic greenhouse gases (resulting from contain climate change far outweigh the potential human activity) amplify the natural greenhouse costs of inaction. The Stern Review on the Eco- effect. Over the past century, increasing industriali- nomics of Climate Change had already come to zation has led to a sharp rise in these emissions. that conclusion back in 2006. The report highlights Furthermore, a strong link exists between green- the potential impact of climate change on water house gas emissions and those of the main air resources, food production, health and the envi-
pollutants, i.e. finer particulate matter (PM2.5), ronment. According to the study, the global cost
sulfur dioxide (SOx) and nitrogen dioxide (NOx). of inaction would amount to wiping some 5% off
These air pollutants are generated, as is CO2, by global GDP indefinitely, year after year. Moreover, industrial burning of fossil fuels, energy production, a greater number of risks and their impacts could heating and transport. amplify this phenomenon, knocking 20% or more The effect of cogeneration reveals potential synergy off GDP. between various anti-pollution and carbon emissions Meeting the world’s growing energy needs will reduction measures. The latter could lead to further require more than $48 trillion in investment until
substantial reductions in PM2.5, NOx and SOx emis- 2035, according to a special investment report
sions, in addition to CO2. The table below shows published this year by the International Energy the correlation between pollutant reduction and Agency (IEA) as part of the World Energy GHGs in China measured by researchers. Outlook series. The «450 ppm i.e. +2° C by 2100» scenario would require an additional $5 trillion,
Reducing NOX through CO2 reduction (China) amounting to only 0.6% of global GDP in additional annual spending. 10 % 25 % 50 % 75 % Ever since the industrial revolution, the global economy has benefited from the free use of 2015 5 % 12 % 28 % 49 % the atmosphere for storing greenhouse gases. Economic players have used it as an infinite 2020 4 % 11 % 26 % 46 % reservoir capable of absorbing all emissions. Today, the accumulation of these gases in 2050 3 % 8 % 19 % 31 % the atmosphere is such as to threaten the very stability of our climate. We therefore need to take action. As explained by Lord Stern in his report Reducing SO through CO reduction (China) X 2 published in 2014, nothing will be possible without the involvment of the authorities and will require 10 % 25 % 50 % 75 % innovative policies and a stable regulation 2015 6 % 16 % 34 % 56 % landscape to promote investments.
2020 5 % 14 % 31 % 53 % The crucial role of transport Transport plays a vital role because of the sharp 2050 3 % 10 % 24 % 37 % increase in traffic and its near total dependence Arthur D. Little, adapted by Michelin on fossil fuels. Its carbon emissions are on the rise Source: Synergy between pollution and carbon and must therefore be reduced. This can be done, emissions control, TSINGHUA-MIT China Energy and yet transport is not sufficiently emphasized on & Climate Project, Oct. 2013. the agenda of international discussions on GHG emissions reductions. Notwithstanding, this sector These figures show that capping CO2 emissions will directly impact climate change and indirectly impact has been striving to reduce its CO2 and pollutant air pollution. emissions on a per vehicle basis. Progress, however, can only be achieved at global park level (car, truck, train, boat, plane, etc.). CO2 emissions reduction will therefore have a direct positive impact on climate change and an indirect impact on air pollutants, since it involves cities adopting energy systems cleaner than those that burn fossil fuels.
26 increase theshare ofdecarbonized energyand to worktogetherincrease energyeffi ciency, change. Asamatterofemergency, allsectors have will meanwehavenochance of limitingclimate the additionof3billionmore city-dwellersby2050 energy intensivemodesofurban development, currentaround 75%ofcarbonemissions.With global materialandenergysuppliesproduce bomb. Theycurrently consumeupto80%of «Cities canbeseenasanenvironmental time said inaninterviewwiththeHuffi ngtonPost: Council forSustainableDevelopment(WBCSD), As PeterBakker, President oftheWorld Business be wonorlostincities» “The battleforsustainabledevelopmentwill and pertonne-kmforgoods. a fourfoldreduction inemissionsperpassenger-km a 50%reduction oftheseemissions wouldrequire a twofoldincrease intransport by2050,targeting expertsforecasting halved by2050.With A +2°Ctargetimpliesthatemissionshavetobe planes, trainsandboats. transport inallitsforms:cars,buses,trucks, without theinvolvementofallemitters,including We simplycannotmeetthe +2°Ctargetby2100 that carbonemissionsstarttofallby2020. must bemadesimultaneouslyacross theworldso transportation, housing, agriculture andforestry structural changesinenergyproduction, industry, temperature to2°Cabove preindustrial levels, To attempttolimittheriseinearth’s mean CHALLENGE! 2/ ADESN NUPEEETD ADDRESSINGANUNPRECEDENTED transport, CO respect to fairly inexpensivesolutions.With puted andanalysisshowsthere are avarietyof emissions reduction tothesectorcanbecom- to McKinsey, thecostofglobalgreenhouse gas the biggestanthropogenic emitters.According Energy, housing,industryandtransportare REDUCTIONSOLUTIONS 3/ level ofCO of road transportsystemsthatachieveareasonable If implemented,theycanspeed uptheintroduction emissions today)whichare classifi edbytype. measures forroad transport (80%oftransport The tablebelowsetsoutanumber ofsuch them withoutnegativeeffects. but whatisneededare measures toimplement city leadersandbusinessesmustbeimplemented.» A majorglobalprogram to facilitatedialogbetween depends ontheinteractionofallthesefactors. The netimpactoneconomiccompetitiveness or usedbythestatetoreduce thetaxburden. carbon canbechanneledtofundsuchinvestments Moreover, thenewvaluecreated bythepriceof invest, whichisbenefi cialfortheeconomy. But carbonpricingalsocreates anincentiveto a negativeeffect ondemand. services thatrelease heavy emissionsandsohas carbon pricingincreases the priceofgoodsand achieve suchtransformationsalone.Introducing sustainable development,theyknowcannot around theworldare championingactionfor develop carbonsequestration.Althoughmayors IMPLEMENTINGCO 2 emissions. 2 emissionsreduction solutionsexist, 2 EMISSION 1 /1 27
GAME CHANGERS REGuLATORY
1 CO2 emission standards Vehicles must comply with a prescribed UE: CAFE (Clean CO2 emissions level Air For Europe)
2 Fuel standards Fuel must lower their CO2 emission levels USA: binding targets for biofuels (15% : E15)
3 Speed limits Introduce appropriate speed limits Spain: 30 km/h in urban zones
4 Very low emission zones Permit access to certain areas to low emitting Tokyo: LEZ 2003 vehicles only Berlin: LEZ 2008...
5 Alternate traffi c routes Condition vehicle access by license plate Beijing: during the 2008 Olympic Games
6 Restrictions on vehicle Condition car ownership via vehicle quota systems Shanghaï: clean vehicles enjoy free ownership registration
7 Parking restrictions Limit parking time slots London: between 8.30 am and 6.30 pm
INFRASTRuCTuRE
8 Reserved lanes Create permanent or semi-permanent dedicated Beijing: for buses during rush hours lanes for high occupancy vehicles
9 Soft transport modes Create dedicated lanes for pedestrians Australia: cycling promotion and “clean” two wheelers
PRICE CONTROL
10 Review of taxes Review taxes or subsidies on new vehicles, tax rebates, China: 10% mark-up on purchase and subsidies on purchases and subsidies for clean vehicles price (clean vehicles are exempt) Introduce scrapping incentives and taxes on company cars
11 Review of taxes Review emission taxes, fuel taxes, London: congestion charge and subsidies on usage kilometers-driven taxes, tolls, parking charges, pay-as-you-drive insurance
12 Public transportpricing Introduce free fares, zonal pricing, Shanghaï : tarifi cation progressive customized pricing
VOLuME CONTROL
13 Allowance trading market Restrict annual CO2 emission volumes EU: ETS (Emissions Trading System) and introduce cap and trade schemes
EQuIPMENT AND TECHNOLOGY
14 Vehicle optimization Promote optimized vehicles (hybrids, EVs, etc.) China: electric vehicle promotion
15 Intelligent traffi c systems Monitor and regulate traffi c and gather big data Amsterdam: ASC (Amsterdam conducive to the creation of new businesses Smart City)
16 Public transport Develop transport systems by BRT, tram, Curitiba: BRT (Bus Rapid Transit) development subway, train, boat Arthur D. Little, adapted by Michelin
28 As CO since itiscommontoalltransportsolutions. a price is put on the externality embodiedbyCO a priceisputontheexternality The strongest solutionappearstobeoneinwhich Paper. Allare underpinnedbycertainprerequisites. A numberofsolutionsare touchedoninthisGreen CO Carbon taxation.Acarbontaxsetsapricefor • below. ments», withthetwomainapproaches summarized in detailthechapteron«NewEconomicInstru- The variouseconomictoolsavailableare described of bothpeopleandgoods. infrastructures and/ortolower thecostofmobility income thuscreated tobe channeledtotransport with thehelpofexistingtechnologies.Itenables optimize utilizationofhighGHGemissionproducts carbon footprint.Furthermore, carbonpricinghelps products orservicestobe distinguishedbytheir allows Putting apriceonthisnegativeexternality high emissions. expensive tousegoodsandservicesthatgenerate create newsources ofrevenue andmakeitmore solutions withlowgreenhouse gasemissions, to encourageplayersinthesectorchoose consumers. Theideabehindcarbonpricingis change thebehaviorofallmarketplayers,especially Putting aneconomicvalueoncarbondioxidewill Creating acarboneconomy cities, theirinvolvementiscrucial. 1 tonneofCO of allowances(1allowance=therighttoemit emissions bydistributingorsellingalimitednumber The authoritiessetthetotalvolumeofauthorized cap ensures thatenvironmental targetsare met. the marketthensetsaprice.Aglobalemissions a quantitativeemissionreduction targetand or “carbontrading”,thepublicauthoritysets house gasemissionsallowancetradingsystem, Emission tradingorcapandtrade.Inagreen-• to theircarboncontent(€x/tonne). prices ofassetsorenergysources according calculating thatprice.Thetaxadjuststherelative And because75%ofglobalCO to implementanambitiousglobalproject. tonne ofCO negotiable allowancesrely onthesamepricing often complementary. Intheory, taxincentivesand have more similaritiesthandifferences andare spectrum, taxmeasures andtradingschemes Tax ortrade: usuallyatoppositeendsofthe A |Direct instruments: 2 emissions.Itsrate,expressed ineuros per 2 hasaglobalimpact,itisnecessary 2 emitted,servesasthebasisfor 2 ). 2 isemittedby 2
around 200gofCO duction! Giventhatcars,inreal lifeconditions,emit for some17%ofCO road transporttheirtoppriority asitisresponsible Solutions forthetransportsectormustmake INSTRUMENTSANDURBANMOBILITY 4/ requires afour-fold progress inCO while thenumberofvehiclesisexpectedtodouble combustion. Halvingtransportemissionsby2050 in thefi gure below. phase whileothersare atmaturity, asillustrated carbon mobility. Someare atthedevelopment There are varioussolutionsforpromoting low This challengeismanageable. well-to-wheel cycleto50g/kmby2050! the challengeistocutemissionsoverentire of theendchaintoother, or«well-to-wheel»), are alsoavailable of cleanernewtechnologies,city-centertolls,etc, zones, scrappingschemespromoting theuse emission cuts. cuts, whereas inataxsystemitisonthepriceof system, thefocusisonquantityofemission seek toachievedifferent goals.Underatrading standards. Inpractice,though,thetwoinstruments compared withpublicpoliciesimposingmandatory implemented, theycanproduce substantialsavings the lowestcosttocommunity. Whenproperly the twoinstrumentsensure emissioncutsat Assuming playershaveperfectinformation, mechanism andproduce similareconomiceffects. B |Indirect instrumentssuchaslowemission RECOMMENDATIONS ONECONOMIC 2 2 perkmonaverage(from one emissionsfrom fossilfuel 2 emissionsre- 1 /1 29
GAME CHANGERS 1 / 1
Introduction Growth Maturity Decline
Taxes and subsidies Soft transportation modes Speed limits on usage
Intelligent traffi c Congestion charge Traffi c controls systems
Enhancement of public Cap and trade transportation capacity systems
Low emission zones (LEZ)
Alternate traffi c regulations Arthur D. Little, adapted by Michelin
Regulatory Volume control
Infrastructure Equipment and technology
Financial incentives
As the transport sector is not homogeneous, To sum up, scientists are calling for strict adherence
it is diffi cult to compare trains, ships, jets, cars and to a 50% CO2 emissions reduction target by 2050, trucks. The best way of providing fi nancial while politicians are increasingly in agreement that
incentives to cut CO2 emissions is to price CO2 this is the direction to take.
on the basis of a fuel’s CO2 emission and to charge Although all sectors of activity are not in the same it on top of the fuel price. This would generate situation, each must contribute and align itself the necessary income to fund a virtuous system. with the 50% reduction target. The technologies and services that should be implemented already A regulatory approach to promote technological exist, so staying focused on them will help drive innovation is also necessary. It consists in gradually innovation and growth. This creates a positive
capping the road fl eet’s average well-to-wheel CO2 dynamic for the planet and society as a whole.
emissions by 2050 at 50g of CO2 /km, 300g/km for trucks and similarly ambitious levels for other transport modes. A gradual progression towards
a CO2 price at $130/tonne minimum in 2040 is also recommended (IEA). For optimum impact,
we advocate the introduction of indirect CO2 emissions reduction instruments, particularly ultra-low emission zones (ULEZs). It is only by adopting measures at national and international level, backed by local initiatives on a massive scale, that the global economy can be made less reliant on fossil fuels.
30 2 broad groups: Air pollutantsfrom transportare dividedintosix ever beenevaluatedbyOECD(2014). The costofhealthimpactroad transporthas in developedcountries. about 5%ofGDPindevelopingcountriesand2% • mature andjustasmanyperinataldeathsannually; urban airpollutionisresponsible for1millionpre- pollution abovethetolerablethresholds; • as energy, heatingandtransportthus: urban airpollutioncausedbymultiplesources such Organization thussumsupthescaleandimpactof emissions andpoorer airquality. TheWorld Health to growing road uses,ever-increasing pollutant Rapid urbanizationinmanycitiesisleading FROMTRANSPORT 1/ This solutionoffers brightprospects, soletusdevelopit! 7 millioninhabitants. inside aswelloutsideLondon’s LEZ,whichcoversroughly 1600km2andservessome Current measurements showalevelingoff ordrop inparticulatematterandafallNOxlevels emission goodsvehicleswillbeencouraged.Constructionandbuildingalsoregulated. during workinghours.Thedevelopmentofhybridbuses,zero localemissiontaxisandlow by 2020,withonlyzero orverylowlocalemissionvehiclesallowedtodriveincentralLondon mayor BorisJohnsonhasannouncedtheLEZ’s conversiontoanultra-lowemissionzone(ULEZ) today! London2008:establishmentofavastLEZwhoseoutcomesmatchexpectations. Tokyo 2003:establishmentofthefi rstLEZ(lowemissionzone)whichisa resounding success and appropriateinfrastructurevehicles with enhancedroad safetymeasures Implementing ultra-lowemissionzones the costofurbanairpollution(UAP)amountsto more than1billionpeopleare exposedtoair LIMITINGPOLLUTANT EMISSIONS
Air pollutants from transport • Lead • PAHs (polycyclicaromatic hydrocarbons) • Benzene Other emissions: Nitrogen dioxide(NO Sulfur dioxide(SO Carbon monoxide(CO) • NO Ozone anditsmainprecursors: • PM Particulate matter(PM): • VOCs(volatileorganic compounds) • AmbientparticulatematterPM • Ultra-fi ne particulatematterfrom dieselengines X 10 (nitrogen oxides)
2 ) 2 ) 0,1 -PM 2,5
1 /2 31 Arthur D. Little, adapted by Michelin
GAME CHANGERS 1 / 2
These pollutants are harmful to human health and in or around the city center could be implemented
responsible for chronic diseases. CO2, of course, over larger areas. Appropriate technological is not on this list since it is not a local pollutant. solutions are discussed in the chapter on winning It has a global impact on the planet and a longterm technologies. impact on climate but does not directly affect One such scheme consists in creating ultra-low people’s health. The primary goal of emissions emission zones. Polluting vehicles are either reduction policies is therefore to improve the state banned from entering these areas or charged of health of the population. an entry fee if their emissions exceed a certain threshold. The purpose of an ULEZ is to reduce
Exhaust gases from vehicles are a source of PM2.5 traditional forms of air pollution. At the same time,
emission in cities. In Beijing, they would account it reduces CO2 emissions and congestion, while
for 22% of the city’s PM2.5 levels. Coal combustion enhancing well-being. is the biggest emitter of this particulate matter in the Chinese capital’s suburbs. Cities must fi nd A complex ecosystem that strikes a balance a way to prevent these emissions, chronic conges- between public and private players tion and the excessive consumption of energy they imply if they want to achieve their goals of Tokyo established a LEZ in 2003 and was improving the quality of life and easing traffi c in city the fi rst city to do so. Since 2006, LEZs have centers. Clearly, a holistic approach is called for spread across Europe on the back of tougher air so that the problems are not simply shifted from quality standards. Local authorities have decided the center to the suburbs. to roll them out on a large scale. Some 180 LEZs It is important to note that the exposure of human were already established in Europe by 2011, beings to noise could also affect health, sleep, including a hundred or so in Italy alone and strong hearing and cause high blood pressure, heart involvement in Sweden (Gothenburg, Lund, Malmo problems, stress, etc. Some writers go so far as and Stockholm) and Germany (Berlin, Cologne, to suggest that noise is responsible for an even Hanover and Stuttgart). greater number of diseases than air pollution. In cities, transport accounts for the bulk of noise. There is no single model, and cities may choose Noise reduction is a complex issue owing to different ways to establish a LEZ based on scale, the number of factors involved - type of vehicle, rules of access, planned pricing, etc. To do so, speed, acceleration, type of road surfacing, they must rely on an ecosystem that convenes infrastructure quality, building design and fi xtures - public and private stakeholders. Most of these and so requires special attention. zones operate round the clock, 365 days a year, except for some Italian LEZs. LEZs admission criteria vary, requiring compliance 2/ REDUCING AIR POLLUTANTS, with one or more European standards. However, CONGESTION AND ACCIDENTS they are a technological showcase for green solutions designed to improve the quality of life A range of solutions is available, including measures of communities and promote awareness among to address the issues of harmful emissions and inhabitants. As such, they serve as life-size congestion related to urban mobility: sensible laboratories for new infrastructure, public-private management of the fl ow of persons and goods cooperation, regulatory harmonization, and so in cities, appeals to civic responsibility that facilitate forth. Far from seeking to eliminate road transport, changes in behavior, reduction in vehicle emissions, LEZs ensure their sustainable development. promotion of green modes of transport, taxation It is indeed possible to plan and develop green of traffi c-based on congestion, and so on. public and private transport modes for low emission If combined, they would signifi cantly mitigate zones without sacrifi cing economic effi ciency or environmental problems and congestion, improve people’s comfort − quite the contrary. To ease the quality of life and regenerate city centers. implementation, they could be introduced over ntroducing areas with emission restrictions greatly time, with increasingly ambitious measures and
helps to achieve an overall reduction in CO2 emis- wider areas being covered over time. sions. That said, the way electricity is generated must continue to be monitored, especially in terms
of the pollutant and CO2 content of each kWh produced. Schemes to reduce vehicle emissions by restricting the access of certain types of vehicle
32 public transportmodes Taxes andsubsidies Investment in green Investment ingreen Introduction increasing eco-effi ciencyandproviding better users tomitigatinglocalpollutionandcongestion, A LEZhasmultiplegoalsfrom empoweringtransport in place. who havealltheinstrumentsathandtoputthem LEZs are thetoolofchoiceforlocalauthorities charges are highbutveryaffordable forresidents. balance, asinLisbonforinstance,where parking to beadopted.Themeasures shouldstrivefor publicandprivatetransportmodes dable alternative control systemtobeusedandthecleanaffor- be met,thepollutantstomeasured, thetraffi c the area tobecovered, theemissiontargetsto To create aLEZ,thelocalauthorityhastodefi ne EMISSIONZONES(ULEZS) (LEZS),FOLLOWEDBYULTRA-LOW 3/ on usage on usage INTRODUCINGLOWEMISSIONZONES Financial incentives Infrastructure Regulatory
Advanced emission control Advanced emissioncontrol technology for commercial technology forcommercial Congestion charge ITS-based traffiITS-based c License plate License plate restrictions Growth vehicles vehicles controls
Equipment andtechnology Volume control still operatingonexperimentalbases. others suchas«taxesandsubsidiesonusage»are It alsoshowsthatwhilesomeare triedandtested, to thoseusedreduce CO required tosetupandoperateaLEZare similar The curvebelowshowsthattheinstruments zation projects. their LEZordevelopitgraduallythrough moderni- public privatepartnerships.Mostcitiesphasein operation oftheLEZthrough theirownfundsorvia They alsoneedtofi nancethesettingup and lanes forthemosteffi cientmodesoftransport. monitoring andcontrol purposes,anddedicated infrastructure, intelligenttransportsystems(ITS)for center, technicallylocalauthoritiesfi rstneedproper others. To establishalowemissionzoneinthecity safety forpedestriansandtwowheelers,among Phase-out of most Phase-out ofmost polluting vehicles polluting vehicles Parking charges Public transport Public transport Traffi controls c Maturity availability
2 emissions(see1.1). Decline 1 Arthur D. Little, adapted by Michelin /2 33
GAME CHANGERS 1 / 2
Presenting the advantages to stakeholders A raft of measures targeting use (demand) is required. These include vehicle emissions pricing The first step in the creation of a LEZ is to facilitate or scrapping premiums to accelerate the transition the public’s understanding of its regulations. to vehicles allowed in the LEZ; amended taxation In particular, this involves explaining the benefits − (VAT, income tax, carbon tax, etc.), integrating less congestion, pollution and noise, better public a yearly road toll calculated on the basis of health − to the various stakeholders, including emissions and applicable to private and users. It is essential to communicate the goals and commercial vehicles; exemptions for clean fuels benefits of the LEZ clearly and forcefully so as (e.g. biofuels); paid limited parking to curb car use to ease the concerns raised by the project and during high-congestion periods and encourage the changes in lifestyle it entails. Transparency and the use of alternative transport modes; conversely, frequent reviews are necessary so that concrete free parking for electric vehicles; free or cheap improvements can be seen. A LEZ will only be public transport, etc. successful if city authorities provide efficient It is also necessary to clearly explain that alternative modes of transportation and actively the resulting income will be used to provide communicate the benefits of the zone. This means renewed mobility, modern infrastructure and performing quantitative impact assessments based redistribution schemes such as free parking close on traffic flow and emissions monitoring data, to public transport solutions, for example. certified by a reliable and independent third party. Measures targeting service providers (supply) are The LEZ must on no account isolate its residents also required. The infrastructure required includes from outlying areas, nor undermine inhabitants’ buildings and access roads designed to ease travel comfort or need for flexibility. They should serve to and offer a maximum of services close to the home boost the economy of the city and to encourage or the workplace of residents. A large-scale roll-out the creation of an effective multimodal urban of ITS solutions (see chapter on Winning Techno- network. These prerequisites should be factored logies) will facilitate LEZ management, information into the city’s development plans from the outset. collection and Big Data analysis with a view to If public transport is saturated − as in Beijing, optimizing the zone’s performance and developing Sydney and Osaka where subway usage reaches a range of activities and attractive services. 135% − people may shy away from using them more.
Tokyo London In 2003, the Metropolitan Government introduced Central London’s LEZ is one of the best known. a series of measures to combat vehicle pollution, The instrument of choice is the congestion spearheaded by the “Diesel Emission Control charge. Set up in 2008, it restricts entry of Regulation” and the “Retrofit Program”. commercial vehicles that do not comply with Both measures require some categories of diesel European Emission Standards: Euro III for light vehicles to be retrofitted with emission control commercial vehicles and Euro IV for medium systems to reduce PM emissions. and heavy commercial vehicles. Passenger Non-conforming vehicles are banned from vehicles are not regulated. Offenses are Low the roads and face a fine of 500,000 Yen (about € punished with fines. emission 3,600), coupled with the naming and shaming Since inception, congestion has fallen by 30% of the vehicle owner. Thanks to the LEZ, Tokyo’s and traffic by 15%. Journey times are shorter ZONE PM concentrations have dropped by approxi- 2.5 and transport services more reliable and mately 55% compared with 2000. predictable. Buses have benefited the most Other cities such as Guangzhou, Beijing and Paris from these changes as the flow of traffic is have tried to lower emissions without creating smoother and their punctuality has improved. a LEZ. In Beijing, for example, trucks are banned Moreover, CO emissions have dropped by from some areas and allowed to enter others 2 19% and fuel consumption has fallen. Other only during certain hours. Guangzhou has a effective and easy-to-implement tools include similar scheme in place. urban access regulation, weight restriction and lorry control, with rules getting stricter every year.
