Road transport, reinvented

Road transport, reinvented

Road transport is a major stake for durable mobility. According to the European Automobile Manufacturers’ Association (ACEA), it accounts for over 75% of all goods transported over land. It also contributes about one-fifth of the EU’s total emissions of carbon dioxide. That impact is likely to grow: “Experts expect global CO2 emissions from road freight traffic to more than double by 2050,” Andreas Thon, Siemens’s vice president for Turnkey Projects and Electrification in North America, tells New Atlas. Thankfully, road transport can be disrupted too.

Electric highways

In 2012, Siemens started testing in Germany its eHighway concept, in which commercial vehicles are retrofitted with a powertrain that draws electricity from overhead cables, allowing them to run on electric power only. In 2016, the “electric highway for trucks” made it to Sweden and in 2017, it was installed around the ports of Los Angeles and Long Beach in California. The aim of the demonstration was to show the system can help reduce “smog-forming, toxic emissions around ports,” wrote New Atlas at the time. Inverse wrote that “cutting truck emissions would have a huge impact on climate change and on the health of those who live near the most congested cities.” Siemens’ Andreas Thon explained: “That’s the main reason that we’re doing this. The main reason is the environmental aspect, both pollution and noise. The economic benefits come in addition.”

In Sweden, in April 2018, a similar technology was installed in the road: two tracks of rail transfer electricity through a movable arm that attaches to the bottom of a moving vehicle. The electrified road is the world’s first that can recharge the batteries of cars and trucks; at 1€ a kilometer, the cost is roughly 50 times lower than that required to construct an urban tram line, reports The Guardian. And the “dynamic charging” means the vehicle’s batteries can be smaller. The Swedish government is reportedly in talks with Germany to develop a network of such highways.

Autonomous trucks

In 2016, the Netherlands organised the first “European Truck Platooning Challenge” so that six European manufacturers could test their autonomous trucks in real life. Platoons of WiFi-communicating trucks left Germany, Sweden and Belgium to converge to the Rotterdam harbour. The aim was to prove that self-driving trucks are safer, cost less and consume less fuel: according to a study, two platooning trucks driving for 160 000 km could save up to 6000€ of gas a year.

In the United States, competition is already fierce. The main actors of the automated truck business are Peloton Technology, Embark, Starsky Robotics, as well as Waymo, Kache.ai and Kodiak Robotics. The new kid on the block, Ike, wants to build “hubs” along the highways, where self-driving trucks can park and wait for drivers to take them to their final destination. The question now, on both sides of the ocean, is whether the diversity of legal frameworks can accommodate the deployment of autonomous freights at a large scale. In Belgium, for instance, where the minimum safety distance between two trucks is 50 meters, “platooning” (which requires trucks to drive closer to one another) is de facto illegal.

The virtues of an integrated approach

But technology is not the only answer to the greenhouse gas emissions problem. In 2016, the ACEA presented the results of a study by Transport & Mobility Leuven (TML), entitled “Greenhouse gas reduction measures for the road freight transport sector.” Its conclusion was that improving the technology of new vehicles is only part of the solution: “there are many more factors than just the vehicle alone that determine CO2 emissions – such as permitted vehicle length and weight, trailer designs, alternative fuels, driver behaviour, optimised transport operations, infrastructure and more,” said ACEA Commercial Vehicle Board Chairman, Martin Lundstedt, who is CEO of Volvo Group. The “optimised transport operations” part is tackled, for instance, by Cargonexx, a Hamburg-based startup that was among the winners of the 2018 edition of the European Startup Prize for Mobility: it uses AI to improve the utilisation of trucks and reduce the number of empty runs.

A 2016 report by the European Environment Agency, entitled “Explaining Road Transport Emissions”, confirms that good progress has been achieved over the past 25 years thanks to a global approach: setting technological standards for vehicle emissions and fuel quality, establishing air quality limits, improving transport planning and public transport incentives, among other things. And the ACEA strongly advocates for an integrated approach, which they believe to be “the only way to reduce the CO2 emissions of the transport industry in Europe on a large scale.”

