As the world becomes more urban and populous, demand for mobility services that get people, goods and services from A to B will rise. But as the planet heats up, governments and societies expect the automotive, logistics and aviation sectors to bring carbon emissions down. What the mobility ecosystem does next will affect us all.
According to current trends, the planet will be over three degrees warmer by 2050. ‘Business as usual’ means rising sea levels and greater risk of extreme weather. In response, a growing list of governments and companies have announced targets and strategies to reach carbon neutrality. But what does that mean for those in the business of mobility? How can they best contribute to decarbonisation efforts? And what difference has the pandemic made to the scope, scale and speed of sustainability plans?
Mobility – an ecosystem driving change
We define mobility in a wide sense, as the movement of people, goods, and services. Rather than focusing on a particular sector, we see it as an ecosystem: automotive, logistics, aerospace, public transport, and other sectors working together to enable local, national, and transnational change.
Transport as a sector is responsible for 16% of global greenhouse gas emissions, and its emissions are rising. Reaching net zero means transport and the mobility ecosystem as a whole will have to reverse this trend.
One way to do this is to bring down the price of sustainable mobility solutions as fast as possible. “The big change will come at the moment when the sector can deliver goods and services in a sustainable way more cheaply than the alternative,” says Remco Schoonderwoerd, Partner and Head of Transport and Logistics, Mazars. “That will make sustainable solutions more inclusive too, by enabling more people to afford them,” says Bongiwe Mbunge, Partner, Mazars.
This will be challenging, as most sustainable solutions and technologies are still more expensive than traditional alternatives. Consumers and clients are still price-sensitive, and margins are thin. But by working with clients, and experimenting, the mobility ecosystem can push down the cost of sustainable solutions to help mitigate global climate change and get to net zero.
How mobility can move faster towards net zero
Working with clients: Many logistics suppliers, particularly smaller ones, can only win contracts if they meet the criteria set by the procurement policies of large companies. That means larger companies have the power to set a sustainability checklist to incentivise decarbonisation if procurement teams set effective sustainability targets of potential partners. The role of these teams should not be underestimated, notes Schoonderwoerd, “Most logistics companies don’t have the intrinsic motivation to significantly reduce carbon emissions, that’s why they often need either a client demand or some other financial incentive to take the necessary steps.”
Logistics suppliers that want to improve on sustainability without losing competitive advantage could ask the procurement department of their clients to raise standards for all suppliers. This could mean new emissions standards for a driving fleet, vehicles powered by alternative energy, or a long-term decarbonisation plan. “In some cases, this might mean clients and suppliers working together to achieve sustainability ambitions,” explains Schoonderwoerd. One logistics company, for example, was able to invest in battery-powered boats by seeking contract security from a large client (see ‘New light on old lessons to help logistics companies win on sustainability’).
Collaborating across sectors: “When I look back over the last few years and consider what had a real impact on sustainability in the logistics sector,” says Schoonderwoerd, “it was cooperation between companies. Some are working together to share loads and volume, which means fewer trucks and journeys. One started a network of distribution centres in each province of the Netherlands to consolidate deliveries between companies, for example.” This is already happening in other sectors as well. The automotive sector, for example, is seeing its fair share of jointly owned carsharing ventures.
Experimenting boldly: Forward-thinking companies will try out technologies and tools to support sustainability. Airlines are cooperating to find clean alternatives to kerosene and researching technology to convert wind and other forms of renewable energy into fuel. Automotive firms and suppliers are experimenting with lighter designs, materials, and business models, such as carsharing, which could see vehicles used more efficiently.
Schoonderwoerd has recently worked with logistics companies experimenting with technology to monitor truck drivers to improve fuel efficiency and reduce emissions, as well as drone deliveries and convoys mixing driven and driverless trucks. These companies can improve the ecosystem as a whole by communicating results to the sector. “If the transport sector eventually makes low carbon alternatives cheaper than current technologies,” says Julien Henault, Manager, Energy and Environment, Mazars, “it will be thanks to incremental improvements such as these.”
Policy driving change: Government policy, investment, subsidies, and regulation have been big drivers of change. “In South Africa, companies’ behaviour in respect to sustainability is driven in large part by compliance as well as reputation,” explains Mbunge. Government investment has also been a key driver. In June 2020, for example, the UK government announced funding for research into electric vehicle charging and other alternative energy solutions. “The German government has also just invested 9 billion EUR in building a full European hydrogen value chain,” explains Henault, “and the French government announced plans to support hydrogen as well.” Mobility companies can support carbon reduction by urging governments to go further and faster.
Covid-19 – both a brake and an accelerator
In some ways, Covid-19 has made the transition to sustainable solutions harder. It has hurt automakers and airlines financially, reducing appetite for investment in expensive innovations. It has also caused a spike in demand for private cars and e-commerce deliveries, leading to more emissions from these sources. The economic shock is also weakening purchasing power.
Mbunge notes that the economic difficulties created by the pandemic may make consumers and clients less likely to embrace sustainable options. “The average consumer is price sensitive,” she explains. “Five months of a pandemic and policy responses won’t necessarily change a hundred years of purchasing decision patterns.”
However, the pandemic has made this transition easier in other ways. By revealing the weaknesses of global supply chains, it has encouraged companies to consider moving to more local suppliers, reducing energy use. It has also given local governments an opportunity to enact policies that nudge users towards sustainability. “Due to Covid-19, the mayor of Paris installed new bike routes,” says Henault. “These routes increased my commute time when travelling by car, so now I take a bike or public transport.”
It has also made a low carbon future easier to imagine. City- and region-wide lockdowns resulted in stark scenes of empty streets. Global road transport fell by half, and commercial flight activity fell by three quarters. Meanwhile, tube and bus journeys fell up to 95% and 85% respectively in some capital cities. Many saw these as bleak – but others saw in them the promise of a more sustainable future.
The automotive, logistics, aerospace sectors, along with public transport, have already started to change in response to new pressures and demands. Further articles in this series will assess what the future of mobility will look like and what it will take to get there. In the end, says Henault, “The transition to carbon neutrality will require deep transformations in the way we produce and consume.”