34 the greater theimpactonparticulateandNO Dutch towns,amongothers.Thestrictertherules, the experiencesofStockholm,Cologneandnine has beenlargelyconfi rmedinEurope by The abilityofaLEZtoimpactmobilityexternalities A developmentmodel and promotion ofcarsharingsolutions. car andtruckfl eetswithmandatoryemissionlimits, and publictransport,fastercompliance ofurban lower carbonandnon-motorizedmodesofprivate accidents (particularlyamongcyclists),shiftsto reductions inairpollutants,lesscongestion,fewer The real benefi tsofaLEZthusincludemeasurable average traffi cspeedhasrisen. CO by 10%.PM10pollutionhasfallen10%and accidents. Urbandeliveryeffi ciencyhasimproved demand forparkingplacesand26%fewerroad 28% fewervehiclesaccessingthezone,10%less voting infavor. Theresults speakforthemselves: review toareferendum, with71%ofthepopulation car-dependent intheEuropean Union,putits price road pricingsystem.Thecity, oneofthemost In May2014,Milanwasacclaimedforitsurban the «temporary»LEZs. shuttle networktomovepeoplewithinandoutside make parkingplacesavailableandlaunchanelectric powerful enoughtoblockaccesscertainareas, when emissionlevelsimprove. Thesystemis LEZs withtoughadmissionrulesthatare lifted emissions. Traffi cis regulated bycreating temporary variations intraffi c fl owstomonitorandmanage published. Thesystemanalyzestraffi candforecasts based Megacity Traffi cManagement),hasjustbeen (BCG). Their jointproject, dubbedCOMET(Condition- Forum (WEF)andtheBostonConsultingGroup the subjectofstudiesbyWorld Economic The LEZdevelopmentmodelofthefuture is Stockholm, sustainablemobility−Milan). 4/ revenue allocation(road infrastructure – fi nancinginfrastructure −Oslo);and − London,fi ghtingaccidentsandpollution –Milan, 3/ objective(tacklingcongestionandfatalities duration, mileage,emissionsclass,orabaserate); 2/ price(variablerateaccording tohour, day, in NewYork, area charginginLondon); 1/ intermsofspatialconfi guration(lanecharging tolls differ emissions bothinsideandoutsidethezone.Urban 2 emissionsby35%.Ontheotherhand, x
infrastructure. Development) projects aimed atreshaping city urban developmentorTOD(Transit Oriented center, theymust bebackedbytransport-focused tools formayorstocreate a more eco-friendlycity congestion andpollutionchargingare legitimate Mayors SummitinJohannesburgshowsthatwhile A C40studyoftheseissuespresented attherecent the extratravelassociatedwithit. to theoutskirtsduerisingreal estatepricesand the risks,includingmigrationofsomefamilies successful, publicauthoritiesmustbemindfulofall the useofcameras.Foralowemissionzonetobe to Lisbonwhere protection-of-privacy lawsban In Germanypoliceuseawindshieldtag,compared whether thevehicleisallowedinzone. to avehicledatabasemakeitpossiblecheck rules. Licenseplaterecognition cameraslinked High-tech toolscanhelpmonitorcompliancewith a project’s prospects. real estatevalues,anticipation effectively boosts the maineconomiceffects ofaLEZistoincrease heavily infl uencedbytruck-to-carratios. As oneof targeting trucks,fi naleconomicoutcomes are the improvement inairquality. bothcities With while Stockholm’s isconsidered effective dueto the rules.London’s LEZisnotself-fi nancing, a dedicatedpoliceforce chargedwithenforcing Big Datadatabasestomanageit,aLEZneeds As wellasrequiring technicaltoolsandOpen London andStockholmservedascasestudies. tackled withcare. Europe’s twoearlyadopters, The economicdevelopmentofaLEZmustbe anticipation andregulatory compliance The keytosuccess:proper economic 1 /2 35
GAME CHANGERS 1 / 2
4/ RECOMMENDATIONS ON THE RULES We also recommend the establishment of FOR SETTING UP AND ENTERING an enhanced road safety area in the ULEZ. ENHANCED ROAD SAFETY ZONES In 2010, the EU-19 reported 10,837 fatal accidents on urban roads, an increase of 38% in road The undeniable success of low emission zones accident fatalities. Yet in the last decade urban in Europe, Asia and North America demonstrates road fatalities have fallen by more than a third that they are instrumental in speeding up fl eet (39%), slightly less than the 42% drop in the total turnover and the shift to clean private, public number of fatal accidents, according to fi gures or non-motorized modes of transport. However, from the European Road Safety Observatory. they rely on the development of complex ecosys- In London, one of the most pressing challenges tems involving multiple local bodies responsible prompting the creation of the LEZ was the high for mobility, transportation and infrastructure, number of fatalities involving both trucks and and private providers who create, develop, operate two wheelers. Safety zones are in place in Chicago, and even fi nance the relevant infrastructure. Oakland, Toronto and many other cities around Of course, there is no single model and cities the world. France has adopted a number of adopt approaches they believe are best suited pedestrian safety measures around school to creating their LEZ. Developing effi cient city entrances, including speed humps and radars. center infrastructure based on ITS technology In the fi nal analysis, however, the purpose of should help to create business opportunities an ULEZ with enhanced road safety is to ensure in the near future. the safety of all users − pedestrians, cyclists and noise-free EVs. Converting a LEZ into an uLEZ and creating enhanced road safety zones ULEZs can be implemented on a large scale and their outcomes optimized by seamless LEZ entry rules should be regularly reviewed door to door passenger mobility modes and and their area widened or adjusted to offset last-mile delivery solutions, whose roll-out is, their adverse effects. We recommend converting in turn, promoted by these zones. LEZs as quickly as possible into ULEZs to cover every type of vehicle, including two wheelers. Retrofi tting fl eets to meet ULEZ standards could help to stimulate the economy.
36 3 performance ofmobilityplayers. transportation demandsandthe economic a newbalancebetweensatisfaction oftheir at theheartofmobilitymarket inorder tostrike means puttingthecitizenand the consumerback Designing anddevelopingdoor todoorsolutions only partially. which meetpeople’s travelneedsandexpectations ment station-to-stationtransportationsolutions, reducing pollutionandcongestion.Theycomple- to urbanstress andsystematiccaruse,thus costs anestimated0.5%ofGDPonaverage), to issuesoflostproductivity (timelostintravel «Door todoorsolutions»canprovide solutions the increasing numberofeverbiggermegacities. performance. Theproblem isamplifi edby impact onbothurbanlifequalityandmobility and thenearest transporthub hasanegative Poor accessibilitybetweenhome−orwork which modeoftraveltochoose. Ease-of-access isthekeyfactorindetermining to render mobilityaccessibleandaffordable forall. the mobilityexpectationsofpeople,challengesurbanizationandgrowing socialpressure Designing anddevelopingdoortotransportsolutionsisaneffective waytoaddress web-based applications solutions forpeople,withcorresponding Developing doortotransport solutions Digitalmultimodalmobilityassistant(DMMA) • Sharingsolutions(car, bike,coach) • autonomous vehicles (V2V /V2I)communicationsandtheadventof Vehicle-to-vehicle andvehicle-to-infrastructure • facilities Roll-outofTODscoupledwithparkandride • Extensionofpublictransportinfrastructure • our attentionforreasons weexplainbelow: in mind.Fiveareas, coveringseveralsolutions,hold and theexpectationsofpeopletheyserve they shouldbechosenwiththeneedsofareas minimum viableusageandsustainability. Assuch, to berolled out.Theyvaryininvestmentcost, or combinationsofsolutions,availableready The fi gure belowpresents thevarioussolutions, FORDOORTOSOLUTIONS 1/ FIVE DEVELOPINGAREAS 1 /3 37
GAME CHANGERS 1 / 3 modes (DMMA) Routing clearing Booking & Planning & Payment & Reservation Integrated transport Mobility Assistant Digital Multimodal Arthur D. Little, adapted by Michelin (ARTS) vehicle modes Autonomous New transport Coach pooling For Taxi or car Taxi with driver groups Car pooling Solve problem Shared carts For Electric Segways Car sharing Bike sharing individuals Bike Lanes for 2W Scooter Two-wheelers modes Non- Existing transport motorized Motorized Taxi service Taxi Park Road Road & Ride car network network DOOR TO SOLuTIONS (V2I/V2V) expansion digitization Private Individual point walking Reduce to walk distance Increase Increase Foot transport traffi c traffi to nearest to nearest willingness solution TOD Civic education Reduce distance journeys / Avoid Avoid problem Targeted Solutions Targeted
Expand Optimize infrastructure infrastructure infrastructure infrastructure Develop systems
38 public transit gence, notrunthem. Lawmakers are expectedto facilitatetheiremer- to doorsolutions. accidents − isa precondition for the roll-out of door it may, improving transportsafety−reducing traffi c to satisfyindividualandcollectiveneeds.Bethatas build andhowtointerconnect transportsolutions simultaneously thinkaboutwhatinfrastructure to boat). Whendevelopingsuchsolutions,acitymust (subway, −BusRapidTransit, bus,BRT trainand urban maturityandtheexistingmultimodalnetwork tion dependsontheeconomicandsocialcontext, and highlypromising solutions.Theirimplementa- We willtouchonlesswellknown,butmore targeted the road networkwhere itistoopoor). electric vehiclesorrickshaws,andextensionof to stations,motorizedandnon-motorizedtaxis, in thisfi gure (foottraffi cforbridgingthedistance known, triedandtestedsolutionsshown This chapterwillnotgointosomeofthesimple, in Brazil2013followingarise inbusfares. development, asevidencedby thedemonstrations or companiesandthewiderissue ofsustainable passes thesocialresponsibility ofpublicauthorities integration. Theideaofinclusive mobilityencom- economic development,urban planningandsocial solution toinclusivemobilityissuesbycombining TODs offer aneffective, integratedupstream ensure itseconomicviability. and ridefacilitiestheTODonthatlandto to protect itfrom speculationandintegratingpark A TODinvolveslocalauthoritiespreempting land integrated intomultimodality. them withtheirvehiclesandcarscanbefully implemented quicklysothatdriverscanuse facilitating sustainablecaruse.Theyshouldbe effectiveness infast-growing cities,while parks nearrailwaystations,increase aTOD’s maximized.Park andRidesolutions,i.e.car and HongKong,where multimodality hasbeen This approach isshowcased byCopenhagen of 250-500metersfrom a transit stop. integrated keyurbanfunctionswithinaradius A transit-orienteddevelopment(TOD)provides The TOD: into multimodality. transport and integrating car use with optimumaccesstopublic residential andcommercial areas into multimodality. transport and integrating car use with optimumaccesstopublic residential andcommercial areas
developing ensuring theyare «alwaysconnected» (wifi ,phone). their employeestotheworkplacecomfortably, Silicon Valley) thatallowremote companiesto carry and coachpoolingservices(e.g.RidePalintheUS include cars-with-driverschemesbyUberandLyft, cantly changingpeople’s travelinghabits.Examples Various derivativesofthisbroad conceptare signifi - monetization (carpooling.com,Waze, etc.). revenueand canalsoearn through ridershipdata a feefortheirservice(carpooling.com,Blablacar) Carpooling companiesbusinessmodelscharge have beenwonbyBlablacarinjustoneyear. (source: UCBerkeley).InFrance,3millionnewusers with thenumberofusersexpectedtotripleby2020 An estimated10%ofAmericansusecarpooling, (GHG) emissions,whilecreating socialties. ling reduces fuelcosts,tollsandgreenhouse gas By gettingmore peopletouseonevehicle,carpoo- The sharpincrease incar pooling sharing 3.0). itintoamassbusinessmodel(car is howtoturn BMW). Thekeyquestionforthecarsharingmarket (2.0) (Car2Go−Daimler, QuiCar−VW, DriveNow− is becomingagrowth driver forcarmanufacturers Car sharing1.0(ZipCar, mobility, Greenwheels) We are witnessingaboominshared mobility. The soaringinterest incarsharing 1 /3 39
GAME CHANGERS 1 / 3
Car sharing innovation curves - Selective
Demand Car sharing 1.0: Car sharing 2.0: Car sharing 3.0: Eco niche OEMs get on Mass market
Swiss self driver coperative (SEFAGE)
1948 2008 2012 - 2015 Time • Station based model • Free fl oating & private • Community • Complicated customer processes: P2P models of driver reservation, information provisioning • Smart phone based • Seamless
Features • Target group - Eco-oriented customers • Premium cars pilots and integrated solutions • Convenience
Source: Arthur D. Little
European fi gures confi rm this boom. According who want to be always connected, older people to Roland Berger, the number of car sharers rose and people with reduced mobility (estimated from 300,000 in 2006 to 2.7 million in 2013 and population of over 1.4 billion by 2040, predominantly is set to hit 15 million by 2018. in more developed countries). In terms of innovation, car sharing has pioneered Their cost will fall signifi cantly if legislation allows on-demand mobility. It is also the forerunner of them to be mass produced. At the same time, Automated Road Transport Systems (ARTS), autonomous vehicles will fast track car sharing a platooning technology for empty vehicle reloca- solutions due to their ability to reposition rental tion and the fi rst step towards last-mile automation vehicles at the right place without costly human pending legislation that would allow automated intervention. vehicles on roads.
Automated Road Transport System (ARTS): autonomous vehicles for customized destinations ARTS is a mode of public transport using autono- mous vehicles to carry small groups of passengers to customized, multiple destinations at fairly low speed. These automated electric vehicles offer an innovative and forward-looking solution compared to a bus with driver which, with 30% global average daily occupancy at best, is unable to cover the last-mile as cost-effectively or fl exibly.
Supported by the right ITS infrastructure, these vehicles (also called Podcars) have good growth prospects among urban young people
40 «facilitators» promote theexpansion ofmobility the technologyasitisaboutfactthatthese Basically, the DMMAdebateisnotsomuchabout markets. opening upnewandlargelyunexplored mobile benefi tssimultaneously(inform,offer, sell),thereby Hadoop, andsoon,thatnowdeliverintegrated technologies, suchasin-memorycloudcomputing, To doso,itrelies onrevolutionary information (regardless oftransportmode). available servicesinreal time duringajourney this innovativetechnologycanoffer andsell easily accessible.Aswellasproviding information, mobility providers isbundledinoneplaceand the informationonservicesoffered bydifferent However, canonlyoccurif multimodaljourneys and accessibility. comfort speed, key expectationsofconvenience, They alsoeducateconsumerswhile meeting their of different transportmodesbyinterlinkingthem. DMMAs increase theeffectiveness andeffi ciency shop formobilityservices(integratedmultimodality). is aweb-basedapplicationthatactsasonestop- A DMMA(DigitalMultimodalMobilityAssistant) modes forimproved performance DMMAs: interconnecting varioustransport growth −awin-winforbothparties. program designers’compensationtoridership to beginwithsincethebusinessmodelpegs The cityhasonlyhadtomakealimitedinvestment discount vouchers,etc. such asbikerentals, culturaloutings,store in oneyear, as wellassalesofrelated services has increased publictransport usageby23% with thehelpoflocation-basedservices(LBS), Montreal’s «Merci» applicationlaunchedin2013 the mostofgeolocationtoolsandBigData. the expectationsofcitizen-consumersandmake In thelongrun,thisapplicationwillbettertarget choices. in theirchoices,includingeverydayconsumer the informationdatathatwillguideindividuals or enterintonewpartnershipsinaracetocontrol blurred asallactorseithertakeonnewcompetitors mobility industriesare becomingincreasingly now takeplace.Theborders betweendifferent with thestilldominantsilosofresponsibility can tems and/orpublic-privateconsortiums:breaking the wayisnowopenfornewcorporateecosys- ofThings», theadventof«Internet With need them. throughout whenandwhere thejourney people longer besoldintheirrespective networks,but as amarket.Allproducts andserviceswillno 1 /3 41
GAME CHANGERS 1 / 3
The Daimler Group has emerged as leader in carpooling to bike share and taxi booking. Moovel the mobility systems of tomorrow by bringing also offers direct bookings via applications and together start-ups through acquisitions and information on preferred mobility options and their partnerships. pricing. Payments are made by different methods For example, Daimler Moovel is a mobile application such as application-based credit cards, initial platform that enables users to compare a variety deposit or a link to other payment systems. of mobility options in a single click, including car2go, taxis, carpooling and public transport. Not only does this service offer users easier access The main functions of Moovel fall into three groups: to mobility information and different sets of custo- route planning, booking and payment. mized options, it also allows mobility providers to For route planning, Moovel employs several mul- receive pre-orders designed to anticipate needs timodal solutions closely integrated with service and facilitate vehicle allocation. providers’ applications. The modes of transport Daimler-Moovel is a promising fi rst incarnation of covered range from public transport, car rental and an integrator of tomorrow’s mobility systems.
Regional governments Bicycle rental providers Car rental provider: Car2Go Taxi rental provider: Mytaxi (city Government of Stuttgart is (Nextbike, NorisBike and (Car2Go is an online car sharing (mobile platform for taxi calling the founding partner of Daimler Nuremberg are Germany’s service provider) and booking) Moovel at early stage) largest bike rental system)
Daimler AG Carpooling provider (Founding partner which provides Daimler Moovel (Carpooling.com is the world’s funding and support Car2Go and largest car sharing network) Daimler Moovel)
Citizens Mobile phone Transport associations Transportation service (The city master, user of Daimler (Android and IOS systems, (Promote the developement and provider Moovel) Apple and Samsung) usage of Daimler Moovel) (DB Vertrieb ans SSB provides transportation information)
BAHN
42 Infrastructure digitization Introduction can playapioneeringrole in mobility. All are designedforsmart cities which,inturn, off-the-shelf systemstoemerging programs. have different maturitylevelsfrom mature As thetablebelowshows,doortosolutions ONAPRIORITYBASIS 2/ Automated Automated (V2V/V2I) vehicles Seamless Seamless Electric Electric DMMA ticketing ticketing IMPLEMENTINGTHREESOLUTIONS Carts (equipment andtechnology) Vehicle Development (TOD) Bike /Carsharing Transit-oriented Car withdriver Public Transit Optimization Optimization Connected Connected Growth cars
(equipment andtechnology) IT-based Solution
Foot-traffi solutions c environment where theyare implemented. on thelevelofdevelopmenteconomic door solutionsshouldtakepriority, depending risks ofeachsolution),webelievethree doorto set-up andoperatingcosts,priceforend-user, (technological maturity, existenceofpilotprojects, pleasure, environmental impact)andaccessibility network coverage,reliability, safety, comfort, In termsofbenefi ts(transportationcapacity, 2/3 wheelers Maturity Park &Ride Car pooling
Infrastructure Infrastructure expansion Infrastructure expansion (mature countries) Motorized taxi Decline
1 Arthur D. Little, adapted by Michelin /3 43
GAME CHANGERS 1 / 3
These solutions are described below. a stand-alone solution used to smooth the flow of traffic (San Francisco, Tokyo, Munich, etc.). 1. TODs for rapidly growing economies
In developing countries, where new urban design concepts are emerging to tackle urban sprawl, Transit Oriented Development (TOD) offers an opportunity to align transport infrastructure with urban planning and estimated population density.
Cities in those countries would do well to optimize public transit systems, while integrating private vehicles into those systems. That means expan- ding the public transport network, improving its efficiency and promoting smart interactions with private vehicles. As private vehicles become increasingly connected, such interaction will get easier. This last point is essential to coordinate the different modes of transport and make getting 2. Encouraging bike and car sharing around the city easier as well as more comfortable. Compared to other door to door solutions, bike In 2012, Istanbul (Turkey) started a public transit sharing (low-cost rental), at less than $80 per bike optimization project called Insights in Motion. in China and around $500 in Europe, is by far The goal of the first knowledge-building phase the most cost-effective since it only requires light was to develop a database on each user’s infrastructure. activities by tracking meaningful locations, While this solution’s profitability is often a challenge, segmenting trips and estimating stop-over the investment and operating costs are mana- duration, purpose of travel, time of day and geable within a broader ecosystem, as in Paris mode of transport through cell phones and where the costs of the Vélib bike share scheme smart phones. In the second phase, the city’s are embedded into the city’s overall multi-annual transit authority used these tools to design advertising contract. It should be noted that feeder bus routes, including to the city’s new the launch of the Vélib scheme brought to bear subway stations. The target was to reduce the concepts of zero emission and sustainable operating expenses by 40%, increase demand transport on the general public, which is key to by 37%, cut commuting time by 60% and lower the acceptability of other solutions in the future. emissions from transport by 40%. However, this system often only covers the last stage of the commuter journey, and not the entire Rapidly expanding park and ride facilities journey. Besides, it may not be suitable for all cities everywhere because of their topography or size − situations In synergy with TODs, park and ride can be very where car sharing solutions come into their own. quickly rolled out in fast-growing economies where After years of experimentation, car sharing the rate of private vehicle ownership is rising shar- is poised to take off on a mass scale, as demons- ply. Park and ride is already in place in cities where trated by the aforementioned figures. car density is nearing saturation point (e.g. Beijing, The technology is mature, the infrastructure Mexico, Rio de Janeiro, etc.). As urban real estate is largely standardized and costs are coming prices continue to climb sharply, public authorities down significantly. Another key factor is that some should take urgent steps to form a group of provi- providers have already developed a sustainable ders for the project before land becomes prohibi- business case. tively expensive. This means planning and building The Bolloré Group, for example, which started out adjacent park and ride and the implementation in France with electric vehicles, is now exporting of TOD facilities along subway, BRT and railway its know-how (vehicles, batteries, and especially lines so as to fully integrate cars into the multimodal the operational business model) to the USA systems of tomorrow. (Indianapolis) and Asia (Singapore) as part In mature economies, park and ride sites are of an all-in-one package.
44 lopedconnectedinfrastructure. ahandfulofsmartphonesandanunderdeve- developedtodayissupportedbyonly communication(NFC)technologybeing gingcomponentofthesystem.Thenearfi eld Transaction paymenttechnologyisanemer (opendata). participateandvolunteertoshare data oftheplayersinchainsothatthey solutionswithoutthreatening theactivity Theproblem isdevelopingintegrated fragmentedamongvariousoperators. transportinformation,whichremains There isadearthofshared real-time public market mustbelifted: of afull-fl edgeddigitalmultimodalmobilityassistant But fi rsttwomajorobstaclestothedevelopment requires specialattention. ture quality, buildingdesignandfi xtures -andso acceleration, typeofroad surfacing, infrastruc- number offactorsinvolved-typevehicle,speed, Noise reduction isacomplex issueowingtothe In cities,transportaccountsforthebulkofnoise. greater numberofdiseases thanairpollution. to suggestthatnoiseisresponsible foraneven problems, stress, etc.Somewritersgosofaras hearing andcausehighbloodpressure, heart beings tonoisecouldalsoaffect health,sleep, It isimportanttonotethattheexposure ofhuman services. users, supplementedbyarangeofvalue-added mobility solutionstheinstanttheyare neededby options. Theassistantshelpdeliverinterconnected the wide-rangingnature ofthemultiplemobility countries becauseofthesizecitiesand enjoy goodgrowth prospects indeveloped (DMMAs), growingofThings», outofthe«Internet Web-based multimodalmobilityassistants DMMAs fordevelopedtransportsystems 3. still limited availability of payment technologies. stilllimitedavailabilityofpayment technologies. • Lackofmultimodaltransportinformation. • a newuserexperience. enhance thefunofmobilitybyoffering people innovations andprofi tablenewopportunitiesthat safety, theywill alsospurahostoftechnological tial societalchallengesofpollution,congestionand in thefactthatnotonlywilltheyaddress theessen- the importanceofthesenewmobilitymodeslies solutions ultimatelyselectedbyeachindividual, In conclusion,regardless ofthedoorto rental. combining bikesharing,publictransportandcar multimodal solution(withusage-basedslidingrates) because itoffers amixed, convenient andaffordable operated bythecityofMunich,isagoodexample urbanmobilitysystem «Mo-bility», amodern effective. of mobilityconsumptionandare already cost- the grounds thattheywillproduce newpatterns (global web-basedplatformsorapplications)on Experts advocatethebroad roll-out ofDMMAs 40,000 fewerhoursspentintraffi cjams,etc. of CO savings of$1billion,reduction of2milliontonnes over a10-yearperiodwere quantifi edthus:annual management foracityof10millioninhabitants Boston ConsultingGroup, thebenefi tsofmultimodal Challenge BibenduminChengdu,chaired by In thetransportmodesworkshopatMichelin all theirmobilityneedsare met. expect theirmobilityexperiencetobeoneinwhich transport, notjusturbantravel,sinceconsumers value ofDMMAalsoliesinintegratinginter-city needed byconsumers.Forexample,theadded start tofocusontheservicesandsolutionsreally These problems canbeironed outonceplayers 2 , 4,000fewerroad accidentsayear, 1 /3 45
GAME CHANGERS 1 / 4
4 Reinventing innovative last-mile logistics systems
According to Frost & Sullivan, annual sales of last-mile delivery services worldwide are expected to soar from $2.6 to $6 trillion between 2011 and 2020, making this by far the fastest growing logistics business, with over 300 million urban deliveries a day by 2020. Driven by growing urbanization across the globe, the growth of this segment in value terms will be 1.5 times faster than its already impressive volume growth.