 

How autonomous cars try to adapt to the world as it is

How autonomous cars try to adapt to the world as it is

Self-driving cars will probably end up reshaping the urban infrastructures. But as long as they have to share the road with manned vehicles, they will need to adapt and learn to communicate.

Today, we are promised a future where cities will be filled with autonomous cars seamlessly communicating with each other. No more accidents, no more traffic jams, no more parking nightmares. But before that bright future happens, autonomous cars will have to cohabit with regular ones. “Better vehicle-to-person communication will be crucial, as most experts predict a lengthy period — perhaps decades — of mixed traffic, with robot cars navigating roads alongside human-driven ones”, writes the San Francisco Chronicle in a comprehensive article on the subject. And even once they’re ubiquitous, autonomous cars will still have to communicate with other users (bicycles, scooters, mopeds, pedestrians). Which is why the study of the relationship between machines and humans is now a booming field. Particularly in the United States, social scientists (mainly anthropologists, sociologists and psychologists) are teaming up with roboticians, engineers, designers and programmers to understand how people interact with autonomous vehicles.

Building trust through communication

First, there’s the issue of acceptance. “It’s crucial to make self-driving cars accepted in society so people feel they are trustworthy and part of daily life,” Sameep Tandon, CEO and co-founder of self-driving car company Drive.ai, tells the San Francisco Chronicle. “Otherwise there’s a risk people will think of this as the robot apocalypse.” That may be where we are now. In March 2018, for the first time, a woman was killed by a driverless Uber in Arizona (it was later established the vehicle had seen her and decided not to brake). In California, one third of the collisions involving autonomous cars in 2018 were caused by humans attacking the vehicule. The New York Times recently explored the reasons why humans tend to attack robots:

cognitive neuroscientist Agnieszka Wykowska evokes a “Frankenstein syndrome,” in which “we are afraid of this thing that we don’t really fully understand, because it’s a little bit similar to us, but not quite enough.” In short, trust is not there yet.

Today, all self-driving cars must embark a human operator seating in the driver’s seat, which may increase the level of acceptance. The Center for Design Research at Stanford University is thinking about the next step, and testing how people react to an empty car. They’ve devised a “car seat” suit that renders the driver “invisible” at first glance: “Our techniques are theater-like ways of simulating the future, like live-action, improvisational role-play for science,” Wendy Ju, who leads that experiment, tells the San Francisco Chronicle. “There’s a comedy to it, but we are dead serious about collecting real behavioral responses.”

AI-powered cars

Then there’s the matter of communication. Cars will have to be able to understand what is happening around them and to react while clearly signaling their intentions. Waymo’s mini-vans are already capable of reading the hand signals of bicyclists. Google has realised that its cars are too “polite” and can stay stuck for a long time at intersections, letting all other vehicles go first. A car programmed to stop whenever there’s an obstacle would rapidly create traffic jams for no valid reason.

So the idea is not to program the understanding of external situations, but to teach it. Waymo exposes its vehicles to virtual re-creations of real-life situations; Nissan feeds them with analyses of a day in the life of an urban intersection. “So many complicated things can happen in the real world,” says Drive.ai’s Tandon. “If you program a rule for every single case, you’d have a decision tree so complicated no one could deal with it. Instead, we use deep learning to make the process go seamlessly. We want our vehicles to learn from as much data as possible.”

Once the situation has been read and a decision has been made, the car will need to communicate its intentions. How do you signal to a pedestrian that they can cross in front of you, if not with a hand gesture or a nod? Drive.ai is now experimenting with light displays on the roof of the car. Nissan has appointed anthropologist Melissa Cerfkin to work on the understandability of white LED arcs, also on the roof, that signal intentions. Other methods could include “audible cues (perhaps a polite voice saying ‘Cross now,’ or a musical tone as at some stoplights); rooftop displays showing symbols or words; laser devices to project a message such as a crosswalk on the road ahead to indicate that it’s safe to cross; and cars that wirelessly transmit their intentions to other vehicles”, imagines the San Francisco Chronicle. For now, car manufacturers are each working on their own solutions. The next step will be to establish standardised communication methods that can be included in the official road safety rules. That means one thing: instead of trying to change their environment, self-driving cars must find the best way to adapt to it.

