The mobility industry is nearing an inflection point in its ability to curb the greenhouse gas emissions caused by urban transportation. Getting there requires closer partnership within the industry and between the public and private sectors, as well as a reliable regulatory environment that fosters investment, according to industry executives and investors who participated in an Oliver Wyman Forum Climate Week NYC roundtable.
Cities and companies also need to seize the low-hanging fruit of relatively simple solutions, such as extending and widening bicycle lanes, even as they make big investments in public transportation and charging networks for electric vehicles (EVs), the participants said.
The good news, executives agreed, is that the narrative around sustainability today focuses around how to scale solutions, not how to invent them or demonstrate that they can be profitable. “Investing in climate is no longer just an ESG initiative. It’s good business,” said Andrew Cornelia, CEO of Mercedes-Benz HPC North America, which is developing the automaker’s high-power charging network in the region.
Transportation generates about 23% of global greenhouse gas emissions, and an even bigger share of major cities’ emissions. Shared and digital services and EV charging are crucial to reducing emissions, and the Oliver Wyman Forum projects the market for those services will grow nearly three times by 2035, to $1.14 trillion globally. But the public and private sectors can accelerate the growth of sustainable mobility, and help avert more severe consequences of climate change, with determined effort and collaboration.
“We have a small window to bend the emissions curve,” said Micah Kotch, a partner at Blackhorn Ventures, a venture capital firm that specializes in using digital technology to accelerate the energy transition.
The power of partnership
Range anxiety is a big factor behind the relatively low adoption rate of EVs in North America. People tend to drive longer distances than their counterparts in Europe and Asia, and the EV charging infrastructure remains underdeveloped relative to countries in other regions, and often unreliable. One in five charging sessions fails because of quality issues, Cornelia said. It will be a challenge to increase charging network density on the one hand and ensure high charge-point utilization and profitability on the other.
Partnerships between automakers or charging companies and convenience stores or retailers can help plug the gaps in charging networks. In July, Mercedes-Benz HPC announced an agreement to install fast chargers at 100 Starbucks stores across the United States in an effort to make charging a car easier and more pleasant. “We want to elevate the charging experience,” said Cornelia.
Collaboration also can play a role in bringing technology improvements and innovation to public transit. The Partnership Fund for New York City invites companies to test their technology on the city’s transit system. This year’s exercise selected applicants for 18 proof of concept tests, including using LiDAR to monitor curbside activity to improve the flow of traffic and cooling a Brooklyn subway station by extracting heat and using it to meet the hot water needs of adjacent apartment buildings.
“We’re trying to make government a good partner for innovation,” said Maria Gotsch, President and CEO of the Partnership Fund for New York City.
The importance of reliable regulation and policy
Urban transportation is a heavily regulated sector because of safety and other competing issues involved in enabling large numbers of people to get around in dense areas. But cities need the right kind of regulation — open to innovation, responsive to market needs, and providing enough certainty to foster long-term investment — to build sustainable mobility networks for the future.
Consider the issue of congestion charging in New York City. Cities such as London and Singapore have used such levies to finance public transit expansion and reduce automobile traffic and air pollution. New York had planned to introduce a charge on cars entering Midtown and Lower Manhattan this year but that was halted at the last minute.
“We’re hopeful it’s a delay and not permanently off the table,” said Gotsch. “New York City needs congestion pricing.”
Other policy measures can accelerate the energy transition in mobility. Denver runs a program that periodically provides rebates of $300 to $1,200 on e-bikes purchases, for example. The US government this year expanded commuter benefits to include tax rebates for e-bike purchases, allowing employees to allocate up to $270 a month of pretax income for e-bike expenses, said Blackhorn Venture’s Kotch.
Grasp the low-hanging fruit
Small initiatives can be implemented faster than megaprojects and still add up to make a big impact.
Ridership on New York City’s Citi Bike bike-sharing network rose 16% in August from the same period a year earlier, to an average of nearly 150,000 rides a day. That’s impressive but usage could grow faster if the infrastructure was made more convenient and safer, said Patrick Knoth, the program’s general manager. “We need more protected bike lanes, and we need to widen existing ones,” he said. “That is what drives ridership.”
Blackhorn Venture’s Kotch said the firm is interested in low-cost ways to ramp up EV charging capacity that can scale quickly. They include using batteries to mitigate the cost of new grid infrastructure and reduce the cost of ownership and demand charges over time.
Cities need to pursue all of these avenues — smart policy, collaboration, and a willingness to innovate in ways big and small — and embrace a can-do spirit to accelerate the sustainable mobility transition.
“This is a financial city,” said Gotsch of the Partnership Fund for New York City. “We have the skills to boost the grid and better price and move electrons.”