Last-mile delivery is the last leg of the supply chain. • Unlike the transportation of people, the trans- It is a key component of urban mobility for a number portation of goods is still not considered of reasons: a priority. As a result, it is diffi cult to develop - 30-40% of tonnes delivered daily around the appropriate infrastructure and planning the world are intended for urban consumption, mechanisms. (source: World Bank); - On average, 30% of tonnes transported are However, growing urban mobility issues are leading headed for urban production and construction public and private players to focus increasingly on sites; last-mile logistics, which accounts for about 20% - Shipment of waste and recyclable materials of miles traveled in cities (source: Oliver Wyman) produced by urban consumption and production, and more if we account for the congestion caused though minor in percentage terms, is a key global by the vehicles’ bulk and unloading stops. challenge. As urban logistics policies pursue sometimes confl icting objectives, multiple parameters must be factored in: 1/ THE FIGURES SPEAK FOR THEMSELVES - reducing congestion: distance traveled, BUT SO MUCH STILL NEEDS TO BE DONE vehicle capacity and length, number of stops, better truck utilization (fewer trucks);
Cities are so caught up addressing people mobility - lowering air pollution (NOX, SOX, PM2.5): issues that they often neglect goods in their type of vehicle, distance traveled; integrated mobility plans. - cutting noise pollution: type of engine, level There are three reasons for this: of congestion caused; - developing the local economy: solution costs, • Cities by defi nition act at a local level, service quality (speed, delivery time slots, whereas last-mile logistics requires a broad fl exibility/reactiveness), retail development, understanding of the supply chain to which etc.; it belongs. Local authorities usually do not - encouraging housing policy: increase available have such knowledge. space, reduce surface devoted to inner city • Moreover, tackling last-mile logistics issues logistics platforms. requires close cooperation with private companies, the key players in this business. Such companies are hardly ever just local.
46 14 13 12 11 10 9 8 7 6 5 4 3 2 1 pick-up points Network ofe-commerce lane/drop-of fpoints traffiReserved c Direct logistics (UDCs) Urban distributioncenters (Indirect) subsidies Congestion charge zones Special retail andlogistics (LEZ Low emissionzones Exclusive zones Time slots Equipment andtechnology Systems (ITS) Intelligent Transport modes transportation Alternative Greener trucks REGuLATORY ANDLANDPLANNING EQuIPMENT ANDTECHNOLOGY FINANCIAL INCENTIVES/TAXES delivery transportproviders Short-term fi nancialincentivesforexemplarylast-mile by vehicleweight Introduction ofcongestion chargingandtolls Self-service pick-uppointsforparcel deliveries lanes forfreight transport Creation ofdedicatedloading/unloading areas andtraffi c transport (boat,train),needingbreak-bulking inthecity Containerized inboundcargoshipmentsbypooledmass Possible award ofconcessions bythecity in thecity Shared logisticsfacilitiesfor poolingfreight tobedelivered use plans Creation ofretail andlogisticszonesinurbanland Transition from LEZtoULEZ(ultra-lowemissionzones) emissions Access tocertainareas conditionedonvehicle Limited tosometrucksizesand/ortimeslots to certainareas Exclusive accessforoneormore transportcompanies of trucksatcertaintimes Opening/closing ofsomeareas tospecifi ctypes conditioned onweight,sizeand/orageofvehicle Access tocertainareas and/orroads forvehicles and centralizedroute planning systems, freight capacityexchangesystems Optimized freight distributionthrough traffi cinformation Often combinedwithUDCsordirect injection (2/3 wheelers,ultra-lightvehicles) andelectrictransport modes Use ofalternative measures Often inconjunctionwithregulatory andland-planning Low- orzero-emission trucks(Euro NCAP5,electric,gas) INFRASTRuCTuRE village Bologna: BolognaInterportofreight Berlin: LEZsince2008 for DHLaround LHR London: Exclusivezone slotsbytypeoftruck Paris: Time in citycenter Prague: 3.5tonnesweightcap for UDCvehicles Bristol: Extensionoftimeslots London: Congestioncharge USA: Amazone-lockers freight atnight Barcelona: Useofbuslanes for from centralpoint Paris: Direct injectionviawaterway logistics Ningbo: DHLUDC;Lyon: LUTBcity (ERP) system Singapore: Electronic Road Pricing (e.g. Monoprix) Paris: Urbanlogisticsbyrail (Deutsche PostDHL) Bonn: Carbon-free project 47
Arthur D. Little, adapted by Michelin GAME CHANGERS 1 / 4
2/ DEVISING A PROPER URBAN LOGISTICS Finally, it is necessary to harmonize regulations STRATEGY across cities and regions. National and international logistics companies should be able to rationalize Several solutions can improve last-mile delivery their regulatory compliance costs without undermi- in the city. They fall into four categories: regulatory ning the underlying objectives. & land planning, infrastructure, incentives and For example, they will not invest in complying with technology. the requirements of a district, or a city, (allowing Selecting the best solutions involves an assess- entry for vehicles below 3.5 tonnes), if the authority ment of their local impact and their individual of that area or the neighboring area applies other contribution to the objectives sought. In addition, rules (allowing entry for vehicles below 6 meters), measuring the combined effect of these solutions and if they are unable to recoup the costs. To do is highly complex, as adopting one solution may so would be counter-productive. positively impact one objective while negatively impacting another. Last-mile delivery solutions are at very different For example, a plethora of small electric trucks levels of maturity, but the analysis below shows the potential benefi ts of combining them: a revised may well reduce noise pollution and CO2 / NOX/ business model (freight pooling, massifi cation) PM2.5 emissions, but they would also increase congestion and logistics costs if truck utilization offering clean and connected modular vehicles is inadequate. in exchange for which public authorities facilitate In the fi nal analysis, the key to an effective urban transporters’ logistics operations. logistics strategy lies in performing a detailed cost-benefi t analysis of the solutions, individually and collectively. We recommend conducting urban logistics pilot studies and trials before undertaking a large-scale roll-out.
Introduction Growth Maturity Decline
Specifi c zones for retail Diesel not meeting Exclusive zones Time slots and logistics emission standards
Indirect subsidies Direct injection Low emission zones (LEZs)
Alternative transport Urban distribution center Network of e-commerce modes (UDC) pick-up points
Reserved lanes/ ITS Greener trucks drop-off points
Ultra-low emission zones Congestion charge (ULEZs) Arthur D. Little, adapted by Michelin
Regulatory Incentives and land-use planning
Infrastructure Equipment and technology
48 25-60% (AllenandBrowne). traveled by30-45%,thuslowering emissionsby reduce thenumberoftripsby30-80%anddistance Studies showthatfreight poolingUDCscanhelp safety andairquality. the city, inshorttheirimpactontraffi candits fl ow, truck utilization,thenumberoftrucksentering delivery tothecitycenter. Theaimistooptimize of thecitywhere theyare recombined foreffi cient are collectedinspecialwarehouses attheedge from thefl owofgoodsintothecity. Shipments decouple thefl owofgoodstotheoutskirtsacity The functionofanurbandistributioncenteristo (uDC) Freight poolingaturbandistributioncenters enhanced iftheyare combinedwitheachother. The effectiveness ofthese solutionswillbegreatly (LEZ followedbyULEZ)andITSroll-out. tion centers),lowemissionzonesintowncenters a matterofpriority:freight pooling (urbandistribu- Nonetheless, werecommend three solutionsas solution mixtailored tothe economicenvironment. Last-mile deliverywillnecessitateanintegrated and levelofconsolidationthelogisticsindustry. availability), existenceofintegratedinfrastructure points, marketshare ofe-commerce, fuel(price, are known:urbandensity, numberofdelivery theselectionofsolutions The keycriteriagoverning SOLUTIONS ANDCOMBININGTHREEPRIORITY 3/ more modularvehicles. looking toexpandtheirrangesofsmaller, lighterand ranges (includingelectricpowered vehicles)and also playingtheirpartbydevelopingmore effi cient Dongfeng, Iveco,GM,Daimler, Renault,etc.)are Leading manufacturers ofdeliveryvehicles(Hino, Return Corp,etc. Return Deutsche PostinGermany, BeijingCollect& lockers, suchasAmazone-lockersintheUS, Many citiesare testinge-commerce pick-up for largeconstructionprojects tobeconsolidated. London requires deliveriesofbuildingmaterials a limitednumberofdedicatedtrucklanes. peak hours.NewYork haspooleddocksand some Chineseregions regulate accessduring Shanghai restricts entryofpollutingvehicles,and Some citiesalready havesuchsolutionsinplace. WERECOMMENDDEVELOPING and PM reduction inrelated emissions,especiallyofNO emissions are overasetlevel.Theresulting Trucks are bannedfrom lowemissionzonesiftheir by ultra-lowemissionzones(uLEZs) Low emissionzones(LEZs)followed them.» ensure thatwhatisgoodfor societyisgoodfor As FrançoisMichelinputit«companiesmust replace thesearch forthe«most-miles». In sum,thesearch forthe «best-mile» should equivalent of3,500truckssurplustorequirements. helped saveover300millionkilometers,orthe 40 companieswhoselogisticscooperationhas Grocery Distribution),which bringstogether done. AnotherstrikingexampleisIGD(Institutefor establish them,asNestléandUnitedBiscuitshave UDCs, sometimeseventieupwithcompetitorsto Some bigcompanies,perceiving thebenefi tsof delivery. solution forlong-distancetransportandlastmile shippers themostattractiveintegratedlogistics tion). Thebenefi tofthisarrangementisthatitoffers costs (trans-loading)andrevenues (loadoptimiza- which actsasaUDCforthepurposesofpooling that cityhavesetupCityLogistics,ajointventure been triedandtestedinLyon, France.Shippersin Another mechanismhighlightedinChengduhas provider. proceeds ofroyalties paidbythelast-milelogistics or publiccompensationfortransporterswiththe Hence thevirtuousmechanismoffundingprivate for leasingspace,handlingandtransloading. UDCs canincrease transportcostsbyadding functions. management, locationmappingandroute planning technical platformsthatperformreal-time delivery rules acknowledgedbyall.Goodspassthrough good communicationbetweenthemandclear and loadersinvolvesclosecooperation Consolidating goodsfrom different transporters The decisiontocreate aLEZgoeshandin transporters anunfairadvantage oversmallerones. compliance doesnotgivelarge, fi nanciallystrong some formofcompensationso thatthecostof as lowpossible.Ideally, theyshouldreceive level,areoperate atnationalandinternational kept compliance costsfortransporters,whousually Cities needconcertedpoliciestoensure that their fl eettomeetthestandards prescribed. require transporterstoinvestinretrofi tting 2.5 , issubstantial.Thezoneshowever x
1 /4 49
GAME CHANGERS 1 / 4
with the development of UDCs on the outskirts of ITS applications make urban transport more the city. efficient by cutting operating costs and improving The definition of an ultra-low emission zone (ULEZ) service. However, applications integrating all should be embedded into the urban planning the complexities of last-mile delivery are still process as early as possible. That would facilitate underdeveloped. With significant investment, ITS the roll-out of smart infrastructure upstream and will help provide cities with modern infrastructure, speed up the introduction of a cleaner vehicle mix. thus boosting their competitiveness and growth The longer one waits the harder it will get. due to the vast efficiency gains they deliver. Logistics experts know that ITS can deliver effi- Intelligent Transport Systems (ITS) ciency gains of 15% to 20% by optimizing vehicle Intelligent Transport Systems (ITS) help to integrate utilization and route planning. The potential of ITS information and communication technologies with can be increased through the implementation of transport infrastructure, vehicles and users. UDCs. These, in turn, will only achieve optimized By sharing essential information, they make transport freight pooling if vehicle, loading rate and road networks more effective, while enhancing their traffic information data are interconnected. safety and reducing their environmental impact. ITS-connected platforms provide route and load Intelligent Transport Systems have a key role to optimization solutions for vehicles. Vans and trucks play in reverse logistics by optimizing utilization so used for deliveries in the city center are only 40% that vehicles return less empty. For this to happen, to 45% loaded on average in most large cities the entire supply chain, including the availability around the world. Most of the time they return of transporters returning to the outskirts from empty and the routes they take are not optimum. their delivery rounds must be under control. The emergence of ITS-enabled B2B marketplaces They will then be able to backload waste, is an opportunity for transporters to limit conges- recyclable materials, unsold items, packages, etc. tion and inform drivers in real time of loading opportunities close to their current point of delivery. Lastly, ITS technologies open the door to inno- The DMMAs described in «door to door solutions» vative transport solutions including combining (see Chapter 1.3) are also vital for developing such passenger and freight transport. marketplaces and delivering benefits in terms of For example, trams and autonomous vehicles are economic growth and urban well-being. ideally suited for moving goods around outside certain hours. By creating an additional activity for public and private transport providers, ITS solutions help them to recoup their investment. Similarly, air drones could be used to provide last- mile delivery services (see the recent experiences of Amazon, Parrott and Wal-Mart), but only if they are supported by ITS infrastructure.
50 5 balance. drawn from afewfailures, havestrucktheright companies that,withtimeand theexperience interactions betweenpublicauthorities andprivate partnership (PPP)torefer tothemanyfruitful possibilities. We usethegenerictermpublic-private and privatesectorsoffers increasingly interesting we believethatpartnershipbetweenthepublic Following arecent stringofOECDpublications, they mustconsider. offers solutionsthat policymakersalternative needs. Privateinvestment,ontheotherhand, Public moneyalonecannolongermeetthose the greater thelikelihoodthiscostwillrise. The higherourexpectationsofsustainablemobility, infrastructure investmentisrequired through 2050. an estimated$120trillioninglobaltransport According EnergyAgency, totheInternational Mobility meansnewopportunitiesforthefi nancialworld! inter-vehicle connectivity, storage,urbandistributioncenters,fl eet managementsystems,etc. dedicated publictransportinfrastructure, parkingfacilities,vehicleidentifi cationsystems, Each ofthegamechangerswerecommend inourGreen Paperrelies onthedevelopmentof challenges ofgrowth andrelated jobcreation. affect thetransitiontoalow-carbonsocietyanddeterminewhetherwecanmeettwin in thedevelopmentofnewmobilitysolutionsonalarge scale.Successinthesetwoareas will which cannolongerbemetbypublicbudgetsalone.Itisalsonecessarytostepupinvestment It istimetotackletheissueoffundingrequirements transportinfrastructure, formodern and innovativemobilityservices for sustainabletransportinfrastructure Mobilizing privateinvestment and Europe, especiallyGreat BritainandFrance. the UnitedStates,Brazil,India,Africancountries over thelastfi fteenyearshascomefrom Canada, offerings. Thestrongest growth insuchfunding infrastructure andinnovativemobilityservice fi eldswecover:large-scalepublictransport PPP fundingisrisingsharply, especiallyinthetwo account forabout5%ofinfrastructure funding. According toMcKinsey, thesespecialpartnerships 1 /5 51
GAME CHANGERS 1 / 5
Summary of different funding instruments for infrastructure and innovative mobility services
REGuLATORY 1 Contractual framework Establishment of various forms of partnerships France: “partnership agreement” (quality/effi ciency, hybrid, traffi c)
2 Public guarantee Financial support mechanism to secure private investment India: ~40%; Canada: ~20% (~20-40%)
3 Review clause (risk sharing) Possible risk restructuring during contract period All PPP agreements
INFRASTRuCTuRE
4 Public Public budget provides 100% funding for infrastructure, China: railways but some mobility services are outsourced
5 Traffi c risk PPP Partnership with 100% risk borne by private sector France: highways (Vinci)
6 Hybrid PPPs (traffi c/quality) Partnership where small proportion of risk is borne Milano: railway station by private sector
7 Quality and effi ciency risk Partnership where traffi c risk is borne by public authority Ottawa: Ottawa-Waterloo light rail PPP with guaranteed fee for private partner
8 Future privatization Partnership where private partner owns infrastructure UK: mainly hospitals at end of contract
FINANCIAL INSTRuMENTS
9 Bonds Possible bond funding (private funds) Canada, USA: pension funds
10 Loans Project fi nance mechanism (banks) All PPP agreements
TECHNOLOGY AND SERVICES
11 Mobility services Private sector fi nancing of new mobility services Indianapolis: car sharing system (IndyBlue)
12 Shared research programs Public-private fi nancing of joint research programs EU: European Green Initiative
13 Public data with private Financing of new mobility applications using monetized Amsterdam: Amsterdam Smart City applications public data Arthur D. Little, adapted by Michelin
52 generated byusers.Theprivate partnerdoesnot fare revenue, ticketprices, etc.).Revenueismainly fi nancing and ispaidfrom thesales proceeds (tolls, partner. Theprivatepartnerarrangesinfrastructure the riskrelates totraffi bytheprivate candisborne projects. Inthefi rsttypeofPPPagreement, for fundinglargepublictransportinfrastructure Some typesofPPPhaveproved inadequate bear mostoftherisk The dangersofmakingtheprivateprovider fulfiare lled. opportunities are availableifcertainconditions the publicandprivatesectors.However, such is fi ndingopportunitiestoshare riskbetween also betakenintoaccount.Themaindiffi culty economic andsocialspinoffs ofprojects should return shouldnotbethesolecriterion.Thepositive For long-terminvestmentsofthisnature, fi nancial or positive(safety)externalities. and valuationofnegative(pollution,congestion) spinoffs forthearea intermsofjobsandbusiness, forecasts, impactsonland values,economic a varietyofcomponents,includingtraffi cdemand The businessmodelforpublictransporthas railways, whichare complex andunprofi table. models andrisktaking.Thisisespeciallytrueof balance betweenthesearch fornewbusiness Transport infrastructure fundinginvolvesadelicate projects The problem ofrisksharing inheavilyfunded INSTRUMENTS INFRASTRUCTUREFUNDING 1/ KEYSUSTAINABLE TRANSPORT than asinglelender. the investmentcapacityofapool oflendersrather zation), publicauthoritiesare abletotapinto instruments suchastransferable securities(securiti- By switchingfrom traditionalbankloanstodebt Canada, butonethatseemsto begettingstronger. a recent trend originatingintheUnitedStatesand expressed byinvestmentandpensionfundsis The shifttowards bondfi nancingandtheinterest using mainlytraditionalproject fi nancetechniques. ments, were fi nancedbylong-termbankloans The fi rstPPPcontracts,primarilytraffi criskagree- long-term projects withapublicguarantee Rising interest inprivatefundingforlarge of theseagreements bearstestimonytothisfact. risk takingandprofi tability. Therisingpopularity fl exible,theywillstriketherightbalancebetween have acommoninterest and are willingtobe solutions. Aslongasthepublicandprivatesectors effi ciencyriskagreements, there are multiplehybrid Besides traffi criskagreements andquality- and increased privateinvestment. macro-economic impacts such asjobcreation service quality, assetpreservation andanumberof fast project delivery, contractuallyguaranteed often citedbytheauthoritiesthemselves,include requirements ofpublicauthorities.Itsbenefi ts, This styleofpartnershipmeetstheeffi ciency been developedinCanada,basedonthismodel. airport orfrom citytolarge outlyingsuburbshave Many high-speedtrainconnectionsfrom cityto operation andmaintenanceinreturnforafee. it entrustsaprivateinvestorwithconstruction, from operatingtheinfrastructure. However, the publicauthoritysinceitreceives therevenue and effi ciency. Thecommercialby riskisborne by theprivatepartnerislinkedtoservicequality used forthelasttenyears,whereby theriskborne A secondtypeofPPPagreement hasbeenwidely and effi ciency a betterbalancebetweenrisktaking The advantageofamechanismthatstrikes transport. why wedonotrecommend thisoptionforpublic putting someproviders outofbusiness.Thatis the economiccrisisledtoacollapseintraffi c are highlydependentonGDPgrowth. InSpain, failed forrailways.Theotherproblem isthatthey been effective forFrench motorways,buthave passenger numbers.Thatexplainswhytheyhave The obviousriskinsuchagreements islow receive anypaymentfrom thepublicauthority. 1 /5 53
GAME CHANGERS 1 / 5
In return, they have to guarantee a proportion of the amount invested (up to 20% and, in some cases like India, up to 40%) to make the project more attractive to private investors.
Note: Private fi nancing rates are always structurally higher than public fi nancing rates (by 2.5-4 points or even higher depending on the risk of the project). It is impor- tant to note that the public authority stands to benefi t not just in terms of fi nancing alone, but in transferring risk to the private sector through the introduction of specifi c, contractual performance and service quality criteria (fast delivery, proper maintenance). It also gains by substituting a fee, albeit a high one, for a capital investment that can be signifi cant during the construction phase of a project wholly fi nanced with public money.
New funding models: land value capture and to install 16,000 public charging stations for retail development electric and hybrid vehicles. For the company, this Private investors are able to create additional amounts to an investment of €150 million over 4 funding models, the most interesting of which years. In return, the group would be exempt from are land value capture and retail development public land use fees. The Bolloré Group’s offering, conditional upon passenger numbers. Mumbai while not intended to supersede the initiatives of (below) is a prime example. We also cite many local authorities, will provide a much-needed spur examples of innovative and successful co-funding to the development of the French national network in the chapter «New Economic Instruments». and, of course, drive the growth of the electric vehicle market. Raising fi nance from the sale of new serviced land in Mumbai, India
«Description FUNDING INNOVATIVE MOBILITY SERVICES The most signifi cant form of land value capture is 2/ acquisition, followed by the sale or lease of surplus land. Governments which acquire (or already own) land around Developing new mobility services also promotes an infrastructure project can either rent it or sell it at innovative systems of funding and can lead to new a profi t once the project is completed. solutions that do not require heavy infrastructure Example funding. The Mumbai Metropolitan Region Development Authority Increasingly frequent − and pragmatic − use of has developed infrastructure for the 553-acre Bandra- Kurla complex. It has sold land parcels to fi nance private investment in innovative sectors (smart additional infrastructure and public works projects. towns, energy, mobility, new services) is often Impact driven by urban development policies. The wides- USD 510 million raised (including the highest land pread adoption of information and communication valuation in India to date at USD 7,330 per m²)» technologies (ICT), operational effi ciency and rapid Source : McKinsey roll-out are key to meeting the new mobility needs of people. Examples include bike sharing and car sharing, The rise in 100% private initiatives new user services (Amsterdam smart cities), public data management for online applications to manage The example of Tesla is particularly pertinent and users’ choice of transport system (Edmonton and revealing. To support its commercial success, Tesla Montreal). needs to have a good network of electric charging stations. Complementing the federal and state The private sector enjoys the confi dence of cities authorities, the company decided to fi nance regarding its ability to innovate, fi nd new business the US network fully from its own funds and plans models and manage risk. to do the same in other countries. A very similar initiative has been launched in France The conditions for the emergence and develop- by Blue Solutions, a Bolloré Group subsidiary, ment of new business models offering mobility which announced in December 2014 that it had services was a recurring theme at the various fi led an application with the French government exchanges, discussions and conferences held in Chengdu.
54 development. sional integratorwhilemaintainingcontrol overits player todelegateaserviceprivateprofes- demand from cities,ultimatelyenablesapublic service AutoLib).Thistypeofmodel,ingreat and stationsforusersoftheelectriccarsharing freeing upofparkingspacesforchargingpoints must alsobeclearlyconsidered. (Forinstance,the on acommonproject. An exchange ofassets between theserviceprovider andthecitybased fi rms(JCDecaux).It rests ona«contractoftrust» companies (water, gas)andlaterbyadvertising ciety. Itwasfi rstsuccessfullyimplementedbyutility offer aservicetargetingwide cross-section ofso- agreement withapublicinstitution (e.g.acity)and this modelallowsaprivateplayertoenterintoan tion toPPPswhichhaveaspecifi clegalstatus, tram), isthepublic-privatemarketplace.Inaddi- car sharing,publictransportbyelectricbusor for developingitspublictransportservices(electric mple byBolloréGroup’s subsidiaryBlueSolutions Another typeofbusinessmodel,favored forexa- urban delivery, mobilityfortheiremployees,etc. rested inservicesrelated totheirbusiness,suchas proportion ofprofessional orprivateusersinte- transport solutions.Theywouldbefi nancedbya litate theemergenceofinclusivemobilityorpublic they havetobepaidfor. Suchamodelcouldfaci- provided forfree uptoacertainlimitbeyondwhich such asLinkedinandDropbox, where servicesare been spurred bythedevelopment ofcommunities paying users.Thistypeofbusinessmodelhas larity oftheservice,whileprofi tabilitydependson enjoying thefree optioncontributetothepopu- a numberofadditionalservicesforfee.Users maximum ofusers.Theotherisnotfree andoffers two options.Oneisfree anddesignedtodrawa the «Freemium» modelistooffer aservicewith The «Freemium» model.Themainideabehind presented byourpartners. the mostpromising ones,someofwhichwere successful inthedigitalindustry. Belowwemention Often theyare basedonthosethathavebeen The newmodelsare not«weaksignals»anymore. partnership with Visa Cardpartnership withVisa Services. also developeditsownsystemandisenteringinto every typeofmobility-related services.Orangehas parking. Tomorrow onesingleticketmightcover travel bytrain,regional and urbanbusandevencar carried outwhere onecan buyaticketcovering France. InBrittany, forexample,atestisbeing is already providing several«NFC»servicesin Chengdu atMichelinChallengeBibendumand is France’s SNCFwhichshared itsexperiencein entire rangeofrelated services.Acaseinpoint the mainserviceprovider offers asolutionforan and securely. Abusinessmodelisformedwhen allow transactionstobecarriedoutmore easily phone, are gainingpopularity. Infuture, thiswill such asautomaticpaymentsystemsbysmart- Near FieldCommunicationPaymentsolutions, proposal. quickly andoutmatchinganypotentiallycompeting business model,thekeytosuccessliesinmoving As isoftenthecaseforemergenceofanew for profi tabledevelopment. category standard andthusmaximizethechances proposals,compete withalternative becomethe and hydrogen fuelcellsforToyota) cansuccessfully that theircharginginfrastructure (electricforTesla make alargenumberofpatentsfreely availableso Tesla andmore recently Toyota havedecidedto impose itsownsolutiononthemarket.Inmobility, same sectoraccesstoitstechnologysoas offers other(andpossiblyrival)companiesinthe business model,popularizedmainlybyAndroid, is onstandardizing aninnovativetechnology. This increasing numberofapplicationswhenthefocus «Open Source» businessmodelshavean 1 /5 55
GAME CHANGERS 1 / 5
The curve below shows the key factors of success in partnerships between the public and private sectors.