Read more:
Making Autonomous Vehicles a Reality: Lessons from Boston and Beyond”, BCG, October 2017.

 

Solving the Cooperation Paradox in Urban Mobility

Solving the Cooperation Paradox in Urban Mobility

By Joël Hazan , Martin Reeves  and Pierre-François Marteau from the Boston Consulting Group

If you build it, the saying goes, they will come. But they have to be able to get there. In cities around the world, getting there is a challenge, fraught by growing traffic congestion and deteriorating public transit systems. All of this piles on travel time and impedes access to urban locations. But it’s more than a source of frustration—the mobility problems that cities face threaten their economic viability, the environment, and society overall.

Traditional approaches to solving mobility problems—adding roads and transit lines—are not sustainable, primarily because of concerns related to climate change, public health, and funding. Hence the interest in new technology-powered forms of mobility: ride sharing, free-floating bikes, autonomous electric vehicles, digital mobility platforms, and more.

These technologies could be “congestion busters,” prompting people to give up grueling commutes in single-occupancy private vehicles in favor of modes of transport that will offer swifter, easier, cleaner travel while decreasing the number of drivers and vehicles on the road. But when it comes to these new modes, most cities and transport authorities have effectively relinquished control by either allowing private actors to compete unfettered with traditional modes of transportation or letting mobility languish as they restrict innovation.

Waiting for the technology to sort itself out is not the way to proceed. It is incumbent on cities to be part of the mobility revolution and ensure that technologies are deployed in ways that are best for cities and the people who live and work in them. City governments need to, in a word, mobilize. They need to regain control of urban mobility by orchestrating the entire landscape of mobility providers and users.

 

MOBILITY CAN DRIVE—OR DERAIL—WEALTH

The relationship of transportation and economic growth is well grounded in economic theory and empirical evidence.

As Adam Smith explained in The Wealth of Nations, improvements in transportation systems increase the extent of a market, allowing the division of labor and unlocking economies of scale. The development of the world’s major cities illustrates this relationship. In New York City, for instance, the construction of the underground subway (financed by the city because no private players were willing to take on the risk) united the five boroughs and created what is now the world’s second biggest city, as ranked by GDP. And in the Paris metropolitan area, the construction of the regional metro and the urban highway network in the 1960s and 1970s changed the shape of a territory, increasing the number of inhabitants from 5 million in 1900 to 12.2 million today.

As many economists (among them Jean Poulit and David Levinson) have demonstrated, in urban areas mobility drives wealth by fostering access. We define access as the number of valued destinations that inhabitants can easily reach within their daily travel time budget. Access is the effective size of the city. Given that daily travel time budgets everywhere have reached a steady state, increasing access relies on transportation speed—how quickly individuals can reach their workplaces and commercial destinations such as shops and restaurants—and the density of those populations and destinations. Moving many people at a fast pace in dense areas is vital for cities; they don’t want people or businesses, frustrated by congestion, unreliable public transit, and increased travel times, to leave.

Access increases productivity by allowing a better pairing between job demand and work supply. It is priced into land value—individuals and companies pay premiums for high-access locations. Our research, illustrated in Exhibit 1, shows the strong correlation between the areas where the wealthiest people choose to live and the areas with the greatest access to top jobs. (See “How We Measure Accessibility.”) Access also draws commerce to a city by attracting companies looking to benefit from a large pool of talented workers. Last but not least, access fosters social and economic inclusion by increasing exchanges between the different parts of a metropolitan area.

 

HOW WE MEASURE ACCESSIBILITY Our objective was to measure access to opportunities within a city using a location-based approach. Our two main constraints: the measure should be easy to understand, and it should allow a meaningful comparison between cities around the world, regardless of the mobility modes available in individual cities. We used two metrics: An Accessibility Index. This shows the percentage of jobs in the metropolitan area that can be reached within 30 minutes from a given subzone using the fastest transportation mode at a peak travel hour. A Compactness Index. This measures the percentage of jobs in the metropolitan area that can be reached within 30 minutes on average per inhabitant. It is the average of the accessibility indexes of all subzones weighted by the population of each subzone. To compute the figures, we used population and job location data from offices for national statistics (such as INSEE in France). We simulated travel times by leveraging Google Maps for public-transit time and TomTom data for driving time.