Investment in sustainable transport infrastructure and innovative mobility services
Introduction Growth Maturity Decline
Quality and effi ciency Mobility services Public guarantee Public funding risk PPPs
Public data with private Bonds Loans Traffi c risk PPPs applications
Joint research Hybrid PPPs Contractual framework Future privatization programs (traffi c/quality)
Review clause Arthur D. Little, adapted by Michelin Regulatory Infrastructure Financial instruments Technology and services
56 Point ofview Private Public condition ofsuccessthroughout thepartnership. Absolutetransparency betweenpartiesisakey • profi tablebusinessmodelsinthismechanism. Private playersfi ndparticipatory, innovativeand tively meetinfrastructure ormobilityserviceneeds. they allowthepublicauthoritytoquicklyandeffec- sectors deliverbenefi ts.Ecosystem-focused, Partnerships betweenthepublicandprivate • sharply, especiallyinnewtechnologies. Privatefunding’s share ofinvestmentisrising • RECOMMENDATIONS 3/ INTERIMCONCLUSIONSANDINITIAL Summary: advantagesanddrawbacksofPPPsfrom apublicandprivatestandpoint • • • atstake,long-termcontracts) Facilitateslargecontracts(bigamounts • oftheproject viaafee) offundsisstabilizedovertheentire duration • fortransportinfrastructure projects • organization • andfi nancialrisks • sectoraverage • Spreads operationalandfi nancialrisks Facilitates accesstoadditionalresources Enhances marketknowledgeandanticipation Facilitates managementofcyclicalcosts(fl ow Identifi sources esalternative offunding Helps tograduallyreform public sector Spreads technological,operational Improves project effi ciencyinlinewithprivate ADVANTAGES duration oftheagreement. creation) impactsofthepartnershipoverentire fi nancial,social(servicequality)andeconomic (job Itisvitallyimportant tomeasure thepositive • for risk-sharingreview clauses. of allparties.Ifpossible,provision shouldbemade for transparency, effi ciencyandbalanceofinterests shouldhelpclarifytheconditions Governance • for thetermofagreement. the publicauthorityprovides protection andstability A legalframeworkisnecessarytoensure that managementoverthetermofagreement todealwithevolvingadministrative • approach Requires companytoadjustpublicsector • (veryexpensive/unattractivetoprivateplayers) • oftheprivatesector • thenumberofstakeholdersinvolved • Leaves thecompanyopentoriskofhaving Cannot beusedinsituationsofuncertainty Needs specialistteamwithgoodknowledge Complicates theproject by multiplying DRAWBACKS
McKinsey, adapted by Michelin 1 /5 57
GAME CHANGERS
2 ACTIONABLE LEVERS ACTIONABLE LEVERS introduction
Game changer implementation enabled by actionable levers
Citizens increasingly making their own mobility choices, existing or emerging technologies offering winning solutions, empirically validated economic instruments, targeted and redistributive public policies successfully tested in some of the world’s forward-looking cities, not to mention new ecosystems to activate – these are some of the actionable levers and techniques for putting efficiency and fun back into mobility. What is now critical is the political will on the part of the various players to massively embrace action and cooperate on creating shared value (in the sense used by Porter & Kramer).
The next five chapters will detail the manner in which to tackle mobility issues with actionable levers in a coordinated manner.
60 2 / 1 1 Innovative mobility ecosystems
The new mobility systems pioneered by the likes of Uber, AutoLib’, Blablacar, Moovel and Waze have necessitated the development of new ecosystems, illustrating the latest responses to growing mobility needs worldwide. Often informal, ecosystems have been more in the domain of ideas rather than concrete forms of human organization with their related economic issues.
The emergence of formal ecosystems bringing together multiple companies and private or public providers is explained by several factors:
Set CO2 reduction targets
• UNFCCC – COP21 • Carbon Capture Storage (CCS) ecosystem • Accelerated vehicle fl eet renewal ecosystem • Open data govervance
Mobilize private funds to address mobility Implement ultra-low expectations emission zones • PPP infrastructure • Multimodality systems • New business models (taxi, parking, digital mobility, etc.) INNOVATIVE • Urban & energy planning ecosystem • Crowdfunding MOBILITY ECOSYSTEMS • Big data & ITS for easier LEZ access (congestion control, etc.) ACTIONABLE LEVERS
Reinvent last mile freight delivery Develop door to door solutions for people • Ultra-light vehicle fl eet development • Freight pooling outside city center • TOD-based ecosystem (UDCs) • Digital multimodal mobility • B2B marketplaces for vehicle assistants load optimization • Car sharing • Autonomous vehicles
61 2 / 1
Consumers seek enjoyable user experiences. This chapter describes the ecosystems which, They demand seamless «all-in-one» solutions rather without seeking to be exhaustive, appear, in our than separate products or services they then have view, to make the most sense, based on the colla- to combine by themselves. They expect integrated borative work undertaken with Michelin Challenge mobility solutions that will make their lives easier. Bibendum’s partners, including companies, public authorities, consultancy fi rms, universities and civil Companies need to diversify their business society at large. models. In search of growth, they are increasingly opting for solutions that enable them to diversify their core activities by expanding in adjacent markets. This trend is driven by the functional economy in which combined technologies and services generate new know-how and business opportunities. This in turn leads to startups and new innovative players building ecosystems rather than control a value chain in its entirety.
New shared technologies and data open the door to innovative systems. Never before have Appropriate ecosystems will contribute to the com- we enjoyed so many shared languages, sources bined implementation of the fi ve game changers and technologies. When combined, they will unlock recommended in this Green Paper. Other solutions, the potential of the new ecosystems for inclusive such as long-distance logistics or extension of growth. mass transit systems (rail, air, sea, etc.), will serve to complement this approach. They have been The public sector has taken on a new role. Local included in our recommended innovative mobility authorities are faced with increasingly complex ecosystems, whose link with the fi ve game issues as they attempt to forge the conditions for changers is summarized in the previous fl owchart. growth and job creation. They must be competitive and business-friendly in a multi-polar world, while struggling with a debt burden that hampers 1/FOUR ECOSYSTEMS TO MEET AMBITIOUS their ability to fund infrastructure projects. GLOBAL CO2 REDUCTION TARGETS The relationship between the public and private sectors has traditionally been conducted along Since the Kyoto Protocol and its preparatory treaties,
national lines and so is not yet globalized. To some it has been widely accepted that the issue of CO2 extent, the public-private dichotomy has become emissions calls for a global ecosystem. obsolete. The UNFCCC (United Nations Framework Conven- tion on Climate Change) is supposed to form universities, professional schools and research the core of such a system. People all around centers are changing fast as they seek to open up the world, moreover, acknowledge that no serious internationally, integrate into the mainstream eco- measures will be forthcoming without a broad nomy and develop incubator structures on a wider international agreement. scale. The transport sector must be a major player in The economic challenges we face are global and this ecosystem. That means offi cially setting up complex. They call for a multidimensional approach. a sub-ecosystem between international agencies, No single player, whether public or private, can ensure national authorities and transport players. While implementation of our game changers on all three it may dispense with the need for a consensus levels − economic, social and ecological − simul- between all the parties concerned, at the very taneously. least it needs to integrate the positions of the four Some specifi c innovative ecosystems are already zones responsible for more than half of the world’s
in place to meet huge mobility needs and its most CO2 emissions: China, the European Union, India pressing challenges. Others have yet to be developed. and the USA. This will not only have a signifi cant impact, but also a knock-on effect on the other nations involved.
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The Paris Conference of the Parties (COP21) will Carbon Capture and Storage (CCS) is
have to make agreement on the principles of CO2 the second area in which an ecosystem needs to
valuation one of its goals. be built to achieve a signifi cant impact on CO2 levels This, in turn, will drive technological innovation and in the atmosphere. In its 2013 Technology Road-
the CO2 pricing process, resulting in companies map, the International Energy Agency reiterated being better rewarded for their R&D efforts and the urgency of «introducing fi nancial support mecha- investments in this fi eld. nisms for demonstration and early deployment of To facilitate this process, a panel of business lea- CCS to drive private fi nancing of projects». ders from the 200 companies present in Chengdu
has agreed in principle on the need for concerted The world emits an estimated 50 gigatonnes of CO2 action among several international private com- per year. A global ecosystem designed to capture panies from the Michelin Challenge Bibendum 2 gigatonnes per year in 2030 would be the fi rst ecosystem in order to speak with a strong and signifi cant measure to reduce emissions and constructive voice in the crucial discussions at the risks associated with anticipated frequent COP21. extreme climate events. Following this decision, actions are under way to implement this goal so that private mobility players The fi gure below confi rms the realistic nature of may demonstrate their commitment to sustainable the target, lead times, growth potential and overall development. benefi cial impact of ecosystem-based CCS.
IAE ‘450’ scenario depicts Carbon Capture and Storageas a major future global growth industry
Global CCS deployment 2010-2050 by region (Mt CO2 captured / year)
OCDE Pacifi c OCDE Europe India China United States Other Asia Eastern Europe Africa and Russia Other OECD Middle East Central and North America South Africa
Captured CO2, Mt CO2 / yr
12 000 3 400 projects
OECD 35 % ACTIONABLE LEVERS 10 000 Non-OECD 65 % 2 100 projects OECD 40 % 8 000 Non-OECD 60 % 100 projects 850 projects OECD OECD 50 % Non-OECD 50 % 6 000 50 % 18 projects Non-OECD OECD 50 % 72 % 4 000 Non-OECD 28 %
2 000
2010 2015 2020 2025 2030 2035 2040 2045 2050
Note: The dashed line indicates separation of OECD/non-OECD groupings. Sources: IEA World Energy Outlook 2010; McKinsey report. The Case for Commercial Carbon Capture and Storage Industry (March 2011) 63 2 / 1
Used in conjunction with other low carbon policies, The first is coordinated global car fleet this approach makes a convincing case for increa- renewal known as yellow label scrapping.
sing the required price per tonne of CO2. After all, Although there are scrapping policies at national
CCS aims to use CO2 for purposes other than level, a coordinated international ecosystem capture, which implies capitalizing on the value would encourage the adoption of greener vehicles,
creation potential of CO2! thereby enhancing well-being and accelerating the somewhat sluggish renewal of the global Discussions on this issue in Chengdu nonethe- vehicle fleet mix (growth). less raised the central question of geophysical
constraints on such CO2 sequestration. At the The second is international open data current stage of scientific research, the view is that governance. This would ensure more reliable
few territories are appropriate. and systematic integration of all CO2 emissions measurements, enhance progress and efficiency Operational forecasts of global geophysical and accelerate multimodality. risks and innovative research on easing these constraints are two key levers that only an ecosys- We believe it necessary to focus on these four tem can operate effectively. ecosystems in an effort to reduce the size and complexity of the issues and to address them most effectively. The main advantage of this modular Two other ecosystems, which are easy architecture is that it simplifies tasks and reduces to develop and put on government agendas, coordination costs. would contribute to synergies between low carbon It also spurs innovation, which is key to change.
policies. Indeed, companies would factor the CO2 variable into their policies much more if it were directly relevant to their specific field of activity and know-how.
64 2 / 1
2/INTRODUCING LEZS AND ULEZS TO impact of restrictions on access to the city center. PROMOTE THE DEVELOPMENT OF A LEZ or an ULEZ is not just about regulation and APPROPRIATE INFRASTRUCTURE infrastructure; it also requires people and goods to AND VEHICLES be transported effi ciently.
The world’s fi rst low emission zone (LEZ) was established in Tokyo in 2003. Since 2006, LEZs have rapidly spread across Europe. EU air quality 3/ ECOSYSTEMS FOR DEVELOPING legislation has got progressively tougher and calls DOOR TO DOOR TRANSPORT SOLUTIONS for LEZs to be introduced more widely, and even FOR PEOPLE, WITH CORRESPONDING expand into ultra-low emission zones (ULEZs), WEB-BASED APPLICATIONS such as the one planned for London in 2020. For the last-mile to home, large-sized buses with Policies dealing with passenger and goods transport a daily average occupancy of 15-30% are simply only make sense if they secure beforehand not suitable. Except for the main lines, they do not the involvement and acceptance of the various offer the fl exibility or coverage required by users. players (users, consumers and drivers). With regard to the mobility of persons, ultra-low The development of door to door solutions is emission zones (ULEZs) entail upstream integration underpinned by different ecosystems depending of walking and cycling with other urban mobility on the solution being sought, the players involved modes. They also entail a denser network of public and the benefi ts delivered to each party. transport (i.e. new infrastructure), a viable city-wide car sharing solution, and an effective communi- cation strategy highlighting their cost advantage, comfort and convenience so as to make them more attractive to different sections of the public. At the same time, cities must create smart goods transport ecosystems to support growth, including reserved lanes for the cleanest vehicles, freight pooling, central warehouses, dedicated pick-up points for parcels ordered on-line, etc.
Three sub-ecosystems it seems to us, play a role in the creation of low emission zones with enhanced road safety measures: multimodality, integrated urban and energy planning, and coordi- nated ITS (Intelligent Transport Systems) solutions:
• Multimodality (and its “integrated” variant, i.e. ACTIONABLE LEVERS intermodality) is essential to gain people’s support for the establishment of a LEZ. The expected revo- lution will stem not from the prevalence of one mode of transportation (all are welcome given the needs!), but from the networking of all modes to facilitate interaction between people and the exchange of goods. • Integrated urban and energy planning policies on housing, heating and transport, hitherto usually dealt with separately. Integration will unlock a potential of CO2 emissions reduction policies, while reducing the global energy bill. • Big Data and ITS should help reduce congestion, enhance safety, control emissions and deliver door to door mobility solutions. This data has to be coordinated and used to offset the economic
65 2 / 1
The bike sharing ecosystem Other private players are now offering bike sharing as one modal option among others. «Mu by The best outcomes in the world demonstrate that Peugeot», for example, includes bikes, e-bikes, several functions can be performed by a private scooters and cars. company as part of a partnership with the local authority. In Paris, for example, JC Decaux manages the sale of advertising space and operates, maintains and manages the Vélib bike sharing network, adjusting the fl eet by moving bicycles to areas where people need them most.
Shanghaï Minhang District Government
Public authorities (local, national and international) Manufacturers Mobility service and OEMs providers
Financial Connectivity suppliers and institutions CUSTOMER systems integrators
NEEDS Added-value Trade service associations providers Arthur D. Little, adapted by Michelin
NGOs Infrastructure and think tanks suppliers Energy suppliers
Leader
Core member
Support member
Little involved
66 2 / 1
The car sharing ecosystem Clearly, service providers are at the head of this ecosystem, relying on cities to introduce Car sharing is emblematic of the new uses of the required mobility infrastructure (locations, road mobility in the 21st century. New private providers signs, etc.), on manufacturers to produce offer an accessible, on-demand transport service the vehicles and on web-based applications based on an innovative business model, thereby to create a direct interface with users. supporting efforts by local authorities to address the issues of congestion and pollution.
Public authorities (local + and national) Offi cial App 3rd-party App Manufacturers Mobility service and OEMs providers
Financial Connectivity institutions suppliers and systems integrators CUSTOMER NEEDS Trade Added-value associations service
providers Arthur D. Little, adapted by Michelin
NFOs and Infrastructure
think tanks suppliers ACTIONABLE LEVERS Leader Energy suppliers Core member
Support member
Little involved
Beyond the ecosystem itself, the table below highlights the role and interests of each car sharing player. It also shows the right balance between the well-being of people, the renewed pleasure of driving, and opportunities for economic growth (average annual growth up 28% over the 2006- 2012 period, according to McKinsey − «A brief look into the global car sharing market «, July 2013).
67 2 / 1
Players Contributions Rewards
1 Mobility service • Own and drive growth of car sharing • Income from delivery of car sharing providers services services to users • Deliver fl eet management solutions • Responsible for operations, day-to-day maintenance and marketing
2 Public authorities • Promote car sharing as sustainable • Enhanced customer satisfaction through (local, regional and mode of transport seamless multimodal mobility national) • Stimulate demand by «nudging» users • Improvement in road traffi c and reduction of GHG emissions
3 Connectivity suppliers • Offer customer interface for real time • Fee received from mobility service and sustems integrators information, booking and payment providers
4 Manufacturers • Produce vehicles for mobility service • Brand awareness and optimization and OEMs suppliers and deliver fl eet management • Income from sale of vehicle fl eets solutions
5 Financial institutions • Deliver payment solutions • Better brand image and payment suppliers • Deliver fi nancing and insurance for fl eet • Income from payment, fi nancing and and infrastructure insurance services
6 Added-value service • Contribute to fi nancing of car sharing • Fee from advertising sales (or media providers* services through advertising sales management, with clawback for operator) (e.g. advertising, and embedded value offerings • Increase in popularity of embedded web applications, etc.) application
*Except transport, covered by transport service providers
The Automated Road Transport (ARTS) The second, provided the implementation of a ecosystem regulated usage framework, would leverage the already available 100% autonomous technology. Autonomous vehicles will be the most fl exible and profi table component of the public transportation The «incremental» model is in fact an extension of network. Privately-owned vehicles could restore the ADAS model for automotive OEMs. Experts the sense of freedom and enjoyment of traveling gathered at Chengdu agree that this market is by road, with fewer accidents and freed-up time in undoubtedly the most signifi cant in the short term. congested traffi c (see chapter 1.3 on Door to Door However, it is also highly competitive, the problem Transport Solutions for People). for automotive manufacturers being how to suc- Some regulatory and technological restrictions, cessfully promote (level L3) automation technolo- however, need to be lifted to unlock the benefi ts gies among consumers, while telling them that they in the years ahead. Experiments on an operational are ultimately responsible for the vehicle’s behavior ecosystem have already been carried out by Google as prescribed by the Vienna Convention. Car (State of California), CityMobil2 (Europe) and The «disruptive» model is admittedly based on LTA-Smart (Singapore), among others. autonomous vehicles, but, more importantly, it Economically, there are possibly two distinct provides a new mobility service offering, as a ecosystems for achieving fully autonomous result of which its benefi t is more readily observed infrastructure and vehicles. by consumers. Yet to be rolled out on a subs- The fi rst one is the progressive automation tantial scale, it requires more public support and of existing private vehicles (fi gure 1). construction of appropriate infrastructure (ITS, V2I, etc.).
68 / 1 Functionality 2
Autonomous Driving • ADAS & V2X • Semi ➔ Full autonomy V2V & V2l • V2V has network effect Figure 1 • V2V need mandate
ADAS Systems • Predictive collision avoidance • Autonomous ADAS functions Active Driver Assist • Proactive control systems • Collision impact mitigation Passive Driver Assist • Sensor-based warning • Ride/andling control assist
Vehicle Dynamics • Traction Control • Electronic Stability Control Reactive Safety • Seatbelts • Airbags • Anti-Lock Brakes IHS / NHTSA 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030
L0 L1 L2 L3 L4
Automation level NHTSA classifi cation L2 – partial autonomy Figure 2 Disruptive L3 – limited self-driving L4 – full self-driving
100 % autonomous L4
vehicle ACTIONABLE LEVERS
L3 Incremental
L2
L1
L0 Environment / Type of use Closed Controlled Semi-open Open e.g. warehouse) (e.g. port / (e.g. bus line) (everywhere) BRT)
69 2 / 1
So far the fi eld is open and the autonomous The DMMA (Digital Multimodal Mobility vehicle system is still at the experimental stage. Assistant) ecosystem As a result, no clear «leader» has yet emerged in We are still in the early stages of reaping this ecosystem, which requires contributions from: the impressive benefi ts delivered by DMMAs - public authorities − at international level for (cf. Part 1, “Game Changers”). This ecosystem vehicle regulations and at local level for trials is the most user-friendly, since the services and roll-outs; directly interface with it. Therein undoubtedly lies its - vehicle manufacturers, original equipment greatest strength and its potential for transforming manufacturers, new autonomous mobility mobility. players such as Google and robotics players; A DMMA ecosystem is led by a mobility service - public transport providers to integrate autono- provider, who in turn relies on a mobility integrator. mous vehicles into their existing network; Other stakeholders include policymakers - academics who developed the fi rst autono- (for facilitating open data sharing), fi nancial institu- mous vehicles (CMU Pittsburgh, Stanford, MIT) tions (experts in payment solutions), connectivity - ITS suppliers for fl ow management and digital and system integration specialists (facilitators, mapping (Here, Google, etc.); not contractors), infrastructure managers, and - connected service providers to make consumer associations who will become natural meaningful use of freed-up time. regulators of the services on offer (NGOs, think tanks, universities).
CITY OF MUNICH
Leader
Core member
Support member Public authorities (local, national and Little involved international) Manufacturers Mobility service and OEMs providers
Connectivity Financial suppliers institutions and systems CUSTOMER integrators
Trade NEEDS Added-value associations service providers
NGOs and Infrastructure think tanks suppliers Energy suppliers BAHN
Arthur D. Little, adapted by Michelin
70 2 / 1
4/INNOVATIVE ECOSYSTEMS Transport and infrastructure providers must FOR LAST-MILE LOGISTICS take the lead in last-mile logistics ecosystems. They include logistics providers, transporters, The last-mile is a thorny issue and its resolution loaders and distributors running their own transport requires interaction between large numbers of service. Since these players own and/or distribute stakeholders. It needs an innovative ecosystem the goods delivered, last-mile solutions impact their capable of linking contributions from various private core business. This aspect must be borne in mind and public players. The latter need to share when developing solutions aimed at supporting a vision, objectives and a set of solutions described the industry’s economy. In what is an increasingly in the chapter on Game Changers, or even complex industry, the skills required are highly to develop new solutions. specifi c. The «multi-local» experience of these providers fully justifi es their inclusion. Operationally, an urban delivery ecosystem coor- dinates at least six key participants, each with specifi c roles:
Leader
Core member
Support member
Little involved
Public authorities (national and international) Manufacturers Mobility service and OEMs providers
Connectivity Financial suppliers and
institutions systems ACTIONABLE LEVERS CUSTOMER integrators NEEDS Trade Retail and other associations added-value service providers
NGOs and Infrastructure thinks tanks suppliers Energy suppliers
Arthur D. Little, adapted by Michelin
71 2 / 1
Policymakers are a core member of these eco- Vehicle manufacturers and OEMs supply systems. They decide the regulations and grants the ecosystems with transport solutions and new designed to maximize value for the last-mile delive- technologies, such as low emission combustion ry system (people, planet, profi ts) at local, regional, engines and electric vehicles designed to reduce national and international level. Policymakers also the environmental impact of urban deliveries. choose which R&D avenues to encourage through Trade associations, which represent their members targeted subsidies. There are two areas on which before policymakers, participate by sharing best they should focus: practices and promoting the adoption of common standards. Competitiveness clusters (such as - harmonization of regulations that enable LUTB in France) spearhead research initiatives. transporters to operate in all cities (as opposed Their analyses provide public and private stakehol- to city by city); ders with insights that enable the right decisions and strategic choices to be made. - refi nancing of load loss for transporters required to pool freight on the outskirts of The contributions of and benefi ts for each par- cities (via income generated from the conces- ticipant in the last-mile logistics ecosystem are sion awarded to the operator of the urban summarized below: distribution center).
Players Contributions Rewards
1 Mobility service providers • Move goods sustainably and effi ciently • More effi cient transport in urban areas • Better brand image • Propose last mile delivery solutions to public • Lower investment risk authorities
2 Public authorities • Adjust and harmonize regulations for • Reduction in externalities due to last mile (local, regional and smoother last mile logistics (times, zones, delivery (economic, social and ecological) national) etc.) • Test urban distribution centers and secure fi nancial compensation for transporters
3 Infrastructure suppliers • Store goods and integrate the supply chain • More effi cient logistical activiities* • Operational management of urban • Better brand image distribution centers • Incorporate digital technologies into infrastructure (V21)
4 Manufacturers and OEMs • Develop innovative vehicle and equipment • Growth/sales potential technologies (hybridization, emissions • Expansion of business model reduction, enhanced safety, modular vehicles, etc.) • Integrate ICTs and ITS into vehicles
5 NGOs and think tanks • Coordinate expert contrbutions and • Infl uence on public policy necessary trials • Represent interests of different stake holders
6 Trade associations • Represent logistics industry before • Support grom association members decision-makers and enable them to take account of impact on industry • Spread innovative initiatives and best pratices
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That implies a structure and processes for the ecosystem within which players operate. Since the measures are interdependent, coordina- tion between players is all important.
Limiting political intervention to coordinating and leading the ecosystem As Adam Smith showed in 1770, the market regulates itself naturally. He called this the «invisible hand». If players are motivated − i.e. the cost- benefi t tradeoff is favorable − they do what is expected of them and the system works on its own without undue public intervention. Each player has their own set of objectives. The «invisible hand», in the case of mobility, is human Generally speaking, transport and infrastructure ingenuity which can be seen in the advances and providers look to provide service quality for innovations primarily designed to address their customers and generate comfortable the expectations of users (safety, convenience, profi t margins. Politicians, on the other hand, are cost, enjoyment, etc.). primarily concerned with the interest of residents If market forces are unable to make the system and businesses. In the context of last-mile delivery, work, political intervention may then be necessary these goals may be diffi cult to reconcile. It is of to achieve a targeted goal. Political intervention paramount importance, therefore, that there is serves to coordinate interaction between various agreement on the objectives of the ecosystem players in an effort to address the societal challenges before selecting and implementing last-mile we face. Accordingly, coordination should focus on delivery solutions. lifting obstacles and encouraging positive, game- changing innovations. Intervention, however, Three sub-ecosystems could be given priority: should be restricted to the coordination of players - Urban distribution centers (freight pooling so as to limit the risk of substituting public mana- outside the city – see Part 1, Game Changers), gement failure for market failure (or failure of the economic model used). - Experimental business models for ultralight At the municipal level, in particular, the role of multi-purpose vehicle fl eets (serving long- government is determinant, and this is highlighted distance providers of road, rail, air and river on pages 108 - 109. transport), - B2B marketplaces that allow last-mile Segmenting issues into modules logistics providers to increase sales by For optimum operation, the golden rule of gover- optimizing vehicle utilization. At less than 45%, ACTIONABLE LEVERS nance is to break issues up into modules. The idea global average utilization is too low and must is that each player should focus on the module that be optimized fi rst. interests them or where they are capable of gene- rating growth and a return on investment. Moreover, this form of segmentation encourages 5/ MOBILIZING PRIVATE INVESTMENT creativity and innovation. Players are more likely to innovate if they do not have to deal with other The growing mobility needs of a rising urban modules in their value-creation proposals. population, necessitating as they do infrastructure, Beyond coordination, there are other important electrifi cation, smart networks and new transport questions to be addressed. Who appoints the relevant solutions, clearly offer a growth opportunity to players? How is interaction between modules to be private companies. managed so that every module gets the information The hardest part about mobilizing private funds it needs from the other modules? is to ensure an appropriate regulatory framework Who decides if a module is working properly or for those investments. not? Who corrects any errors and how? What is needed is a guaranteed level of service Who referees? Who monitors and assesses quality for public players and return on investment the performance of a specifi c module? visibility and stability for private players. And so on and so forth.
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In answer to these questions, each ecosystem - New business models (taxi, valet parking, should set up a Coordination Committee for each etc.). Public authorities must encourage their game changer module, overseen and managed by emergence with a view to better satisfying the private players concerned. Each committee will the expectations of citizen-consumers, including operate in consultation with an innovative mobility their need for «on-demand mobility». ecosystem governance committee. Overseen by - Crowd funding. Although this mechanism the public authorities, the committee will set targets is perfectly suited to participatory economics and measure progress, but again leaving operatio- and helps place the consumer at the heart of nal responsibility to the private players. the concerns of mobility players, it is still poorly To a large extent, what makes the innovation eco- regulated or unregulated. Such an ecosystem system in California’s Silicon Valley so remarkable could lead to the creation of investment products and well performing is this model of governance, that match the expectations of private investors allied with the formation of local clusters of innova- looking for a steady return over the long-term. tion, investment and talent. By way of interim conclusion, introducing the eco- Accordingly, three ecosystems for mobilizing systems identified for each of the game changers private funding should take priority: recommended in this Green Paper will help deter- - Public/Private Partnerships (PPP): Special mine the winning technologies that can be rolled focus must be placed on new styles of out today, the relevant targeted regulatory measures governance and new goals to ensure that and the funding instruments available for large-scale these ecosystems function as they should and roll-out. are not hampered by uncertain profitability and ill-defined goals. For this to happen, separate The following chapters will address these issues, coordination and governance committees (see with a view to keeping mobility enjoyable for above) must be set up. This in turn requires everyone and facilitating the transport of freight. public authorities defining the oadmapr in terms of operational modules and related business opportunities, thereby enabling private players (manufacturers, mobility players, ITS suppliers) to focus on their respective modules.
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2 The winning technologies of tomorrow
The technologies required to implement the recommended game changers are suffi ciently mature to be rolled out in the next 10 years. For this to happen, the only developments that still seem necessary, apart from incremental ones, are local adjustments and appropriate regulations (on autonomous vehicles, for example).
Set CO2 reduction targets
• Boost renewable energie’ share • Further optimize internal combustion engines and electric power trains • Create and use lighter materials • Optimize and reduce travel time • Routinely use fuel cells
Mobilize private funds to address mobility Implement ultro-low expectations emission zones • Extract value from information • Introduce ITS infrastructure for • Promote green investments vehicles • Promote open innovation WINNING • Encourage growth of HEV/EV TECHNOLOGIES market share • Deliver IT applications for car sharing and parking • Develop global IT standards • Install sensors required for infrastructure nodes
Reinvent last mile freight delivery Develop door to door solutions for people • Use and develop platooning technologies • Deploy full hybrid technology • Routinely use Digital Multimodal for trucks Mobility Assistants (DMMAs) • Adopt ADAS widely • Create and develop car sharing infrastructure • Promote introduction of autonomous vehicles 76 2 / 2
“Winning technologies” provide the technical 1/DEVELOPING INTELLIGENT foundations for truly innovative mobility ecosys- TRANSPORT SYSTEMS tems. They will usher in a new era of growth for both industry and services. Examples of successful ICTs (Information and Communication Technologies) deployment abound when the political will is and ITS (Intelligent Transport Systems) are present. The coming decade will culminate in the cornerstones of modern transport solutions. the call for a second phase of innovations ready for Already available on the market, these technologies mass deployment which build on the fi rst wave will shape urban mobility by: of applications we already know (hydrogen, fi rst and second generation bio-fuels, brain-machine - enhancing safety for everyone through interactions, etc.). automatic emergency calls, real-time roadside assistance, remote assessment, advanced driving Implementing the fi ve game changers presented assistance and obstacle avoidance systems; in this Green Paper involves developing fi ve fi elds of winning technologies: - preserving the environment through more effi cient public transport, travel optimization and 1 Mass data collection and real-time data traffi c management, car sharing, multimodality, processing capability, in harness with ITS applica- arrival on the market of green services, etc.; tions in particular, comprise the most revolutionary tool for improving passenger and goods transport. - stimulating the economy through new economic opportunities stemming from business models 2 Advanced driver assistance systems (ADAS) based on monetization of Big Data streamed and automation technology are essential to enhan- by vehicles (real-time traffi c fl ow, infrastructure cing safety, eliminating pollution, and combating congestion levels, traffi c monitoring, route congestion and related stress. They will pave planning, driving behavior, etc.). The resulting the way to autonomous vehicles; income streams will lead to the creation of new jobs and skills; 3 Multimodality and intermodality, if well coordi- - promoting new user attitudes and behavior nated and backed by new service offerings, are such as eco-driving, telecommuting, new mobility crucial for tomorrow’s mass transit systems; models (pay-as-you-drive), sharing, multimodality, ACTIONABLE LEVERS services offered at intersections (transport in- 4 Electrifi cation of road vehicles, albeit partial, frastructure nodes), entertainment, not to mention is a prerequisite to almost total urban pollution everything that goes into making driving and abatement (since subways, trams and trains are moving around enjoyable. often already electrifi ed, and two-wheelers, boats and even some planes are on the way to being so); The four most promising ITS technologies are: • V2X communication systems that help to 5 The availability of clean energies that reduce enhance safety. Their deployment implies that all pollutant and CO2 emissions from one end of vehicles are fi tted with standardized systems; the chain to the other (well-to-wheel) is key to energy diversifi cation in the transport industry. • collision avoidance or pre-crash systems and directional control;
• automatic speed change (congestion/fuel consumption/platooning); • GPS-based sign recognition (safety/congestion).
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By being connected, tomorrow’s transport systems - response to infrastructure: traffic lights, smart will be cleaner, safer and more reliable. displays; - response to vehicle: New players and markets ➜ steering correction, The prospect of vehicles connected via ICT and ➜ automatic toll payment, ITS systems not only concerns traditional road ➜ parking space management, transport players, but encompasses a complex ➜ route management, etc. ecosystem of stakeholders, including public autho- rities, regulators, operators, vehicle manufacturers, Much needed international regulation providers of other travel modes, service providers, new technology suppliers, financial institutions, Public authorities need to step up the deployment etc. This breakthrough innovation relies on a wide of ITS technologies. For example, the 5,000 or spectrum of applications offering connectivity so Chinese ITS equipment and network installation between people and services, between vehicles companies must coordinate efforts to facilitate and infrastructure (V2I) and between vehicle and data sharing and synchronization. The lack of vehicle (V2V). Many types of communication a standard traffic control protocol makes it difficult technologies are available today (smartphones, to integrate existing software with complex GPS, etc.), each with ITS-specific applications. maintenance.
The necessary condition for mass deployment of The role of public authorities will be decisive ITS is large-scale use of on-board sensing and in promoting a sound ITS-based ecosystem, communication technologies: radio frequency while protecting rights to privacy. It is vital for cities identification (RFID), V2V and V2I, sensors, to analyze traffic data, create their own urban induction loops and video vehicle detection, mobility dashboard and so provide themselves beacons at all transportation nodes, etc. with the means of taking documented decisions. This approach will foster more appropriate user The primary effect of these technologies, driven behavior through innovative digital applications by electronics, software, sensors and actuators, which, in turn, will raise additional financing from is to account for up to 40% of the vehicle’s price. data monetization by private firms. This entails new providers, including parts suppliers, maintenance service providers and mobility inte- Creating value from Big Data grators, among others. The automotive industry Processing vast amounts of data (Big Data) gathered is in a state of flux as it shifts its focus away from by ICTs will help create new services for consumers mechanics to greater reliance on electronics and and professionals alike. As a result, insurance information technologies. premiums linked to driving style, or special offers The second effect of these smart technologies from stores during a journey based on the passen- and the consolidation of data derived from them ger’s buying tastes and preferences, are among is the provision of new services which people will the first possible applications. Service packages undoubtedly pay for because they match their new can be offered by providers delivering commercial lifestyles. solutions based on user habits and routes. Beyond mobility itself, the information collected would ITS technologies lie at the interface between opera- foster the development of a wide range of services tional improvement in the transport mode itself and and new business models that stimulate growth communication with the outside world (location, and job creation. safety, information, payment, entertainment).
The various players are jockeying for position at the different stages of development of ITS technologies:
- real-time data collection: recognition, surveillance (cameras, GPS, etc.); - real-time data processing;
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ITS : Intelligent Transportation Systems and matching services
Real-time data collection • Cameras • GPS • Inductive loops • Sensors
Real-time data processing • Software • Hardware • Powerful and fast computers
Response to infrastructure • Traffi c lights • Smart street signs • No-access streets
Response to vehicle • Direction correction • Route management MICHELIN • Atomatic tolls MICHELIN
Navigation ACTIONABLE LEVERS
Data-bases business models • Pay-as-you-drive insurance $€ • On-route service ¥DM offerings £ adapted by Michelin McKinsey and WEF,
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will come sooner than we think». The main obstacle MOVING FROM DRIVING ASSISTANCE 2/ to its entry into service is the lack of a defi nitive SYSTEMS TOWARDS AUTOMATED legal framework. Laws need to be suffi ciently TRANSIT SYSTEMS AND AUTONOMOUS robust to be enforceable in all jurisdictions around ROAD VEHICLES the world. Addressing this vital issue would pave the way for new players and stimulate the creativity Autopilot systems for planes and boats and of existing manufacturers. driverless subway trains are already part of every- day life and will become increasingly widespread. Automatic control of the vehicle’s main functions optimizes its use and reduces its fuel consumption. Advanced driver assistance systems (ADAS) for It also ensures smoother vehicle operation and road vehicles release drivers from some tasks, prevents driver error. This solution could be used improve their understanding of the vehicle’s in high safety zones as an adjunct to vehicles and surroundings and even take over from them infrastructure designed to signifi cantly enhance in an emergency. Their ability to ensure steadier the safety of all users, be they pedestrians, driving, avoid unnecessary acceleration and opti- two- and three-wheelers or cars. mize journeys will contribute to reducing pollution and congestion. The driver will be more relaxed While some technologies such as automatic and far more able to just enjoy the pleasure of parking, low-speed emergency braking and white- driving and cruising. To fulfi ll their potential, though, line detection are already built into a number of ADAS technologies need to be standardized and market-available vehicles, others such as auto- technically compatible. Along with automation mated driving in traffi c jams and lateral/longitudinal systems, they are a forerunner of autonomous vehicle control are on their way. These highly vehicles. These technologies already exist, but automated driving systems will be available by the sooner legislation takes account of their added 2020. The ability of the driver to relinquish control value, the faster they will develop. of the vehicle on the motorway, for example, is still some time away as long as there is no legal The ultimate in ICT/ITS technologies, autonomous framework or consumer acceptance. Low emission vehicles will soon constitute a revolution in road zones in cities would be an ideal test-bed, providing transportation! They already exist in one form a well-demarcated area – with few and at night or another: limited autonomy vehicles available very few vehicles – conducive to deliveries by on the market such as the Mercedes Class S, or autonomous vehicles, for example. prototypes such as Google Car and Ligier VIPA.
Often only used for short-distance applications, The US National Highway Traffi c Safety they can pave the way for major advances in Administration (NHTSA) classifi es autonomous mobility planning. Their development requires wide vehicles according to their level of sophistication public acceptance and shared responsibility with and emergence on the market: lawmaking authority. «The car to which we are accustomed and the way in which it is used are going to change radically and quickly», says Bill Ford. He believes «the automatic car of the future
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2014
Full automation Level 4 From highly to fully automated (door to door)
Limited automation Level 3 From partly to highly automated: automatic steering mode (motorways, dedicated lanes, traffi c jams
Partial automation Level 2 Cooperative ADAS (lane keeping assistance with adaptive speed regulator, traffi c jam assistance)
Function-specifi c automation Level 1 Specifi c function control (adaptive speed regulator, self-parking, lance keeping, braking)
Level 0 No automation (no ADAS or warning systems only) Futuribles and NHTSA, adapted by Michelin
2005 2015 2025 2035
It should be noted that drones could also soon be one mode to another to be monitored. Lisbon, for making a signifi cant contribution to light-weight example, is preparing a project aimed at offering logistics operations. Amazon’s plan to deliver everyone two multimodal alternatives to using their parcels under 2.3 kg in less than 30 minutes within own vehicle. Several highly creative avenues exist a radius of 15 km from 2019 opens the door to for combining mass transit systems with more new applications for these machines which have customized solutions. For example, a combination proved their mettle on the battlefi eld. of electrifi ed bus rapid transit (BRT) systems and electric vehicles is suitable for fast-growing countries in control of their urbanization (Transport 3/ OPTIMIZING INTERMODAL MASS TRANSIT Oriented Design). BRT solutions have demons- SYSTEMS trated their ability to limit congestion and deliver
services tailored to the needs of city dwellers, ACTIONABLE LEVERS In big cities, public transport is the only affordable provided they are well connected to other trans- solution for moving vast numbers of people over portation modes. They are much more economical long distances. Developing mass transit systems to build and run than underground networks like on a best practice basis is therefore essential. the subway (about 18 times cheaper). Associating the development of BRT systems with ongoing Today, intermodality is all about seamless passenger- research on electric vehicles is clearly a winning friendly coordination between different transport technology mix. The infrastructure for BRT systems modes. In this age of telematics, this means providing could be equipped with battery recharging capacity connectivity applications between vehicles, in a way that preserves the peace and quiet of infrastructure and traffi c control centers, which in the areas crossed. Since these buses operate turn relies on the development of sensors and within a radius of 30 kilometers, every stop could intelligent transport systems (ITS). At infrastructure technically be equipped with wireless recharging nodes in particular, where several transport modes systems. intersect, it is essential to have a network of effective sensors that allow the fl ow of passengers from
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Autonomous vehicles will be needed in specifi c However, we need to widen our technological areas for last-mile logistics or to offer residents horizons. Internal combustion engines and liquid a door to door commuter transport service. or gas fuels also have a promising future. The complementarities between BRT and autono- That is why it is important not to be dogmatic, mous vehicles running, when necessary, on but be mindful of the breakthroughs required in dedicated bus lanes should defi nitely be developed each technology. as part of a seamless transport policy because they are both convenient and reliable (see IHS Internal combustion vehicles. While signifi cant report «Impact on new urban mobility»). progress has been made to improve the energy These vehicles should be economically affordable effi ciency of engines, most vehicles are still too and physically accessible to all. They should be heavy to be energy effi cient and much still remains deployed on a large scale only in conjunction with to be done. There is potential for improvement ITS solutions that facilitate mobility management both inside the vehicle (engine, particle fi lters, during peak hours. Outside rush hours, their weight reduction, etc.) and outside through the use scalability could also be used for freight transport of new concretes in urban infrastructure able to and for participating in the last-mile logistics supply degrade air pollutants. chain. Electric power trains. So long as they are based on traditional platforms, even the most sophisti- 4/ ROUTINELY USING LOW ENERGY cated consume too much power to: AND VERY LOW EMISSION SOLUTIONS - offer suffi cient autonomy outside urban areas and a viable economic alternative, except for Lower energy consumption and diversifi cation of high-end niche or targeted applications; energy sources are the watchwords for all types of transport. It is not feasible to sustain a doubling - keep well-to-wheel CO2 emissions down of fossil fuel consumption resulting from a doubling to satisfactory levels in every country. of transportation. That is why we need lighter We therefore need to design more energy-effi cient vehicles with optimized electric or combustion and lighter electric vehicles that offer users custo- engines and a wider use of hybridization (not just mized autonomy. The technologies are available, hybrids combining an electric and combustion including batteries, fuel cells and supercapacitors. engine, but also vehicles using the latest air and hydraulic hybrid drives). If toxic emissions are to Developing much-needed new generations be reduced, however, the inevitable shift to more of vehicles electric powered urban transport must stimulate the development of necessary low-carbon electric The challenge facing us, for example, is to develop power generation processes. three- or four-wheel vehicles that are attractive for All the fi gures presented in this report are «well-to- city use, consume less than 10 kWh/100 km in wheel» precisely to factor in this requirement and electric mode and emit less than 50 g CO2eq/km to avoid shifting the environmental impacts to well-to-wheel (regardless of mode based on CO2eq another stage in the life cycle of tomorrow’s of electricity). Assuming that a truck consumes six transport systems. times more fuel than a light vehicle, it would mean Above all, development of electric energy produc- cutting freight-related emissions to 300 g CO2eq/km. tion and vehicle charging infrastructure is required, This challenge can be met – and previous Michelin as well as rethinking electricity use and smart grid Challenge Bibendum events have shown as much interconnection between geographically dispersed − since the solutions are both environmentally and producers and consumers on the one hand, and economically viable. high-capacity power stations on the other (with batteries either charging or sending back electricity Overall, technological innovations, like societal to the network). demands, are growing rapidly. Key advances include: China’s two-wheelers are a highly successful - reduced fuel consumption by internal example of the shift to electric mobility. The country combustion vehicles with the help of «Stop & has become the world’s leading producer and Start» technology, improved lubricants, better exporter of these vehicles, with the domestic aerodynamics, regenerative braking for hybrid market alone accounting for about 90% of global drives, etc.; sales.
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- cleaner engines and exhaust systems, with These connected vehicles with access to traffi c combustion optimization (smaller engines assistance systems, city-center parking and and lighter materials), direct injection, intermodality will be perfectly suited to last-mile turbo-compression, exhaust after-treatment, logistics and door to door commuting. etc. As well as allowing drivers to enjoy their habitual driving behavior, these solutions are The advantages of hybrid vehicles adapted to actual vehicle use cycles; Hybridization is ideal for moving within low- and ultra-low emission zones and making inter-city - low-carbon fuels, such as natural gas, journeys. A signifi cant number of vehicles could liquefi ed petroleum gas (LPG) and biofuels be designed with plug-in features (rechargeable (whose world production rose from 9.2 million hybrids), smaller turbo-compressed engines and tonnes of oil equivalent (toe) in 2000 to regenerative braking. Such hybrids would also 65 million toe in 2013). Also recycled fuels have suffi cient 100% electric driving range (cooking oils) or fuels derived from animal fat, (30-50 km) to move around easily in city centers. depending on the availability of those products; Within the next 15 years, hybrid power trains with - battery-supercapacitor-fuel cell combinations their vastly fl exible design may well become pre- providing better performance and driving range dominant. They will signifi cantly reduce emissions in electric mode; without disrupting driving habits. Fast growing - very low energy auxiliary systems (lighting, countries have the opportunity of leading heating, air-conditioning, etc.); this development through rapid implementation. Many government initiatives are driving this inno- - more effi cient driving styles, backed by built-in vation, including the China New Energy Vehicle electronic assistance and driving lessons for Program and Quebec’s Transport Electrifi cation
learners. Journey times will be the same, or Strategy. As noted, however, the problem of CO2 even quicker, at lower speed; emissions from electricity generation remains. - smoother traffi c, parking information, real-time While 97% of Quebec’s electricity comes from route planning with ITS and ICTs; dams and therefore emits very little CO2, 78% of China’s electricity is generated by coal-fi red - more fuel-effi cient, ultra-low rolling resistance power stations. tires offering 5-10% energy savings, coupled with equal or better safety performance. The rolling resistance coeffi cient has been cut by 30% in the last 20 years. Lower fuel consumption also means greater driving range.
Solutions aimed at achieving 95 g CO2/km by 2020 in Europe (or regions that have similar regulations) should be pushed to attain 50 g CO2/km by 2040. ACTIONABLE LEVERS
Vehicle platooning − a convoy of autonomous trucks behind a lead vehicle offers a low-carbon mobility solution on highways thanks to vehicle-to- vehicle communication technologies. It has been tested in Germany, the United States, Sweden and Japan. Its many advantages include steady convoy speed, less utilized space and optimized loading through the pooling of cargo shipments. By optimizing aerody- namics due to the small space separating the vehicles, platooning reduces fuel consumption, half of which results from air resistance created by higher speeds. Continuous speed control improves driver comfort and safety. The convoys also enable existing infrastructure capacity to be increased. Then there is the positive impact of pooled deliveries on product prices. In future, convoys will converge on urban distribution logistics platforms where their cargo is loaded on to small vehicles designed for city center deliveries.
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Preventing carbon from escaping
The aim here is to capture CO2 when it leaves the chimneys of factories and then treat or store it. There are many such projects worldwide, the first on a large scale being the thermal power station in
Saskatchewan, Canada, where CO2 emissions have been cut by 90%. The gas will subsequently be injected underground into geological formations that will retain it. This type of technology can be applied to
large facilities producing CO2 (chemical plants, cement works, thermal power stations, etc.). That means finding storage sites, developing infrastructure (pipe- lines) for transporting gas from the place of emission to areas appropriate for storage.
It is also possible to mix CO2 with hydrogen or other chemical components to form methane, which in turn could serve as a fuel or as molecules needed by the chemicals industry. Some pilot units are using CO2 to Rising electric mobility and the advent multiply algae in reactors. The idea is to process them of hydrogen to produce fuel. To ensure the success of the +2°C scenario in 2100, The future undoubtedly lies in meeting a greater share
the IEA assumes that 8.5 Gt of CO2 will be trapped of overall transport requirements with electric mobility. yearly by 2050, or twice the road transport emissions As pointed out by McKinsey in a recent study, of the same scenario. this change is unavoidable and will occur on a signifi- We should also mention that research on a vehicle- cant scale by 2030. Batteries and fuel cells continue specific approach is under way. According to the to improve, opening the door to more and more University of Michigan (Institute of Transportation), it applications. Their cost continues to drop as a result is conceivable that all or part of the CO2 emitted by of economies of scale and productivity gains. Fuel vehicles could be stored by first separating the exhaust gases and then compressing and storing the carbon cells are being widely tested in planes, boats and dioxide captured within the vehicle. This approach has road vehicles. Fuel cells and hydrogen are essential to so far attracted limited interest because of the technical higher-range electric mobility. In an optimistic scenario problems associated with it, such as overweight, of 10 g CO2eq/km from road traffic, McKinsey sees volume necessary for storage, gas offloading hydrogen playing a major role by 2050, after infrastructure, etc. a ramp-up in 2025 (see figure above).