But urban mobility is at an impasse. Cities have not been able to increase access using traditional techniques (building new roads or extending transit lines). Worse, rising congestion (TomTom traffic data shows that from 2008 to 2016, congestion levels increased by 10 to 15 points in New York City, Los Angeles, San Francisco, and other major US cities) along with the unsustainable levels of carbon and particle emissions and pressure on public-transport finances, threaten to decrease access. This presents clear challenges to the economy and the environment; it also sets the stage for troubling social outcomes in which mobility depends on income and magnifies income inequality.

Some might think that the solution to all these challenges lies in new technologies. Indeed, technology will be part of the eventual solution. But on its own it will not provide simple, quick fixes; in some cities, it is actually exacerbating near-term challenges. Cities have not yet figured out how to steer new technology opportunities toward desirable ends.

 

AN UNTAPPED WORLD OF OPPORTUNITIES

Urban mobility has never moved so fast. A combination of disruptive technologies and changes in the aspirations of city dwellers (shown in Exhibit 2) is setting the stage for a revolution that could, if correctly managed, open up a new world of opportunities for cities.

 

From physical infrastructure to digital platforms, the mobility value chain is rapidly becoming more connected, emission-free, autonomous, shared, on-demand, and multimodal. Already, mobile apps have allowed the development of on-demand mobility services such as ride hailing and free-floating vehicles as well as real-time travel assistants; both types of innovation have started to change the way people move in cities. But much more is coming. Autonomous and electric vehicles, combined with the tremendous improvements in data generation, collection, and processing, could provide crucial elements of the solutions that cities are looking for.

If properly leveraged, disruptive technologies could—eventually—help cities pursue sustainable growth. What could the new urban mobility look like? Attractive possibilities exist in several areas:

  • Economic Performance. Commuters could reclaim time and peace of mind by stepping out of their individual cars and relying instead on an integrated combination of new modes of transportation, such as ride sharing and free-floating vehicles. Maximizing the number of passengers per car would reduce congestion. With better access, opportunities for economic transactions—and therefore the wealth of a city—increase.
  • Environmental Sustainability. Environmental benefits could be gained as a decrease in congestion reduces idle time per car, as electric vehicles replace gasoline-powered cars, and as new, lighter vehicles multiply.
  • Social Equity. Cities could reinvigorate access through the thoughtful deployment of new modes of transportation that ensure inclusive access to all, across geographic areas of the city and income bands.
  • Funding. Funding concerns could be alleviated as costly capital investments in new infrastructure are replaced with asset-light initiatives, thereby increasing the efficiency of existing public and private assets.

Mostly, though, cities have been standing aside, and as a result the first wave of the urban mobility revolution has been somewhat chaotic. Public authorities lack the tools to work with the newcomers, and so regulatory progress is lagging, meaning that in many cases operators of new mobility modes either are able to operate unfettered or are unduly restricted. The uptake of ride-hailing services such as Uber, Didi, and Lyft has turned the old taxi industry upside down; such services are also directly competing with public transport through pooling and microtransit services. The development of free-floating services, such as some bike- and scooter-sharing models, has presented a new challenge to city officials, who are used to traditional sharing systems with docks or dedicated spaces and have no policies in place for new approaches. Further, cities now have to deal with a high number of mobility players, instead of the few, well-known providers.

There have been some attempts to regulate new forms of mobility, but they (two acts in France that aimed to regulate ride-hailing services in just two years, for instance) have so far been scattershot rather than strategic.

Cities’ uncertainty about how to proceed might be explained by the fact that new mobility services have not yet begun to deliver on the above-mentioned attractive possibilities, despite massive investments from venture capital funds, tech giants, and car manufacturers. As of today, what matters most—the daily commute—has not changed. Ethnographic research that we conducted in the summer of 2018 in partnership with the French digital agency My Little Paris found that even though 75% of Parisians aged 25 to 45 have tried new mobility services, less than 6% rely on them for their daily commute.

New mobility services have also not been reducing congestion. For instance, a 2017 report from former US Department of Transportation official Bruce Schaller concluded that ride-hailing services had worsened traffic on the busiest streets of New York City, inspiring the recent decision to cap the number of for-hire vehicle licenses (used by drivers of Uber, Lyft, and their equivalents) there. Our research shows that without optimization mechanisms that consider all vehicles, autonomous vehicles are likely to further impede traffic flows in already congested situations.

All of the above findings, though they come somewhat early in the mobility revolution, strongly suggest that cities are not yet on the right track. In general, cities acknowledge that new mobility services can generate tremendous socioeconomic value at a lower cost than investments in traditional infrastructure, but they are struggling mightily to understand how to unlock this potential.

THE IMPERATIVE FOR CITIES: SOLVE THE “COOPERATION PARADOX”

Cities need to be part of the mobility revolution, for the sake of economic development, for their own financial viability, for the cause of fighting against climate change, and for the well-being of their residents. Indeed, without proactive moves on the part of cities, new mobility services could deliver more downsides than upsides, leaving cities ensnared in any of several potential mobility dystopias: paralyzed cities, for example, or cities dominated by private players that have commandeered public space and optimized mobility for their own narrow interests.

It is true that cities’ interests conflict with those of new mobility providers. Cities want to achieve “asset moderation,” a scenario that maximizes utilization of modes of transportation—ensuring, for instance, that each vehicle on the road carries as many passengers as possible. Many private players, on the other hand, want to pursue a model of “asset proliferation”: more vehicles, roads, parking spaces, and hours of hired-vehicle time. These clashing goals create a cooperation paradox that needs to be resolved. But which stakeholders should cities work with to find solutions? It is hard to identify partners, though it’s clear that cities can’t rely on one player for all the right competencies.

The imperative for cities, then, is to become orchestrators of mobility.

By doing so, they will figure out the right balance of regulation and innovation. Traditional highly regulated models have value because they protect players and the public interest, but they can go too far and stifle innovation. On the flip side, an extreme laissez-faire approach allows innovation to flourish but also lets certain players act in ways that might not be wholly beneficial to the city. Cities can orchestrate the new mobility by taking six interlinked and sustained actions. (See Exhibit 3 for an overview.)

 

It’s important to emphasize that cities will be orchestrating these activities, not performing them on their own or in a silo. Other stakeholders, such as the new mobility operators, will play important roles in carrying out these actions, negotiating with one another, and putting their findings to work.

Measure

What doesn’t get measured doesn’t get done.

To drive the urban mobility revolution, cities should start by putting in place the tools to understand its advantages and disadvantages in detail. They should equip themselves with a measurement framework that can help inform policies. This framework should be a common one, used by all cities, so that they can share their findings and insights.

This effort is not just an updating of existing measures. Indeed, traditionally, cities and transport authorities have assessed ease of movement rather than the interactions between movements and places. Today’s in-depth socioeconomic analyses are limited to large infrastructure projects that cannot be easily adapted to asset-light initiatives. Current measurement systems also lack user centricity, which is needed to build a mobility offering that truly addresses the needs of residents instead of just optimizing each mode in a series of silos.

Cities need a way to monitor the socioeconomic value of asset-light initiatives, looking for signs of almost immediate implications as well as user satisfaction. Indicators should be available at both the urban and district levels to assess potential differences. They should also be de-averaged, by mobility service, to reveal the contribution of each service to the mix. This measurement will instruct pilots as well as policy decisions. (Exhibit 4 shows examples of indicators to monitor.)

 

Capture Value

Cities need to figure out where the value (economic, environmental, and societal) of the new mobility offerings goes and capture the fair share to be reinvested in balanced, integrated solutions; this is the great, wealth-creating lever effect of urban mobility. It is essential to attain the right balance of funding sources for the mobility system overall. Three types of value sources are commonly used to fund mobility: general funding, user fees, and indirect, targeted funding such as development impact fees and land value taxes. The last category is particularly informed by insight into value—it tells authorities which private parties can derive value from the new mobility, particularly if they help to fund it.