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Towards 10g/km of CO2 emissions
(%) market share 100 90 ICE (optimized) 80
70 BEV 60 50 40 FCEV 30 HEV 20 REEV 10 0 2010 15 20 25 30 35 40 45 2050 McKinsey adapted by Michelin.
ICE dominant until 2025 but loses market share to electric vehicles (EVs) In the long term, battery powered vehicles (BEVs) lead small vehicle segment and fuel cell vehicles (FCEV) the large vehicle segment
ICE : internal combustion engine BEV : battery electric vehicle HEV : hybrid electric vehicle (potentially rechargeable) FCEV : fuel cell electric vehicle REEV : range extended electric vehicle
Electric mobility promotion policies will focus on Arrival on the market of electric vehicles ACTIONABLE LEVERS Battery powered vehicles will see their energy density lightweight vehicles using X-by-wire systems and double by 2020 to 200 or even 250Wh/kg. This will collision avoidance technologies for improved traffi c considerably increase their attractiveness as the large safety. majority of their users (80%) are more than happy to Governments will have a key role to play in promoting recommend their purchase. BEV sales in Europe have these vehicles. The Canadian government already grown 16 times faster than HEV sales over the last provides a grant of C$8,500 towards the purchase 36 months. Countries that introduced fi nancial incen- of an electric vehicle and C$2,000 for the installation tives have obtained positive results because the «Total of charging infrastructure. Cost of Ownership» turns out to be identical, even though the purchase price remains high, as in Norway. Let us not forget that home-based power generation FCEVs are starting to be commercialized. or hydrogen production is feasible via solar and wind Toyota and Honda, among others, offer vehicles based energy systems and can be shared through «smart on this principle. Power densities (power-to-weight grids» like those already used in Japan. ratios) of 3kW/l (2kW/kg) are available. The conditions Automotive manufacturers are also exploring solar for hydrogen storage tend to converge at 70 MPa and power, as is the case with the C-Max Solar Energi € the cost of gas at 9/kg of gas. The construction of prototype unveiled by Ford. hydrogen production facilities is rapidly gathering pace in Germany, Japan and California. Great Britain, Korea and France too have projects. In terms of safety and performance, the technologies are mature. The main challenges remain cost and inadequate infrastructure.
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Placing increasing emphasis on safety
All the developments touched on in this chapter should aim at improving safety across all transport modes, with special emphasis on road safety. China is concerned about the high number of deaths on its roads. Many other countries, where vehicles may have 4 to 5 times fewer safety features than in developed countries, are faced with the same problem. The introduction of regulation will play a key role in improving road safety. As the demand for mobility increases, regulations will get tougher for manufacturers (crash tests, airbags, ABS, ESP), drivers (speed limits, breathalyzers) and people (adherence to the new rules introduced by the authorities). A WHO report published in 2013 shows the loopholes in legislation regarding major risks and safety equipment in passenger cars. Other than regulation, a range of technologies can help bring improvements that make vehicles substantially safer. They fall into two categories: • active safety systems to reduce the probability of an accident: vehicle dynamic control, electronic braking and stability systems; • passive safety systems to minimize the effects of an accident: vehicle architecture (management of energy produced at impact, pedestrian protection); protection devices (infl atable bags, seat belts with pretensioners and force limiters); interior padding, etc. Active and passive safety technologies are increasingly effective. Manufacturers have developed a fully integrated approach from collision avoidance to reduction of its impact on both passengers and vehicle. The systems are designed to improve the protection of passengers and pedestrians, absorb crash forces and limit the damage caused to the vehicle. The cars, due be released on the market very shortly (some already have been), will be fi tted with automatic accident information systems that notify other vehicles, the infrastructure network and the emergency services. We should never forget that safety is at the core of people’s expectations!
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3 New economic instruments
An economics of externalities must therefore be re-invented, starting with CO2. This will help generate new streams of income, which could then be recycled into the economy through greater investment in networking, infrastructure and new technology aimed at making fares affordable for everyone and easing labor taxation.
Set CO2 reduction target
• Put a monetary value on CO2 and recycle income
• Price CO2 indirectly: regulatory instruments, incentives and support policies
Mobilize private funds to Implement ultra-low address mobility expectation emission zones • Foster public private partnerships: traffi c risk, quality and effi ciency • Promote clean mobility modes risk and mixed quality and traffi c • Introduce urban tolls risk NEW ECONOMIC • Set prices for parking • Co-fund research programs INSTRUMENTS • Moblize crowdfunding
Reinvent last mile freight Develop door to door delivery solutions for people
• Set prices by vehicle weight • Promote partnerships in shared • Introduce urban tolls for trucks systems and infrastructure • Return load loss fees development • Use concession agreements • Finance new mobility services for UDCs • Develop pay-as-you-go
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«There is a time for weighing evidence and a time for acting. And if there’s one thing I’ve learned throughout my work in fi nance and government, it is to act before problems become too big to manage...»
Henry M. Paulson, Chairman of the Paulson Institute at the University of Chicago and Secretary of the US Treasury (2006-2009) «The coming climate crash: Lessons for Climate Change in the 2008 Recession», The New York Times, June 21, 2014.
«Putting our economies on a low carbon and more sustainable footing involves ground-breaking innovations in technology, regulation and social organization. These breakthroughs will not emerge spontaneously, but will result from the introduction of a wide array of economic and regulatory instruments that must complement each other, avoid red tape and promote individual initiative and entrepreneurship».
Christian de Perthuis, President of the Scientifi c Committee of the Climate Economics Chair, Paris ACTIONABLE LEVERS
As well as offsetting labor tax reductions, In this chapter, we also touch on the recent the income generated from CO2 externality pricing emergence of innovative fi nancing and payment should be used to fund infrastructure and new solutions for individual mobility services. mobility services. Both would benefi t from opening After their experimental phase, these solutions will up projects to private sector funding, including take off. those traditionally fi nanced with public funds.
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1/ INTRODUCING EFFECTIVE ECONOMIC Should the price of CO2 gradually reach the IEA INSTRUMENTS recommended level of USD130/tonne (in 2040), or that of USD150/tonne, successfully adopted by Sweden today? It’s up to States to decide. 1.1 Putting a monetary value on CO2 Below these levels, some experts think that
Carbon pricing sends a strong and increasingly the value of CO2 will be insuffi cient to contribute
clear, indeed much awaited, signal to the business signifi cantly to CO2 emissions reduction. community. It is the cornerstone of the abatement There are two possible direct pricing options:
system for two major reasons. Firstly, it will encou- establishing a CO2 emissions trading system rage the switch to carbon-free goods and lower for transport, or introducing an emissions tax. fossil fuel consumption. Secondly, it will generate income, thereby accelerating the funding and development of sustainable mobility solutions and infrastructure, reducing fares and easing labor taxation.
New economic instruments
Flowchart for CO2 emissions reduction, implementation of new solutions, and contribution of investment to growth and job creation.
NEW ECONOMIC INVESTMENTS EFFECTS INSTRUMENTS
Investment in infrastructures New jobs
GIVE CO2 Well-being a value Individuals
Investment in Innovative Systems Mobilize Private Investment
Inclusive Pricing or Relieving Labor Taxation
Financial fl ows Jobs creation
CO2 emissions reduction
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Incentive-based CO2 pricing − an interim and probably quicker alternative solution We draw here on Sweden’s successful pricing of
CO2. Creating a CO2 tax applicable to all modes of transport would in our view be a more appropriate method of direct monetary valuation, provided that:
• all countries are encouraged to reduce CO2 emissions, the fi ght against global warming being in the service of a global public good. The scope of a carbon tax must be as wide as possible so as to avoid a situation where only a handful of countries make the bulk of the effort. Nevertheless, to ensure CO emissions trading for transport: 2 the effort is proportionate, the amount of tax has to an economically attractive solution still be adjusted in terms of purchasing power parity. at the experimental stage Various CO emissions trading systems are 2 • the ideal implementation regime would be undergoing trials around the world. In China alone, one that results from an agreement between no fewer than six test markets in six different cities the biggest emitting countries: China, European were launched in 2013. Globally, there are now Union, the United States and possibly India. Such about ten experimental or pilot markets dealing an agreement would have a signifi cant knock-on in transport emissions, in addition to China, effect on the other countries of the world, as it California, Quebec, Europe and Kazakhstan. would give them clearly defi ned revenue collection and redistribution responsibilities. Transport is by nature very diverse and diffi cult to cover under a single scheme. The systems of • since our aim is to spur innovation, intro- measurement, data collection and verifi cation are ducing a carbon tax will create a virtuous circle of complex since it is necessary to establish lower energy consumption and innovation. a method of allocating and monitoring allowances for each individual. Admittedly, CO allowance 2 • many experts propose immediately recycling, trading market trials which include transport have by way of incentives, the resulting revenues into yet to demonstrate their effectiveness, but we at least three key sectors of the economy: are only at the beginning of this experimentation employment support via measures to ease labor process. tax; investment support, especially for infrastruc- Probably the most interesting example in this res- ture requirements; support for technological pect is found in North America. The system innovation. introduced in Quebec (SPEDE) tied up on 1 January 2014 with the Western Climate Initiative
adopted in California to become the leading CO2 ACTIONABLE LEVERS allowances market in North America. Since January 2015, this experiment for the fi rst time includes emissions from the transport sector and will surely be keenly followed at the upcoming Paris COP 21 conference in December. Nonetheless, this solution offers a considerable window for creating economic value. It will probably take some time to make the transition from experi- mentation to maturity. This is why we believe quicker CO2 pricing measures can be adopted as a fi rst step. Once the different stakeholders are made aware that CO2 emissions carry a certain value, allowance-based regulation and trading will probably be easier to introduce.
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Impacts of CO2 monetary valuation on CO2 emissions and job creation
Impacts on CO2 emissions Job creation
All sectors Shift to low-carbon goods All sectors via recycling of carbon revenues to ease labor tax
Transport Increase in share of modes that emit less Sectors of public transport per passenger/km and new mobility services
Energy Improvement in energy performance Energy industry (excluding fossil fuels) of different transport modes
Innovation Low emission technologies Research and development (electric, hydrogen, etc.)
Infrastructure More effi cient infrastructure Construction industry (building, ITS, etc.)
Urban Planning Urban densifi cation All sectors: driven by growth in urban development and densifi cation (agglome- ration economies)
Direct CO2 pricing alone will not be enough to Incentive instruments (bonus-malus, make the transition to low-carbon mobility. It will be public transport pricing, etc.) essential to use indirect pricing mechanisms Some incentive measures such as vehicle or fuel as well, usually in the form of targeted usage tax may be decided at national level. Others, such incentives decided locally, for example at city level. as tolls and public transport or car park pricing may be decided locally. There are costs related
1.2 Effect of indirect CO2 pricing on mobility to the introduction of a collection system. These instruments moreover raise problems of Several indirect mechanisms can be successfully acceptability. «Bonus»-based incentives or «social introduced locally in conjunction and synergy with pricing of public transport» also constitute a cost, direct CO pricing. They fall into three categories: 2 but allow the poorest to be included. Most fi nancial incentives generate income (taxes, tolls, penalties) Regulatory instruments (traffi c, CO standards 2 that can be used to fund other incentives (bonuses, for vehicles, etc.) public transport fares) or new transport infrastructure. These are measures to encourage behavioral changes in mobility demand. Standards are Support policies (eco-driving instruction, decided at national level or, as with the Euro walking and cycling projects, etc.) standard, at a wider level. Traffi c optimization The goal of these complementary measures is measures are decided locally at city level. to reduce congestion through public transport Regulatory measures, however, can be costly to development, pollution reduction and health implement. By their very nature, they do not seek improvement. The success of these measures to raise revenue, and unlike taxes they do not bring is highly dependent on local conditions such as in revenue. On the other hand, they require the in- demography, landscape and street safety levels, troduction of control systems such as license plate especially with regard to promoting cycling. recognition. Care must be taken to ensure that they do not raise issues of fairness, especially as the poorest households usually also have old and, therefore, high-emitting vehicles.
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1.3 Introducing ultra-low emission zones congestion charge shortly by another 10 pounds (uLEZs) for diesel cars not complying with the Euro 4 standard. Since its introduction in 2003, London’s
CO2 pricing is entirely consistent with the creation congestion charge (currently 11.5 pounds per of ULEZs and their corollary, pollution abatement. vehicle per day) has raised 1.2 billion pounds net over a decade, entirely reinvested in improving It is essential to target urban emissions because public transport. The number of cars entering cities are the source of 75% of global CO emis- 2 the zone has dropped by 15%. sions. Gothenburg, for example, plans to establish an ULEZ by 2020 in which only EURO VI vehicles will be allowed. Introducing a CO tax will at 2 PROMOTING NEW MOBILITY BUSINESS the same time limit journeys by extremely polluting 2/ MODELS modes of transport outside the boundary of an ULEZ (interurban travel). As timing is important, we recommend phasing in 2.1 Devising new ways to fi nance the CO2 tax, starting low and raising it gradually sustainable transport infrastructure to ensure its acceptability. As the tax increases, behavioral changes will become more commonplace. In our game changer «Mobilizing private invest- As efforts to renew fl eets with cleaner vehicles ment for sustainable transport infrastructure and continue, ULEZ criteria will only be restrictive for innovative mobility services», the advantages of a small proportion of vehicles. new forms of partnership between the public and When households are forced to give up their private sectors were pointed out. We will limit polluting vehicles to enter an ULEZ, the demand ourselves here to illustrating this point with for low emission door to door solutions is bound concrete examples. to increase. The same reasoning applies to goods transporters and last-mile delivery solution Developing partnerships that create innovative providers. business models: the example of railway station funding The «ULEZ + carbon pricing» combination can Recent railway station refurbishments or deve- be broadly implemented. Nevertheless, the accep- lopments in Asia (Tokyo, Hong Kong), New York tability of these instruments has to be factored in. State and Europe (Milano Central, London’s Canary The same is true for the expression of the carbon Wharf, etc.) point to the existence of multiple tax in purchasing power parity terms, existing funding models. mandatory levies, the urban density criteria Land value capture appears to have the greatest used in ULEZ delimitation and public transport potential. In Asia, Hong Kong’s MRT (Mass Railway infrastructure. Transit) and Japan’s railway station developments are mainly fi nanced from real estate earnings. Discussed at length in Chengdu at the conference
Joint developments, in which the property ACTIONABLE LEVERS on new economic instruments, the winning systems developer obtains the right to develop a section are those that advocate several instruments of the site in return for participation in the construc- encompassing all modes of transport and conver- tion of the railway station, are tried and tested ging on the same goal. London was cited several models. (e.g. refurbishment of the Saint-Lazare times for the consistency, ambition and gradual railway station in Paris). nature of its approach. New retail developments can be highly effective. The fi rst stage of London’s strategy focuses on A minimum of 50,000 passengers a day are expanding the public transport system, with needed to establish a profi table project. electrifi cation of lines and greater underground and train traffi c density. This is accompanied by a vast Capitalizing on the economic, social and fi nancial program of station refurbishment, together with benefi ts of such partnerships a plan to promote the use of bicycles, public river According to the Canadian Council for Public- transportation on the Thames and the development Private Partnerships (2004-2014), total PPP of fast and clean transport links to airports. investment in Canada for the last ten years The second stage consists in the allocation of amounts to CAD 51 billion. PPPs have generated a 600 million-pound fund to promote electric and 290,680 direct FTJs (Full Time Jobs) over hybrid vehicles, starting with public transport. the period, CAD 32.2 billion in wages and social The fi nal stage consists in raising London’s security benefi ts, CAD 48.2 billion towards GDP
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(including 25 billion towards direct GDP), 2.2 Mobilizing private capital to develop CAD 9.9 billion in savings and CAD 7.5 billion new mobility services in miscellaneous tax revenues. The Canadian government believes these figures Co-funding experiments are particularly effective show that PPP projects drive GDP growth and in spurring innovation at a community level. boost the country’s «competitiveness». These «forward-thinking projects» factor in citizen and user demand, the public authority’s vision and the innovative potential and implementation Below are two other success stories: capacity of private companies. The PPP between the Indian Railways Ministry and the French rail company SNCF signed Amsterdam Smart City (ASC) is a unique partnership in 2013. among companies, local authorities, research A framework agreement refocused cooperation institutions and the people of Amsterdam. between the two partners on four priority areas: Their common aim is to develop a smart city within high-speed lines, railway station refurbishment, the city. The project is based on the city making modernization of India’s rail network, and urban available a maximum of data enabling all players to and suburban transport systems. SNCF, offer innovative solutions for the well-being of together with its specialist subsidiaries Gares its people. & Connexions, AREP, Keolis and Systra, will be involved in implementing this agreement. Autolib. Launched in Paris, Bolloré Group’s car The agreement would not have been possible sharing service has expanded to North America without the presence of SNCF in India for several (Indianapolis), with plans afoot to develop it in Asia years, mainly through its subsidiaries Systra and and London. The model relies on the privatization Geodis. Under the agreement, the rail operator will bring its technical expertise and operational of surface parking spaces and the payment of skills to bear on managing risks and ensuring a public subsidy to participate in the investment headway in the projects. and operating costs of the service, and so strikes a proper balance. However, to break even, it must Electric battery vehicle charging stations attain critical mass in terms of customer numbers. in New York State The ‘Charge NY initiative’ has invested The European Union’s Green Vehicles Initiative USD 50 million to promote electric vehicle (EGVI).The automotive sector, which accounts for development over a 5-year period. A PPP to 12 million direct jobs in Europe, is facing unpre- this effect has been signed by the Governor of cedented technical challenges in order to meet New York. The first stage consists in setting up environmental requirements. Finding technical 80 charging stations in Manhattan. The project solutions, bringing about a successful transfor- provides for the installation of 3,000 public mation and preserving jobs has led the EU to call charging points in New York State by 2018. on several industries to combine their innovation resources. A PPP has been entered into between the European Green Vehicles Initiative Association (EGVIA) and the EU, with a research budget of €1.5 billion, financed on a fifty-fifty basis.
Open Data in Montreal and Edmonton (Canada). In Edmonton, an open data application provides direct access to urban mobility performance data. Urban services have round-the-clock access to 400 data sources enabling them to make decisions aimed at improving performance and resource management (vehicles, energy, human capital, etc.). Montreal has developed a partnership with SAP allowing this private company to analyze mobility flows in real time and to offer new services that provide income generation opportunities.
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Cooperative Research & Development Agreements In Curitiba, an experiment allows the poorest city (CRADAS). This US initiative focuses on setting up residents to exchange their refuse at a waste treat- cooperatives that bring together federal laborato- ment center for bus tickets and food. ries from key public sectors (defense, healthcare, This initiative has a positive impact on the cleanliness energy) and industrial organizations. In the absence of the poorest urban areas. of joint funding, the aim is to share projects, In Beijing, reverse vending machines at some researchers, resources and infrastructures, pool subways accept plastic bottles as payment at R&D resources and work together in areas of the rate of 5-15 cents a bottle. common interest to spur innovation. This partnership model is used in the aeronautics In Moscow, a special ticket machine has been industry and could be extended to other fi elds installed at the Vystavochaya subway station of transport. offering passengers free tickets in exchange for 30 squats with the two-minute transaction period monitored by camera. The aim is to raise 2.3 Encouraging private investment by awareness about public health. and for the people Private investment for people Micro-credit is an innovative solution for mobility. Private monetary and non-monetary investment by people In India, cycle rickshaws (cycle taxis) play a vital To be successful, the mass roll-out of a new mobility role in the mobility of people living in medium-sized offering has to attract massive public support. towns. The Dipbahan Cycle Rickshaw Bank Project The principle of crowdfunding is not effective for encourages drivers to acquire their own vehicle infrastructure projects where the investment requi- through a micro-credit. An advertising space on rement is extremely high. the cycle helps to improve the project’s profi tability. However, it comes into its own as a solution for funding mobility. In the Philippines the Mayor of San Fernando has started phasing out 1,200 of the most polluting Crowdfunding grew by 170% between 2011 and three-wheelers. Their owners have been offered an 2013, amounting to over 5 billion dollars of global interest-free loan of USD 200 to buy a new, less investment. This system of fi nancing, created in polluting vehicle. The initiative has been turned into 2009, continues to grow dramatically as it allows an environmental program. project developers to retain control of their pro- jects, while pooling sponsor communities around different methods of fi nance, from the simple gift 2.4 Promoting new pay-as-you-go solutions to various types of loans. Crowdfunding relies on word of mouth and is par- Pay-as-you-go solutions are expanding very fast ticularly suited to the current development of social and meet a wide range of needs. Their rapid growth is exemplifi ed by the rise of companies like and viral marketing. By nature it is international, ACTIONABLE LEVERS as are its main players Kickstarter and KissKiss- Uber. New business models will emerge because BankBank, both of which are growing at a pheno- there is strong societal demand for pay-as-you-go menal rate. When a project needs to be fi nanced, solutions. this «simple» system is worth considering. The taxi is the traditional example of pay-as-you- Examples of innovative mobility solutions fi nanced go in transport. Only the kilometers traveled are payable. by crowdfunding. • Items used for individual mobility (door to door): A kilometer tax trial has been taking place in Leev electric scooter, Onewheel Urb-E, Riide, Brussels and its outskirts since 17 February 2014. ZoomAir electric scooter, etc. Each participant is given a GPS which they log into at each journey. The GPS measures the distances • Items used for deliveries (last-mile delivery): traveled and calculates the amount payable for Kubo. each journey. The tax is 9 cents per kilometer If people are unable to participate in mobility fi nan- during peak hours in urban areas, but motorists cially, they can still access public transport through pay nothing if they drive between 10 pm and 5 am. exchange systems. The kilometer tax replaces the traffi c tax already in place in Belgium. The purpose of the trial is to
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compare the amount paid towards this new tax 3/RECOMMENDATIONS with the amount of traffi c tax.
A mileage allowance for people cycling to work A range of measures at various levels must be in France is also a pay-as-you-go experiment, but considered in order to make a successful transition in reverse. The allowance amounts to 25 cents to a low-carbon mobility economy. a kilometer. The trial will run for 6 months from The fi rst of these consist of strong incentives 2 June 2014. 19 companies and organizations decided at national level, with a synergistic effect totaling 10,000 employees will test the system. among countries. CO2 pricing will contribute, as Four criteria will be tested: changes in the number a result, to the reduction of other negative externa- of persons cycling to work, whether or not they lities, especially pollution and congestion. It will also stop using their private car, the procedures for release economic resources for faster transition to claiming the allowance, the factors behind low-carbon mobility. the scheme’s success or failure. This incentive Such an approach inevitably involves convergence is a «bonus», unlike the Belgian kilometer tax which between the main emitting countries. is a «malus».
Still on the subject of mobility, pay-per-use We recommend pursuing the two following insurance has already been available for some dynamics: years. A PAYD (Pay As You Drive) box sends the insurance company a monthly account of • Incentive measures aimed at establishing the exact number of kilometers traveled by you the appropriate CO2 monetary valuation mecha- and the journeys you have made. In addition to nism (carbon pricing), coupled with the introduction a fi xed monthly fee, only the kilometers traveled of ULEZs (congestion charging, parking pricing); are payable. • Economic measures to promote new mobility Nantes in France offers a tailored package for business models. This involves funding infrastruc- public transport. Only journeys made are billed and ture necessary for the development of public that too at the cheapest hourly rate of €1.38. If a transport (green public transport, infrastructure person travels frequently, their charges are capped development) and sustainable and innovative at the monthly ticket price for their age group, with mobility services and technologies (hybrid and no commitment or subscription fees. electric vehicles, car sharing and carpooling, door to door and last-mile delivery).
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The decision tree below illustrates the virtuous paths to achieving a shift away from current (2010) CO2
emission levels of 216 gCO2/passenger-km to a possible target level of 50 gCO2/passenger-km by 2050, as a result of leveraging the dynamics we recommend.
Real time calculation Optimize journeys Optimize Car sharing private car Car pooling use Remote work
Travel better with private Congestion charging cars or traffi c restrictions
Parking pricing Shift or to other restrictions Door to door transport Last Mile Delivery 216 g modes Green public solutions CO /passenger-km 50 g 2 transportation CO /passenger-km Develop 2 127 g infrastructure CO2/tonne-km 2 and 3 wheelers
Scrapping policy
Enhanced ICE ULEZ Lower fuel Hybrid Emit less consumption vehicles Improve ACTIONABLE LEVERS Carbon Electricity pricing Electric vehicles
Emission Reduced carbon Better fuels standards intensity Biofuels
Technological and service solutions Economic instruments
Ways to reduce CO2
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The participation of many players from the world of fi nance at the Chengdu Michelin Challenge Bibendum helped us select the economic instru- ments to be prioritized for each «Game Changer» and take into account emerging methods of fi nancing such as green bonds and crowdfunding.
Instrument to fi nance infrastructure as a service
PP P
Value to CO2 Bonus schemes Financial Private Public & recycle for clean vehicles Toll-by-Weight partnerships Partnerships income
Indirect CO2 instruments Urban tolling Pay-As-You-Go Revers Logistics Green Bonds
Parking prices UDC concession Crowd Funding incl.CO2 value
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4 Targeted public policies For public authorities, developing mobility will not be resolved by building more roads, harbors, railway stations and airports. Governments have to fully understand that there is an urgent need to foster a new urban mobility culture. In January 2012, the United Nations identifi ed «sustainable transport» as one of its priorities and encouraged governments to take initiatives in that direction.