This value capture plan will also help cities address urban mobility in the broader context of urban planning—to align planning and mobility decisions, ideally across a metropolitan area. It will force cities to consider actual interaction patterns rather than mere incremental shifts, and it will inform a shared goal of all stakeholders: improving sustainable accessibility for all in the city.

Integrate

Most transportation systems have been developed to address singular modes (car, public transit, or bike, for example) rather than to offer a comprehensive transportation approach that considers users’ varied needs. In some cities, different modes and infrastructures are governed by different entities, limiting the ability to organize and synchronize the mobility ecosystem. Fragmented governance is posing a problem in the face of a convergence of mobility players and the desire to promote multiple modes. The rise of digital platforms that can integrate multiple modes of transport and multiple services (for example, booking, ticketing, and payment) gives cities a new opportunity to tackle this old issue.

Cities should integrate all mobility modes and services in a single platform to offer a seamless experience for users and to equip themselves with a powerful tool to supervise and orient flows. They should also use the platform to unify governance across modes of transportation and types of mobility infrastructure. In short, cities should pursue a smart and user-centric integration of public policy and new technology.

Incentivize

As mobility becomes integrated, authorities can begin to pilot a comprehensive social transportation policy. They could offer user-based incentives that emphasize particular modes, travel hours, and population categories. They could also incentivize mobility providers, which could be paid in exchange for an improvement in access or quality of service, for instance.

Based on the predefined measurement system, the incentives should focus on big-picture outcomes (an increase in travel speed, for instance, or a reduction of pollution) rather than contributing effects or inputs (like the percentage of on-time trains or the share of electric vehicles).

Regulate

It’s clear that new forms of mobility call for new policies and regulations. The recent demise of the Autolib’ electric-car venture in Paris is a signal that cities need to be nimbler in the way they deal with the private sector. Instead of following the tenets of traditional contracts, cities should limit their intervention. They should offer greater flexibility to private players (by, for instance, not requiring them to predefine transport routes).

When it comes to the new mobility, cities will benefit from balancing what is and is not regulated. New ecosystems need efficiency and guardrails, but they also must allow for diversity, initiative, and innovation. This requires positive partnerships and a great amount of trust between cities and private players, not reactive regulations.

Seattle’s newly issued permitting system for free-floating bike sharing is a good example of the new form of regulation that cities should implement. The policy focuses public intervention on select steps of the value chain such as data sharing, parking, safety, and equity while maintaining the diversity and flexibility (regarding detailed pricing structure and user interfaces, for instance) of private operators.

Experiment

The mobility revolution is going to be rapid, and it is going to require major adaptations. Cities don’t have time to wait for definitive solutions. They must learn by experimenting. Some experiments will fail. Given that, cities would benefit from sharing their experiences with other cities. And partnerships between cities and individual mobility players will be beneficial as well; more and more of these partnerships are being put in place, which is a good start for instructional experiments.

For instance, before implementing its permitting system for free-floating bike shares, Seattle used a “sandbox” approach, which included a pilot with LimeBike, ofo, and Spin in 2017 to better understand how to regulate and leverage this new mode of transportation.


Singapore, Dubai, Hong Kong, and London are regarded as exemplars of urban mobility. It is not a coincidence that these city-states (or close approximations thereof) have autonomous governing bodies that control the entire metropolitan area’s transportation systems. They also have a clear understanding that transport and accessibility are the keys to success. Other cities can look to these standouts as models of best practices.

Indeed, looking to other cities and even joining forces with them will be a key advantage, given the magnitude of changes ahead.

Cities do share a common destination: a comprehensive mobility system that provides easy access and encourages participation in all sorts of commerce throughout the metropolitan area. The journey to that destination will vary as each city works, alongside stakeholders, through the six imperatives to find the best solutions for its future and the future of its residents.

This article is the first in a series on the future of mobility. In subsequent publications, we will explore the six actions in more detail, drawing on the findings of our soon-to-be-launched research platform; we welcome the input and participation of cities and private players.


BCG Henderson Institute

The BCG Henderson Institute is Boston Consulting Group’s strategy think tank, dedicated to exploring and developing valuable new insights from business, technology, and science by embracing the powerful technology of ideas. The Institute engages leaders in provocative discussion and experimentation to expand the boundaries of business theory and practice and to translate innovative ideas from within and beyond business. For more ideas and inspiration from the Institute, please visit Ideas & Inspiration.

Cities need to foster public activism in urban mobility

Cities need to foster public activism in urban mobility

Urban mobility ecosystem is becoming more and more complex, with technology and innovation often going against cities’ public interests. While new mobility solutions (ride-hailing, car-pooling, free-floating vehicles, etc.) are proliferating in all major cities, congestion is still on the rise (+15 to 20pts in travel time between 2008 and 2016 in Paris, Berlin, London and Brussels, according to BCG’s analysis of Tom Tom Traffic Index). The reason for that: a lack of complementarity between mass transit and on-demand mobility solutions. But Mobility-as-a-Service (or MaaS) could soon reshuffle the cards.

“Mobility-as-a-Service” is usually defined as a digital platform supporting end-to-end commuter journey – from planning to payment and ticketing – across all modes of transportation. Commuters’ adoption is expected to be extremely rapid since they increasingly expect convenient and efficient interaction with the mobility ecosystem whereas it is becoming more and more complex given the growing number of options available. If 76% of Ile-de-France residents aged 25-45 have tried free-floating mobility solutions, only 6% use them in their commute, according to the September issue of the BCG Baromètre Mobilité, in partnership with My Little Paris’ Urban Lab.

On the other hand, cities see MaaS as a lever to improve the integration of mass transit and on-demand solutions, and to ultimately lower personal car usage, congestion and pollution.

MaaS has thus become a gold rush for private players: they are in the starting blocks to develop their solution as quickly as possible, to protect their access to end-users and become inescapable… for competitors.

Comprehensive solutions are yet to come: most of existing MaaS platforms remain at the all-inclusive travel pass caricature. They aggregate mobility solutions from different operators, resell unitary tickets to commuters, and charge commissions to operators. The Helsinki-based Whim app is the international reference for MaaS: users can subscribe to a monthly unlimited mobility plan, giving them access to all transportation modes. Even if price point (500€/month) is well above Pass Navigo’s (€75/month), the offer remains attractive for car owners looking for credible alternatives for their daily trips.

However, for MaaS players, economic model remains a struggle. It is sustainable only if users favor cheap transportation modes (e.g., mass transit, bikes), but the all-inclusive pricing strategy often drives them towards ride-hailing and taxi services.

In order to reach sustainable economic models, MaaS players must put in place incentives to encourage commuters to use economical transportation modes. Public authorities are the only ones who can centralize transportation subsidies, tax personal vehicles, enforce such incentives, and therefore enable sustainable economic models for MaaS players. Moreover, public authorities should see MaaS as a tool to foster public activism in mobility, and to help them reach their objectives:

  • Environmental objectives: to drive users towards green modes and to lower personal car usage
  • Economic objectives: to spread traffic across peak and off hours, and to optimize infrastructure utilization
  • Societal objectives: to make urban mobility more inclusive

If technology already exists, operating model remains a question mark. Public authorities must take on this challenge before technology giants transform it in a winner takes all B2C battle. Authorities must reinvent public-private collaboration models, orchestrate rather than delegate, and define precisely what is expected from private players.

Joël Hazan – Partner & Managing Director at BCG; BCG Henderson Institute (BHI) fellow
Hind El Abassi Chraibi – consultant

This article was originally published in Le Monde on October 18 2018

What it will take for biofuels to be the fuels of the future

What it will take for biofuels to be the fuels of the future

Running cars on ethanol made from palm oil, corn or soy is already a wide-spread reality. But the biofuel industry is still far from providing a truly sustainable and clean alternative to fossil fuels — unless it switches its gears.