Set CO2 reduction targets
• Set CO2 reduction targets at local/national/international levels • Establish regulatory framework
for CO2 pricing • Adopt national plan for purchase of electric vehicles + related infrastructure • Conduct promotional campaigns for renewable energies Mobilize private investment Implement ultra-low to address mobility emission zones expectations • Defi ne sustainable urban mobility • Encourage innovative public plans -private partnerships • Develop effi cient, multimodal • Introduce legal framework public transport conducive to development • Set quantifi ed targets (tolls, of new mobility services parking, etc.) and closely monitor TARGETED PUBLIC effi ciency indicators POLICIES • Introduce bike sharing systems
Reinvent last-mile freight delivery Develop door to door solutions for people • Create Urban Distribution Centers and dedicated infrastructure • Propose single card for all public • Adjust labor laws to the needs transport modes of night workers • Develop inclusive transport • Encourage development policies of specifi c delivery vehicles • Anticipate construction of new • Develop multimodality through infrastructure (fast charging, a single multimodal agency induction, etc.) • Develop new administrative • Develop regulatory framework governance tools for autonomous vehicles • Set up specifi c agencies for urban areas
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This involves: What are the legislative and regulatory - thinking beyond the traditional boundaries instruments to facilitate implementation of the transport sector and focusing on access of the fi ve game changers? to mobility; It is necessary to defi ne an institutional and gover- - integrating both people and freight; nance framework setting out the guidelines to be - optimizing the use of all transport modes and adopted. In the absence of a single management organizing co-modality between various public authority, excellent coordination is needed between and private modes of transport; the various public players potentially concerned. - ultimately, integrating sectoral policies The decisions to be made must be backed by (parking, roads, transport, environment, a public authority with budgetary powers. air quality, traffi c management and controls, Governments and local authorities − each opera- policing, safety services, maintenance, etc.) ting within their specifi c jurisdiction – can shape so that the various services and administrative tomorrow’s mobility using an array of measures authorities, who have not typically worked (laws, decrees, regulations, orders, circulars, etc.), together, may develop strong synergies. provided that the role of each authority is clearly defi ned beforehand, that the mechanisms are adapted to the circumstances, and that, once ratifi ed, they are properly enforced. The same authorities may also determine future choices by earmarking specifi c budget allocations and subsidies.
Traditional transport New urban mobility approach culture
Purpose Provision of transport Response to people’s mobility needs
Targets Transport fl ows, capacity and speed Accessibility and quality of life
Methodology Appointment of government expert Involvement of multiple stakeholders ACTIONABLE LEVERS
Technology Mainly focused on transport modes Innovation stems from different departments application and fi elds
Content Priority given to large, capital intensive Global planning approach that takes market infrastructure projects. structure, services and information systems into account. Priority given to cost-benefi t tradeoffs, effi ciency improvements, service quality and performance
Impact study Limited impact study (sometimes even Reinforcement of ex ante impact studies by post-project) reviewing, if necessary, environmental, social and economic assessment criteria
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1/DEVELOPING POLICIES TO REDUCE emissions in less wealthy nations and are rewarded with credits that can be used to achieve their own GLOBAL CO2 EMISSIONS emissions capping targets. The receiving countries enjoy free access to advanced technologies that To reduce overall CO2 emissions, especially with regard to all transport-related activities, governments enable their factories or power plants to operate must take three types of measures. more effi ciently. These will help reduce individual consumption and promote an energy mix. Transitional policies, aimed To this end, the United Nations Secretariat encou- rages the development of an agenda of solutions, at lowering CO2 concentrations in the atmosphere especially in the fi eld of transport, focusing on fi ve and oceans through CO2 capture and sequestration could be subsequently implemented. initiatives developed by fi ve international organi- zations: UITP, UN-HABITAT, UIC, GFEI and Smart a) The fi rst step is to control energy demand by Freight. The initiatives seek to show the existing encouraging more responsible user behavior and range of concrete actions aimed at promoting offering incentives (shared transport grants, etc.). carbon-free mobility. Building awareness of these initiatives among governments and international As mentioned, in December 2015 Paris will host fi nancial institutions would enable to develop them the international conference on climate change on a much wider scale across the planet. (COP 21). This should be a decisive step towards A high-level group on sustainable mobility has the negotiation of international agreements for been set up by the Secretary General of the United the period beyond 2020. These agreements are Nations to work in that direction. necessary to ensure that all countries, including both developed and developing nations responsible Cities too have a key role to play, particularly for the heaviest greenhouse gas emissions, are cities in developing countries should account for actively committed to the goals of preservation. 90% of global population growth by 2050. Each country should aim to conclude agreements In addition to administrative mobility plans to facili- that are applicable to all countries and are suffi ciently tate mobility of their staff, cities should also adopt ambitious to attain the global warming abatement wider climate plans and avail themselves of target. To meet this challenge, three key players − the funding instruments available at international the United States, China and the European level. Union − must come to a unanimous view. The success of these agreements will primarily hinge on cooperation among these players. For example: the US Conference of Mayors in 2012 led to The fi rst task is to strike a balance between an agreement on climate change, with more the Kyoto accounting-centered approach, in which than 1,000 Mayors signing on! the results achieved by each country are added up, and the Copenhagen accord, a set of non-binding International campaign to promote co-modality, European national commitments devoid of comparable fea- Commission tures. The Paris conference will need to make a paradigm shift whereby the climate challenge is not viewed as a mandatory «sharing of the emis- sions burden», but an opportunity to create jobs and wealth and invent new patterns of production b) The right energy mix should be promoted. and consumption. It is important to encourage the development of renewable energies (wind, solar, hydro, etc.). Existing international mechanisms already offer As the price of these technologies falls, renewable the possibility of fi nding solutions within a proactive energies are becoming increasingly competitive, framework. They are in fact seldom used. For particularly in the emerging countries (Asia and Latin example, the Clean Development Mechanism America). Governments can facilitate the develop- (CDM) could be used to help many countries ment of these energies by adopting a stable develop environmentally-friendly infrastructure. regulatory framework. Governments also have a role This mechanism for fi nancing carbon emission in organizing energy markets. reductions is defi ned under Article 12 of the Kyoto Protocol. Under this arrangement, the industria- As regards the question of what transport energies lized countries pay for projects that lower or stop to promote, each country must carry out a case-by-
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case review of electric, hydrogen, NGV (Natural Gas fi rst analyzing the functional urban area used for for Vehicles), biofuel and fossil or synthetic fuel modes transportation, and then embedding the mobility based on their climate and their topological, water, promotion measures into a wider urban strategy. agricultural and even maritime resources. Urban mobility plans encompass all mobility players, including taxis and short-term vehicle The role of new information systems in transport must rental fi rms, treating each as a «mobility public also be taken into account. International governance service» provider in their own right. The players are of open data would ensure more reliable and syste- fully included in the policy-making process, since matic integration of all CO2 emission measurement they are an important link in the transportation data, thereby promoting progress and effi ciency. chain. They should, therefore, be subject to special In addition, the onus should be on improving energy measures with respect to parking, road access and effi ciency through new energy production, transfor- integrated airport and railway infrastructure. mation and utilization systems, as is the case The plans should contain incentives where neces- in Hong-Kong and Rizhao (China) and Malmo sary, to encourage the siting of public entities or (Sweden). service centers close to public transport points, for example. Vehicle taxation based on fuel use could also be They could be supplemented by traffi c fl ow and considered (see chapter 2.3 on New Economic speed regulations based on local traffi c conditions. Instruments). Lastly, it is important to bear in mind that health Lastly, governments should introduce carbon issues should be integrated into sustainable urban pricing tools and in doing so develop new economic planning. channels conducive to the creation of new business activities and, potentially, jobs. Examples of cities which have developed such traffi c controls and measures include Tokyo, c) If only for a limited period, governments must New York City, San Francisco and Stuttgart. encourage public and private players to launch
CO2 capture and sequestration programs where the circumstances allow, i.e. within sites fi t for b) Then, ultra-low emission zones with enhanced purpose. They should defi ne a legal framework road safety measures have to be carefully defi ned. for secure, long-term carbon dioxide geological The local authority initiating the project chooses storage on their territory, exclusive economic zones the vehicle groups allowed in the zone, based and continental plates. Storage permits should be on legal vehicle classifi cation defi nitions, possibly subject to periodic reviews every 5 years initially using criteria such as level of vehicle technology and, most likely, every 10 years thereafter. identifi ed by the mandatory technical check (rather Upon termination of this period, sites should be than the date of fi rst entry into service). transferred to the state which then becomes responsible for surveillance and the introduction of To create an ULEZ, it is necessary to: corrective measures, if any. Prior to transfer, as well • carry out technical studies establishing poor air ACTIONABLE LEVERS as making a fi nancial contribution to the state, quality; operators must demonstrate that the carbon • delimit the target area based on number of dioxide will remain permanently confi ned. inhabitants (e.g. upwards of 100,000); • establish a dialog with the target population, explaining the range of decisions to be taken. 2/FACILITATING THE ESTABLISHMENT A public information and awareness campaign OF ULEZS is essential; • defi ne a timescale for close scrutiny of Public authorities must confront the fact that the changes produced by the scheme. A period «transport policy» is now tightly bound up with of three years seems adequate before introducing «urban development policy». Public policies must new measures; therefore be integrated and sustainable. • make absolutely sure to have appropriate intermodal infrastructure (including information a) First and foremost, local authorities must draw systems, energy supply, parking spaces, etc.) up a sustainable urban mobility plan. Such a in place, clearly marked cycling tracks and public plan is drawn up jointly at national and local level, transport accessible at reasonable cost (multimodal in consultation with all interested stakeholders, areas). Easy and fast access to city centers from starting with the citizens themselves. It involves
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airports must be carefully planned. as parking spaces and car parks. «Smart car An annual performance assessment report is also parks» providing cutting-edge services are submitted to the relevant national (or in some an effective way to cut pollutant emissions (better cases supranational) authority, mainly to facilitate management of available spaces, bays reserved sharing of good practices. for clean vehicles, etc.), promote intermodality and encourage soft transportation modes, along c) Towns that have introduced such zones have the lines of San Francisco and Lyon (France). received strong support from the local community. Non-motorized modes must be properly integrated The various lines of action developed above un- into the defi ned areas, with the local authority pro- derlie the concept of «smart cities». It is therefore moting walking and bicycle use. important to encourage and facilitate the exchange Although many players recognize the importance of experience and best practices in those fi elds. of such an approach, they have little room for One such is the initiative launched by the European action. It is therefore necessary to encourage the Commission to promote exchanges via commu- exchange of experience and best practices in this nities under the European Innovation Partnership fi eld with already existing platforms and tools such (EIP) in order to test new forms of cooperation and as the Transport, Health and Environment Pan-Eu- note what should be done or avoided in terms of ropean Program (THEPEP) supported mainly by legislation and regulatory oversight. the United Nations Environment Program (UNEP). In parallel, the World Health Organization has developed a tool called HEAT (Health Economic 3/ENCOURAGING AND CONNECTING Assessment Tools) that deserves more attention DOOR TO DOOR SOLUTIONS from and wider adoption by governments and public authorities. In the context of urban expansion, public transport Bicycling, in addition to its health benefi ts, leads must adapt and bring on board door to door to a fi fteen-fold increase in the catchment area solutions.
of a subway or train station. Soft mobility modes To develop high-quality public transport, substantial must also be backed by national campaigns and improvements need to be made in terms of time- incentives. liness, frequency, timings, safety, information and accessibility. Examples: the Netherlands promotes professional bicycle As a fi rst step, some straightforward measures use through tax incentives. could be widely adopted: The French Paris’ Vélib initiative has led in the Netherlands to a sharp increase in • Use of a reserved bus lane, especially in large the number of bike share stations, with urban areas, with priority for buses at intersection 45,000 bikes in use at some 7,000 stations traffi c lights; across fi fty towns. • Space sharing with priority for public transport; In Korea, Changwon has become the bike sharing capital, with more than 300 stations • Intermodality, with necessary institutional built since 2008. adjustments (use of tools such as Digital In China, Wuhan and Hangzhou have the largest Multimodal Mobility Assistants (DMMAs), bike sharing network, with 90,000 and as noted earlier); 40,000 bikes, respectively. • Specifi c services such as «public taxis».
As a second step, additional measures could The use of new, light and individual modes of be devised: transport (two- or three-wheelers) requires a proper regulatory and legal framework to ensure safe use a) Government encouragement for the gradual of shared public pedestrian thoroughfares. Draft switch to multi or intermodal travel through regulations to this effect are under preparation in the introduction of a single ticket or single the State of California and the European Parliament, invoicing system. Each government would defi ne for example. an action plan for streamlining the transport system and providing a nationwide user-friendly system d) Finally, local authorities have at their disposal across all key criteria (timetables, information, other highly effective and easy-to-use tools, such on-line booking, etc.). Setting up regional-level
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agencies would provide private operators with and mini-buses operating a fairly well-established the necessary public information. business model. The most fl ourishing examples Given the expansion of different modes of transport, are to be found in Nairobi (Kenya) and Kampala a citizen mobility charter could be proposed by (Uganda), though these practices are widespread each country’s ministry of transport that sets out in many developing regions. It is interesting to note the various user rights (to information, accessibility, that as living standards rise, these informal modes protection, etc.). of transport tend to disappear. Governments attempt to regulate them, for example, through mandatory b) Specifi c legislative instruments to clarify seat belts in buses. Some cities pursue a proactive the relationship between the transport organizing policy of banning them in order to comply with authorities and the operators, and to promote open labor and tax laws and modernize their image. procedures. The specifi cations agreed between both In developing countries, two- and three-wheelers parties must be detailed and long term (upwards of are often the only mobility solution available. 5 years). In addition, given the growth in alternative or complementary modes of public transport, it is essential that these authorities exercise some Example institutional control over the new modes while «Three-wheel» transportation is known by looking to facilitate their adoption. In addition, price different names in different countries (Phat-phati transparency should be the rule. Users should be or Chandgari in India and Pakistan, or Qingqi made aware of the true cost of transport and in China). It provides up to 15% of jobs in urban the use to which public money and their own areas. Due to the pollution they cause, some contributions have been put. local authorities require three-wheelers to switch to natural gas (India, Pakistan) or electric power c) As noted, municipalities should encourage (China, India, etc.). carpooling and car sharing as possible alternative door to door mobility solutions. In the case of car sharing, cities should preempt special parking In the fi nal analysis, individual safety concerns in areas and the charging infrastructure which urban environments are a key factor in increasing accompanies them (Autolib in Paris). Similar solu- the attractiveness of public transport. Designing a tions are needed for bikes. In this area, cities have proper land transport safety policy requires the necessary clout to facilitate the establishment an understanding of public freedoms, applicable of car and bicycle stations and to introduce local laws and the specifi cities of each transport sector. incentives; in short to shape the market and make f) The rise of Intelligent Transport Systems (ITS) their city more attractive by re-branding its image. and the advances in driver assistance applications d) As noted, emerging countries were the fi rst to have spurred the development of semi-autono- introduce TODs (Transit-oriented developments), mous or fully autonomous vehicles. To support building retailing and pedestrian areas around this innovation, public authorities need to change public transport stations (bus and rail) offering the regulatory framework by introducing specifi c park-and ride facilities. The layouts for new living standards and regulations that facilitate experimen- ACTIONABLE LEVERS spaces were fi rst designed in Copenhagen and tation in open environments. Global marketing of Stockholm. The success of TODs is dependent these solutions requires an international approach. on them being fully integrated into urban planning policy and supported by data management tools that focus on densely populated areas.
Examples: the most successful TODs, i.e. those that have helped reduce urban congestion signifi cantly, are based in Toronto, Vancouver, Singapore and Tokyo. In Asia, bus-based TODs have been developed in Kaoshiung, Qingdao, Jiaxing and Kuala Lumpur. Bus Rapid Transit (BRT) TODs have e)also In the been poorest introduced developing in Latin countries, America «informal» transportin Curitiba, remains Santiago the rule,and Guatemalawith undeclared City. taxis
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4/COORDINATING THE ORGANIZATION OF LAST-MILE LOGISTICS
The issue of urban goods delivery has often been neglected, particularly due to the overall inconsis- tency of regulations governing traffi c, parking, delivery hours, etc. The right to conduct trials, i.e. to test demonstrators in real conditions, is not set in law, which slows down the introduction of virtuous mechanisms of innovation.
As with public transport, urban delivery should be governed at an institutional level. Local authorities must factor in all aspects of urban logistics related d) The public space can be altered to facilitate to people and goods under a single logistics deliveries. For example, Barcelona has adopted system. a local urban delivery charter. Certain areas, It is important to consider six measures: designated «exclusive zones», allow access to a limited number of transport companies only a) First, goods distribution in urban areas requires (a solution also being rolled out in London to effi cient interfaces between long-distance transport complement the ULEZ). and transport used for distribution over short distances in town. Initially that means enabling e) With communication platforms such as cell the development of logistics centers around urban phones and the Internet growing exponentially, conglomerations (Urban Distribution Centers or local authorities should use IT systems to provide UDCs). Second, it is necessary to create pooled operators with maximum information on the traffi c urban delivery centers in cities to facilitate delivery situation, keeping them informed in real time of in areas with regulated access. To get as close traffi c jams in the city. as possible to residents and develop optimum coverage, some leading e-commerce and logistics Cities that have successfully introduced ITS providers currently rely on a network of neighbo- technology to manage traffi c include Hong rhood retailers. Kong, Guangzhou, New York City, Los Angeles b) The organization of urban services must be and Chicago. rethought as must delivery hours (by day for some types of vehicle, but above all at night), shop and f) In terms of administrative organization, warehouse opening hours, etc. This, of course, has a national authority for coordinating urban logistics repercussions for labor and social legislation and might be useful in harmonizing national regulations requires decisions at national or ministerial level. (to avoid local differences from town to town), c) To drive this change and promote very low emis- creating a link between several regions with a high sion vehicles, local authorities must intensify the concentration of logistics nodes, contributing to retrofi tting of their fl eets. refi nancing load loss (under the terms laid down by the urban distribution center’s management), and ultimately encouraging cities to sign up to It should be noted that postal services are often an inter-municipal logistics charter. Steps should front runners in this process. be taken to coordinate co-modal distribution with For example, the Universal Postal Union ((UPU) other types of infrastructure such as rail or inland encourages various countries to move in this waterway where cities have, or are close to, a river. direction by organizing fi eld training and best practice sharing. In the United States, these Example: initiatives are being pursued by players such the Paris Logistics Charter, signed in 2002, is as Amazon who have not shied away from a code of conduct agreed upon by all logistics entering into agreements with delivery centers players setting out the access arrangements used by drugstores and mass retailers. for delivery trucks. Interestingly, many mass distribution brands have quickly adopted alternative (rail/waterway) delivery modes to rationalize costs and to improve energy effi ciency.
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Table showing the different forms of public-private partnerships in use today
Integration with PuBLIC PRIVATE
Type of operation Traditional public Publically fi nanced Privately fi nanced Entirely privately procurement operationss operations owned
New Distinct design Private sector provides Private sector provides Private sector controls Infrastructure and construction bids design and construction design, construction the entire process under single bid and fi nance
Existing Managed by a govern- Operating and mainte- Operating --- Infrastructure ment agency nance contract and maintenance contract
5/ENCOURAGING PRIVATE FUNDING 1/ the development of urban mobility strategies at local level in close cooperation with the private To facilitate dialog with private players, the various players best meeting the specifi cations; public stakeholders need to adopt a coordinated 2/ green public procurement contracts approach and encourage private initiatives with for example, should be offered where several local sound business models (for example, if they allow authorities jointly order a certain number of clean for advertising, or generate income by using urban vehicles and use a (public) demand aggregator. land for a new purpose). In addition to PPPs, close attention should be paid As guardians of a public transport service and to the role of one-off semi-public companies in user fares, public authorities need to safeguard developed countries. These companies are useful the common interest by ensuring a certain level of for governance purposes when conducting local service quality from the private partners. public programs as they combine the benefi ts of direct management, whereby the local authority Inter-ministerial coordination should be strengthened retains control of its public service, with the advan- at national level to ensure consistency of government tages of delegated management, whereby the skills investment policies and encourage private invest- and innovative abilities of a private provider are ment in support of new and innovative urban brought to bear on the project. For developing mobility priorities. To this end, a newly-created countries, micro credit offers a solution in that it ACTIONABLE LEVERS body would prepare government decisions relating encourages the adoption of a particular mobility to agreements between the state and fi nancial mode through the ownership and use of institutions. The new entity would also coordinate two-wheelers, for example. the drafting of specifi cations for calls for projects. Finally, it would oversee appraisal of investment projects, issue opinions and recommendations, evaluate investments and prepare an annual report on program implementation. By convening public and private players, this action would further promote the development of trans- national centers of excellence, competitiveness clusters and public-private cooperation networks. As an additional measure, private players could usefully be offered incentives to propose new, «clean» urban mobility initiatives under traditional state-province plans, or national funding contracts for local authorities. This action should be backed by a training program for local authority staff in
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In conclusion, public policy promoting innovation Example: can make a decisive contribution towards addres- micro-credit scheme in Pudukkottai, India sing global challenges by working in tandem with to promote the use of bicycles by women. a mix of technological and economic initiatives.
At the international level, depending on the require- These will shape tomorrow’s urban mobility, provi- ments and as part of a concerted dialog, the World ded they are integrated (i.e. they take into account Bank could provide support for stakeholders in all aspects of urban policy), coordinated between urban mobility projects under joint financing agree- national and local levels and pursue the same ments with the Global Environment Facility (GEF) objectives. Some forward-looking cities have taken and regional banks (e.g. Asian Development Bank, the lead by anticipating the new mobility challenges, European Investment Bank, etc.). «breaking down walls» between the governing To avoid poor coordination between projects departments, setting up new mobility management linking different territories, a strategy along the lines authorities with their own skills and resources, and of the European Transport Networks (ETN) could not shying away from seeking solutions beyond be implemented to develop major infrastructure their jurisdiction. projects across regions or countries. The ETN is an integrated transport system combining road and road/railway transport, waterway transport, sea ports and the railway network (high speed trains, in particular). Intelligent transport manage- ment systems and satellite navigation also fall into this category.
At the international level, governments can and should do more by way of deeper cooperation in the definition and/or harmonization of com- mon standards. The development of international cooperation and exchange platforms or programs, such as the CIVITAS European program, should be stepped up.
CIVITAS : a network of some 200 towns that have been cooperating since 2002 on more than 650 locally implemented schemes. Since inception, the network has been supported by the European Commission, which has allocated a €200 million budget to it. We are now entering the CIVITAS MORE II phase the aim of which is to promote collabo- ration among new European and non-European cities through March 2015.
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5 Rolling out the fi ve game changers on a massive scale
The weight of transport in local pollution is well known and the impact of corrective actions
can be easily estimated. We worked with the International Energy Agency (IEA) on its CO2 emission quantifi cation model, assisted by the strategy consultants Oliver Wyman and the Climate Economics Chair of Paris Dauphine. In a study on growth carried out in parallel with NERA Economic Consulting, whose economic experts are recognized for their work by many government agencies, we sought to assess – based on business-as-usual projections − the potential macro-economic effects of our game changers.
Large-scale roll out of the fi ve game changers
Set ambitious global CO2 emission reduction targets and implement the relevant economic instruments
GAME Implement ultra-low emission zones with enhanced road safety CHANGERS measures and appropriate infrastructure and vehicles
Develop door to door solutions for people, with corresponding web-based applications 5 Reinvent innovative last-mile logistics systems Mobilize private investment for sustainable transport infrastructure and innovative mobility services
Impacts on: ACTIONABLE LEVERS
Local pollution
Growth and employment
109 1/REDUCING LOCAL POLLUTION
The transport sector accounts for a mere 5% of
SOx (sulfur oxides) due to the desulphurization of fuels in most countries. On the other hand, it accounts for more than 20% of particulate matter
(PM) and 50% of NOx (nitrogen oxides) emissions, leaving ample room for reduction and improvement. Accordingly, in this chapter, we propose the fi rst step of an environmental and economic quanti- Two groups: OECD and non-OECD countries fi cation process that would bring on board new partners as its accuracy and knowledge base The fi gures below, drawn from the Mobility 2030 increase. Results so far are very encouraging. report published by the WBCSD and prepared by Action on a city scale appears to be key for the IEA shows forecasts to 2050 for two major enacting all our game changers. We thus propose transport pollutants (NOx and PM) in both OECD a method along with a set of ground rules for and non-OECD countries. effectively implementing our proposals.
OECD countries
OECD regions: Transport-related Nitrogen Oxide (NOx) OECD regions: Transport-related Particulate Matter emissions by mode (PM-10) emissions by mode Megatonnes/Year Megatonnes/Year 20 20
15 15
10 10
5 5
0 0 2000 2010 2020 2030 2040 2050 2000 2010 2020 2030 2040 2050
Total
Freight Trucks Two + Three-Wheelers
Buses Light Duty Vehicles
OECD countries have been pursuing pollutant reduction policies regarding both pollutants for several decades through the adoption of increasingly stringent (EURO) standards and the deployment of specifi c technologies (particulate fi lters, catalytic converters, etc.) These policies have borne fruit for a number of years already but, in the absence of new initiatives, a fully satisfying situation will not be achieved until 2030.
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Non-OECD countries
NON-OECD regions: Transport-related Nitrogen Oxide NON-OECD regions: Transport-related Particulate
(NOx) emissions by mode Matter (PM-10) emissions by mode Megatonnes/Year Megatonnes/Year
20 20
15 15
10 10
5 5
0 0 2000 2010 2020 2030 2040 2050 2000 2010 2020 2030 2040 2050
Total
Freight Trucks Two + Three-Wheelers
Buses Light Duty Vehicles
Non-OECD countries are lagging behind by about fi fteen years (and some have yet to desulfurize their fuel). The growing size of their motorized fl eet and their rapid urbanization call for urgent measures.
Two game-changing measures – one regulatory, 2/REDUCING CO2 EMISSIONS the other technological – are essential to reduce local pollution, and in particular PM and NOx, whose damaging impact on health 2.1 The IEA’s two reference scenarios: is a cause for public concern. 4°C and 2°C ACTIONABLE LEVERS
Creating ultra-low emission zones (ULEZs) will The 2°C scenario is «deductive». It is based on drastically reduce local pollution in densely a predetermined outcome consistent with the goal populated urban areas. CO2 emission reduction of limiting the rise in global mean temperature to initiatives will further cut local pollution. Mobilizing 2°C above preindustrial levels by 2100. This sce- private investment will contribute to the develop- nario also identifi es the solutions that would help ment of more sustainable and effi cient infrastructure. ensure a secure and economically viable energy Door to door solutions, along with last-mile system in the long term. Its target: cutting CO2 logistics, will promote soft or electric modes. Fast emissions by more than half by 2050 and ensuring implementation of the measures developed in this that they continue to fall thereafter. Green Paper is therefore key to accelerate action on air quality improvement. The 4°C scenario on the other hand is «inductive». It is founded on measures public authorities consi- Fully eliminating urban pollution, however, will der “realistic”. The outcome of this scenario is require an overall strategy tackling transport, a 4°C rise in global temperature by 2100 compared housing (heating, cooking, air conditioning), industry with preindustrial levels, with major geographical and major construction projects. disparities.
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Transport’s share in the 4°C and 2° C scenarios The «transport» scenarios are drawn from the IEA’s reference scenarios (4°C and 2°C) presented
above. They model the evolution of CO2 emissions
from transport. In terms of total CO2 emissions worldwide, the transport sector accounts for almost 24%, with road transport alone accounting for slightly more than 17%. To model mobility, the IEA used MoMo, a mobility model which covers all transport modes and is structured as follows:
MoMo structure
Country historic data files Air Materials
Global historic database 2- ans 3- wheelers Infrastructure
Fuels Passengers LDVs Master interface
Data: local polluants Road freight Costs and investments
Data: GDP and population Buses Data: electricity mix input
Data: bateries Rail
Data: fuel economy potential Shipping
LDV = light-duty vehicle Perspectives 2014 (AIE) Technology Energy
Key point MoMo covers all transport modes and includes modules on local air pollutants and on the costs of fuels, vehicles and infrastructure as well as analysis on the material needs for new vehicles.
Under the 2°C scenario and despite an overall Under the 4°C scenario, its share will rise by 30%.
reduction in emissions, based on IEA CO2 data We observe that transport’s share is larger in 2050 and International Transport Forum (ITF) transport under the 2°C scenario because the IEA antici- data, transport’s share of direct emissions1 will pates technological breakthroughs in the energy
increase by 35% between 2011 and 2050. sector that will have a greater impact on CO2 emissions.
1 - Direct emissions: the emissions calculation considers that the emissions factor for biofuels is zero, as opposed to the “well- to-wheel” method, that takes into account the fuel’s biogenic carbon which is transformed into CO2 during combustion.
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The 4°C scenario is used by us as a benchmark .2.2 Outcomes and interpretations against which to measure the impact of «shocks» produced by our game changers. Two of the four assumption sets − «MCB Shock 1» and «MCB Shock 4» − have outcomes very close The effect of the game changers has been defi ned to those of the 2°C scenario. Both favor the phased by Michelin Challenge Bibendum (MCB) experts introduction of CO pricing towards the level by taking into account all the characteristic values 2 recommended by the IEA in its 2°C scenario (i.e. of the transport sector in the IEA’s 4°C and 2° C US$130 in 2040 versus US$150 in Sweden today). scenarios. MCB experts have also assessed the That is why the monetary valuation of CO is a estimated speed of implementation of the game 2 particularly powerful lever for making massive cuts changers. to CO2 emissions. We have developed four different assumption The study confi rms that our game changer recom- sets with Oliver Wyman Consulting and the IEA mendations are synergistic. Their combined effects («MCB shock 1» to «MCB shock 4»). They take into are inevitably more powerful than the impact of any account all game changers in this Green Paper, one lever. Further simulations will make it possible allocating different weightings to them. to examine even more ambitious scenarios.
Chart comparing CO2 trajectories in the IEA’s 4°C and 2°C scenarios with the four assumption sets (MCB shocks 1 to 4)
Mt CO2 eq 15000 14000 13000 12000 11000 10000 9000 8000 ACTIONABLE LEVERS 7000
6000 IEA, Oliver Wyman, Climate Economic Chair and Michelin Challenge Bibendum 5000 Year 2010 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050
IEA 4°C Shock MCB 2 IEA 2°C Shock MCB 3 Shock MCB 1 Shock MCB 4 The outcomes of the four assumption sets based on the fi ve game changers described in this report confi rm that, in all cases, our game changer scenarios signifi cantly reduce CO2 emissions versus the IEA’s 4°C reference scenario, other things being equal.
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3/THE IMPACT ON GROWTH NERA’s studies are based on an economic shock AND EMPLOYMENT to the transport sector (i.e. a close but non-identical shock as the one resulting from our game chan- 3.1 NewERA Global Model, the general gers) consistent with the difference between 3 equilibrium model by NERA Economic the IEA’s 2°C and 4°C scenarios . Consulting Specifi cally, shock modeling involves substantial improvements in the environmental performance NERA Economic Consulting uses NewERA Global2, of the transport sector (passenger and freight land its proprietary Computable General Equilibrium transport) measured as «tank-to-wheel» CO2 (CGE) model, to guide decision makers on the long emissions per unit of transport. term economic impacts of policy trade-offs. Briefl y, general equilibrium model simulates complex rela- The following fi gure summarizes the key features tionship between economic sectors and between of NERA’s approach. regions and allows to study impacts of different and wide ranging policies such as environmental policy.
Summary of approach adopted
0 1 2 Baseline Shock Scenario analysis Economic equilibrium Shows the contribution The economic impact over the modeling of the transportation associated with the shock horizon sector to a low varies according carbon world to the policy mix
GTAP 8 accounts Defi nition: We have designed 8 • Economy Changes to transport scenarios to illustrate activity and related CO • Energy 2 the policy tradeoffs (tank to wheel) emissions faced by decision • Environment based on the difference makers between IEA 2DS and ITF 2013 Outlook 4DS scenarios The scenarios are based projections on four levers: • GDP Key aspects: • Policy type used to • Population • Overall transport activity is broadly comparable limit transport CO2 • Oil Prices emissions (fuel but CO2 emissions • Transport activity decrease considerably effi ciency standards or cap and trade policy) 3 - Passenger • Passenger private Outcomes Private: 2W and 4W transportation falls • Technological Public: rail and bus progress on transport Impact on Real GDP and is compensated and Employment - Surface Freight by a rise in public specifi c backstop technologies (timing of • Transport CO2 transportation emissions adoption and diffusion) > • There are important - Tank to wheel regional differences • Revenue recycling of carbon revenues (lump IEA WEO 2012 sum transfer or projections reduction of labor taxes) • Energy production • OPEC response to and demand 4 a fall in oil demand (standard, maintain price or exports volume) NERA analyses
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To illustrate the differential impact of various public policies, NERA modeled the aforementioned «economic shock» by combining different scenarios with regard to: 1/ the emergence of innovative technologies to limit CO2 emissions; 2/ the choice of policy instruments; 3/ the method of redistributing auction revenues from an economy-wide cap-and-trade program; 4/ the reaction of OPEC countries to a signifi - cant fall in the demand of oil5. ACTIONABLE LEVERS
2 - NewERA Global is a forward-looking, global computable 4 - OPEC could respond to a drop in global oil demand by either general equilibrium model based on assumptions of full utilization attempting to maintain its exports or maintain world crude prices. of the factors of production. The model simulates the interactions NERA’s analysis investigates these two extreme responses as well between industry, households and government. It covers all as a middle of the road response. sectors of production in the economy and models bilateral trade. Productive investment decisions are based on perfect anticipa- 5 - Based on its experience, NERA has chosen a relevant policy tion of future public policy choices and the future of the economy mix to illustrate how these instruments and market conditions at large, resulting in optimum levels of saving and investment. The affect economic outcomes. A comprehensive analysis of the po- NewERA model is particularly well suited for analyzing economic licy instruments available and the uncertainty surrounding market and energy policies as well as environmental regulations. conditions is beyond the scope of this study.
3 - Policies to address climate change also tend to limit the risks of major environmental damage and the resulting costs. In line with most available CGE models, NERA has not modeled this aspect, though we expect its probable impact up to 2030 to be limited.
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3.2 Outcomes and interpretations The first finding is that GDP in these scenarios grows during all the periods under review. The Outcomes projected growth is only slightly below estimated NERA Economic Consulting has assessed growth in the baseline for the 2015-2030 period,
the impact on the global economy of CO2 emis- for the reasons stated below. The “shocks” thus sions reduction in the transport sector. induced in the model would not stunt growth, The tentative outcomes of this first analysis for as some people might have feared, despite the the United States, Europe and China are set out magnitude of the recommended changes. Further below. possibilities do exist and other more favorable combinations can still be tested.
Impact on GDP growth Impact on GDP GDP annual growth rate over the period 2015- % change relative to baseline in 2030, min-max 2030 (CAGR), min-max range of all scenarios range of all scenarios and baseline
1.00 7.00 Baseline CAGR 0.59% 5.91% USA 2.52% 6.00 0.50 Europe 1.98% 5.85% China 5.91% 5.00 0.00 -0.19% -0.22% -0.14% 4.00 -0.50 % Change
CAGR (%) 3.00 2.52% -1.00 -0.91% 2.00% -1.00% 2.00 2.46% 1.97% -1.50 1.00 NERA analyses
NERA analyses -2.00 0.00 USA Europe China USA Europe China Country / Region Country / Region
Impact on Employment % change relative to baseline in 2030, min-max range of all scenarios
1.00 0.87%
0.50
0.09% 0.00 -0.36%
-0.50 % Change
-1.00 -0.96%
-1.50 -1.28% -1.57% NERA analyses -2.00 USA Europe China Country / Region
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NERA’s analyses make a distinction between Impact on employment the impacts on the gross domestic product of The need to improve the transport sector’s environ- the United States, Europe and China. In all the mental effi ciency comes with adjustment costs scenarios modeling the impact of the economic that increase the marginal production cost for shocks, US and China’s GDP fall short of their companies. The implied reduction in labor demand baseline levels. The impact on European GDP leads to a drop in employment8. Europe, however, depends on the scenario used. can produce a positive impact on employment under a scenario whereby it recycles the income Second, it should be stressed that while the impacts from CO pricing to ease labor taxes, as we will measured relative to the baseline are relatively 2 discuss in greater detail below. Also, all three small for the 2015-2030 period, in absolute terms regions enjoy a «wealth effect» associated with the there is a substantial difference between an undis- reduction in the price of imported oil, which boosts counted cumulative negative impact of consumption despite the decline in employment. USD 2,400 billion6 and an undiscounted cumulative positive impact of USD 1,100 billion7, depending Finally, although we do not present the fi gures on the scenarios and geographical areas involved. here, the transformation under way in the transport These aspects highlight the key role of decision- sector leads to a drop in consumption and economic makers in shaping the most cost-effective policy activity in the oil exporting countries as a result of mix. falling revenues from oil exports9.
On the jobs front, the impact of simulated shocks The key role of decision makers relative to the baseline is generally negative for in the formulation of public policies the United States and China and varies for Europe depending on the scenario considered. As noted, the impacts measured relative to the baseline represent substantial amounts in absolute terms, underlining the need for the most Interpretation cost-effective policy mix and rapid implementa- Impact on GDP tion (see chapter on Targeted public policies). In two scenarios analyzed, the impact on GDP The perceptible differences between regions and employment of the conversion of the trans- (depending on the scenario) mainly stem from port sector is enhanced by the implementation of three factors: relevant policies10. 1. The decarbonization of the transport sector results in a slump in oil demand and prices and a signifi cant improvement in the trade balance of oil importing countries. China and Europe, both heavily dependent on oil, benefi t from this effect. 6 -In 2012 USD.
2. The transport sector’s relative share of each 7 -In 2012 USD. ACTIONABLE LEVERS region’s economy and the impact on fuel prices 8 -The quantifi cation of simulated shocks and their impact on caused by its conversion to low-carbon fuels employment should be used with caution, since labor market determine the economic costs of transition to more modeling on CGE models is too narrow to capture the specifi c characteristics of each country and period. environmentally friendly transport modes. The US, with its large transport sector consisting mostly 9 -This effect is especially pronounced here because the simu- of private vehicles and relatively lower fuel prices, lated shocks focus on the transport sector − a sector heavily dependent on oil and with limited substitution options in is the region most negatively impacted by this the baseline. transition. 10 -This analysis ignores scenarios with a positive impact falling 3. As China has the highest CO2 reduction challenge, outside the sphere of public action in the regions under study. the cost of switching to a more environmentally For instance, a scenario whereby OPEC decides to maintain its volume of oil exports at the baseline level would be relatively friendly transport sector has a negative impact positive for both GDP and employment, but decision-makers on GDP, thereby offsetting the positive impact in the regions under review have little infl uence in this matter. of improvement in the country’s trade balance referred to in 1 above.
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- The «High Technology» scenario assumes - The «Revenue Recycling on Labor Taxes» the emergence and rapid deployment of scenario sees decision-makers using the inco-
innovative low-carbon technologies in me generated by CO2 pricing to reduce labor the transport sector (in blue in the figure below). taxes and therefore mitigate their distortive This scenario also assumes the establishment of effects on the economy11 (in yellow in the figure 12 a CO2 allowances market, marked by redistribu- below) . tion of the resulting income in the form of fixed This scenario assumes an average pace of techno- household subsidies and OPEC’s middle of logical innovation, coupled with the middle of the the road response to a drop in oil demand. road OPEC response to a drop in oil demand.
Impact on GDP Impact on Employment % change relative to baseline in 2030, all scenarios % change relative to baseline in 2030, all scenarios
1.00 1.00
0.50 0.50
0.00 0.00
-0.50 -0.50 % Change % Change -1.00 -1.00
-1.50 -1.50
-2.00 -2.00 USA Europe China USA Europe China
Year Year NERA analyses
Revenue Recycling High Technology on Labor Taxes
NERA’s study serves to identify the action plans 11 - This approach seeks to produce two positive effects on the economy: reduced pollution and reutilization of environmental available to decision-makers to optimize the macroe- taxes to cut other taxes − such as labor tax − that have a distortive conomic impacts of the transition to a low-carbon impact on the economy. This process is usually called «double transport sector. dividend». These findings are in line with the results of several 12 - This policy has been applied only in OECD countries. studies of the impact of climate change mitigation For that reason, its shock mitigation effect on employment in China policies, such as those published by OECD13 and is weaker than that observed for the USA and Europe. 14 the Stern Review . 13 - OECD (2012), OECD Environmental Outlook to 2050, OECD Publishing; Chateau, J., A. Saint-Martin and T. Manfredi (2011), “Employment Impacts of Climate Change Mitigation Policies in OECD: A General-Equilibrium Perspective”, OECD Environment Working Papers, No. 32, OECD Publishing.
14 - Stern, Nicholas (2007), The Economics of Climate Change: The Stern Review, Cambridge University Press.
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4/ QUANTIFYING THE COMBINED IMPACT CONCLUSION OF THE GAME CHANGERS Reducing local pollution from transport requires This fi rst analysis shows that the impact on growth the development of new technologies. and employment of the simulated shock can be The study of CO2 emissions reduction carried positively affected so long as they promote innova- out with the IEA shows that the outcomes for tive technologies and mechanisms for the redistri- the transport sector in the 4°C reference scenario can be signifi cantly improved. In two assumption bution of income from CO2 pricing. sets, we close in on the emission levels in The winning scenarios proposed by the NERA the 2°C scenario if we act quickly and decisively simulations study are consistent with the predic- to introduce CO2 pricing. table impact of our game changers, as they identify Finally, NERA’s analysis of GDP and employment similar dynamics. highlights two scenarios capable of optimizing the impact of simulated shocks. The fi rst involves CO2 pricing, recycling the resulting income into fast deployment of innovative technologies. the economy (especially to support employment The second involves introducing a mechanism during the tricky transition period) and rapid expan- for the redistribution of income from CO2 pricing sion of innovative low-carbon technologies lie at to ease labor taxes. the heart of our proposed game changers. They are underpinned by improved investment capacity and openness to private capital.
The focus in the next stage of our joint work will be on optimized alignment of the analyses undertaken and possibly on measurement of the combined effects of our fi ve game changers.
Our goal in the coming months is to fi ne tune assessment of the impact of our game changers with the help of our partners. We hope that this will strengthen our convictions and ability to persuade the various stakeholders. ACTIONABLE LEVERS
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AS A NEXT STEP AND BEYOND, LAYING • «individualistic» cities, with a high proportion THE GROUNDWORK FOR AN INNOVATIVE of private vehicles must re-engineer their system URBAN MOBILITY ECOSYSTEM towards more common and sustainable solutions; • «public» cities, with a high proportion of public As a result of these learnings, we offer cities transport (and where walking and cycling are a simple framework to develop the vision practiced) must integrate their mobility system expressed in this Green Paper. by connecting mobility solutions and interacting An analysis of mobility maturity and performance with their citizens. in 84 cities around the world, conducted by Arthur D. Little in collaboration with UITP, reveals three The solution for the future is an interconnected pathways to progress: multimodal network, tailored to the city’s growth project and balancing economic development and • emerging cities can invent their own sustain- well-being. able mobility solutions. By capturing emerging transport infrastructure and technologies, they have the opportunity of becoming the test-bed for the urban mobility systems of tomorrow;
Establish Rethink the system: Network th system: sustainable core: shape political agenda integration of different
invest in sustainable towards shift to public market players and Arthur D. Little urban mobility and sustainability networking of citizens
Strategy infrastructure
Feature: Stockholm Hong Kong • Innovative thinking Paris Maturity • Seamless integration Singapore with « one key » Tokyo London for citizens Ankara • High convenience Addis Chicago Shanghai Bangalore • Sharing concepts Baghdad Ababa Guangzhou Athens Kuala Time Lumpur
Emerging Individual Public Networked mobility Emerging cities with Mature cities with Mature cities with Integration of all modes partly underdeveloped high share of individual high share of public to reduce share of mobility systems transport in modals transport / walking & individual motorized split cycling transport
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Four key dimensions • Public transport funding. To ensure the fi nancial viability of public transport The stakeholders in urban sustainable mobility and its operators, assessments must be made ecosystems should focus on four key dimensions: in three areas: opportunities to derive additional • A visionary strategy and ecosystem. revenues from aggregation of third party services; Cities should develop a political vision and growth in passenger numbers; and revenue collec- objectives based on the strategic alignment of all tion from indirect benefi ciaries of public transport key public and private urban mobility stakeholders. (see chapter on «New economic instruments»). This alignment will ensure a balance between visionary ideas and project feasibility. All four dimensions have to be carefully weighed • Mobility supply management. by cities at the trial stage, all too often by-passed Cities should extend their transport offering for when it should in fact form part of a formal assess- citizens, shifting from “delivering transport” to ment process, by factoring in the specifi c context “delivering solutions”. They should enter into of the country and the city. The fi nal outcome will partnerships and alliances with third parties, be infl uenced by the performance of the weakest delivering user-friendly multimodal solutions link. that meet everyone’s needs. A strict implementation process must be followed • Mobility demand management. for each innovative mobility ecosystem under Cities should defi ne ways (incentives/penalties) consideration: to encourage people to match their behavior to the mobility mode adopted. Measures do exist, some of which are tried and tested.
1 2 3 4 SET DEVELOP FORMALIZE IMPLEMENT THE STAGE A VISION A STRATEGY AND MONITOR
understand and articulate: • Town planning models, • Plan a multi-faceted • Identify appropriate • Adopt transparent
initiatives and issues approach from priority sustainable governance and ACTIONABLE LEVERS the outset mobility measures fi nancing mechanisms • City performance and and assess synergies variance from best • Develop a policy vision • Earmark budgets practice encompassing priorities • Select strategic options and targets for all integrated for roll-out of integrated • Key stakeholders measures solutions on a massive • Align ecosystem scale stakeholders with defi ned priorities • Ensure monitoring of impacts of key mobility challenges Arthur D. Little adapted by Michelin
121 And now, let’s act!
As ascertained during the Chengdu Global Summit, the material presented in this document provides a pertinent response to the urgencies we currently face and a vision for a sustainable and opportunity rich future. The action now required must be strong, socially equitable and support sustainable economic activity.
COP21 and the other key international meetings on the 2015 global agenda provide unprecedented opportunities to spread these ideas and inscribe them in the reality of national development and modernization programs.
Citizens are increasingly thirsty for new mobility and pleasure to move about.
So…Let’s dare the double choice of the mind and of the heart!
122 Editors: Erik Grab and Patrick Oliva Authors: Olivier Dario, Antoine Féral, Patrice Person, Matthieu van der Elst with Hugo Bois Publication: Sylvie Gillet and Lysiane Escuit Coordination: Delphine Defl andre Translators: Govind Bhinder/Feat, Proofreaders/Reviewers: Jennifer Bravinder, Michael Fanning, Luc-Michel Gorre, Jean-François Mathieu Digital community: Virginie Stellmacher, Bluenove with Alexandre Echalier Graphic design: Trëma Clermont-Ferrand
Sincere thanks are due to the following institutions for their strong contribution: AIE, Arthur D. Little, Climate Economics Chair at the university of Paris Dauphine, Frost & Sullivan, IHS, McKinsey, Michelin, NERA Economic Consulting and Oliver Wyman.
This Green Paper, written on behalf of is a collective work. This does not mean that all parties agree with every word in this book.
This document also benefi ted from the expertise of: • ADEME, Agence De l’Environnement et de la Maîtrise de l’Energie; IEA, International Energy Agency; CDF China Development Forum; CIRAIG: Centre Interuniversitaire de recherche sur le cycle de vie des produits, procédés et services (École polytechnique de Montréal); C40 Cities Climate Leadership Group; CIRODD Centre Interdisciplinaire de Recherche en Opérationnalisation du Développement Durable; DHL, EEA European Environment Agency; ETSI European Telecommunication Standard Institute; IPCC Intergovernmental Panel on Climate Change; ITF International Transport Forum (OECD); LuTB Lyon Urban Truck & Bus competitiveness cluster; MOVEO Movéo competitiveness cluster; POLIS European association for innovation in transport; uQAM University of Quebec Montreal; Università degli studi di Roma «La Sapienza»; WBCSD World Business Council for Sustainable Development; WEF World Economic Forum
• and the information sources of: AGECO, BCG (Boston Consulting Group), Chengdu Jiaotong South West University, HTS, IBM, MIT, SAP, SNCF, Tsinghua University (Beijing), University of New Delhi and Xerox.
Thanks are due to those whose insights helped to enrich this work: Dominique Aimon, Pr. Adriano Alessandrini, Annie & Bernard Aujon, Alain Ayong Le Kama, Alain Barillier, Sébastien Bartaud, Eric Berger, Paul Bernstein, Pierpaolo Cazzola, Philippe Chabalian, Patrice Cochin, Rémi Cornubert, Marlène D’Aversa, Antoine Doyon, Marc Durance, Franck Ferrer, Philippe Fouchard, Pr. Martin Fransman, Alexis Garcin, Phil Gott, Jennifer Guinot, Ruchika Gupta, Sylvain Haon, Hakim Hammadou, Richard Harris, Emmanuel Igier, François Job, Éric Jugier, Laurent Kalfon, Oleksii Korniichuk, Anthony Lebleis, Jean-Sébastien Lénik, Éric Leyval, Dr Mashelkar, Bénédicte Meurisse, Dr Mohan, Jincheng Ni, Christian de Perthuis, Claire Papaix, Marina Rachline, Pr. Jean-Pierre Reveret, Christophe Reydi-Gramond, Adrien Rougier, Gérald Sézille, Dr Tiwari, Guy Tondeur, Sugandha Tuladhar, François-Joseph van Audenhove, Hélène van Rossum, Gonçalo Vilaça, Manoëlla Wilbaut, Mei Yuan, Lucy Zhang…
Photographs © 123RF, ATNMBL by Mike & Maaike, Alternatives Energies, J.Bravinder, Commission européenne, Fotolia, Ligier, Michelin.
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