The quest for alternatives to fossil fuels is not new. In fact, it’s been going on for as long as cars have existed. Originally, Henry Ford planned to fuel is famous Ford T (produced and sold from 1908 to 1927) with ethanol; other early cars were running on peanut oil. And in the years 2000, after decades of near-total hegemony of fossil fuels, the tide started to change again. A renewed enthusiasm for biofuels led the United States to implement the Renewable Fuel Standard in 2005 and the Energy Independence and Security Act in 2007, according to which the transportation industry had to adopt biofuels on a large scale, by using them as supplements to traditional fossil fuels. “The beauty of biofuels is that they suck carbon dioxide out of the air as they grow. When we burn them in our automobiles, we release carbon dioxide, but it is the same carbon that the plants absorbed while growing. Just on that basis, biofuels appear to be zero net emitters”, writes professor of thermal sciences John Abraham in The Guardian. And they have the added advantage of being a renewable resource, contrary to fossil fuels.

In Europe, biofuels have had their advocates since the middle of the 2000 decade too. For the past 15 years, the “Fuels of the Future” have had their own international conference, at the initiative of German actors of the bio-based energy sector. Since 2017, the conference includes “renewable mobility” into its main points of focus: “In incorporating this additional content, the conference organisers underline the fundamental importance of all renewable options for decarbonisation of transport. Referring to the ambitious objective of the Paris Climate Agreement, the conference organisers emphasise that decarbonisation of transport cannot be achieved by 2050 unless all these options are deployed.”

Not-so-green crops

In that spirit, the U.S. started to massively grow corn, soybeans and milo to produce ethanol, while Brazil and other tropical countries resort mainly to sugarcane. In Europe, biodiesel (a fuel usually made from palm oil) is widely available. Today, explains Smithsonian Magazine, nearly 40 percent of the U.S.’s corn production is converted to fuel. “But it turns out that the environmental problems associated with growing those crops on an industrial scale—a crop that requires highly fertile land as well as copious irrigation, tillage, and tractor fuel to produce—outweigh the environmental benefits of burning corn-based biofuel.” Because the production process often relies on coal or natural gas — at least in the U.S. –, “biofuels don’t replace as much oil as they use,” explains National Geographic. That’s not all. Some warn that the harvest of sugarcane or palm oil for biofuel could be devastating for the rainforests. And then there’s the question of food: crops (like corn) that could feed people are used to power cars; land that could be used to grow food is requisitioned for biofuel-production purposes. “Agriculture is being challenged by increasing food demand, and changes to regional climate. On top of this, most plans to combat climate change rely on the agricultural sector to increase carbon storage in soils, and to produce raw materials for the large-scale production of biofuels and power,” Dr. John Field, from Colorado State University, sums up in The Guardian.

The right crop, at the right place, in the right way

That doesn’t mean that biofuels are not the way of the future; it means that the biofuels we are producing now are not it. John Abraham recalls co-conducting a study in 2009, whose conclusions were that “if non-commercial crops were grown, you could actually end up with fuel that was significantly cleaner than petroleum. The trick was finding clean crops that don’t need a lot of fertilizer, water, and other inputs. (…) Our conclusion in 2009 was straightforward. Don’t use good cropland for biofuels. Rather, use marginal croplands, with minimal water and fertilizer, to create plants that can be converted to biofuels.” These marginal croplands can be switchgrass (which allows to produce fuel containing more than 5 times as much energy than it takes to grow and refine it) or hemp (which Ford wanted to use for the T Model, and produces nearly four times as much oil per acre as soybeans). According to Smithsonian Magazine, algae, an exotic plant called carrizo cane and a tropical shrub called jatropha are also leads worth exploring.

Of course, each of these solutions have their own specific drawbacks, and the path is not free of hurdles. Dr. John Field and a team of scientists found in a 2018 study published in Nature that marginal croplands give lower yields, which means there are “competing issues of productivity and greenhouse gas reduction,” writes John Abraham. But they also found that farmers make decisions based on the price of biofuels and the cost of greenhouse gases: “Simply put, if we put a reasonable price on carbon pollution, farmers will be able to grow switchgrass, poplars, and other species, reduce greenhouse gases, and make money. But, if there is no cost to carbon pollution, farmers will be motivated to spend more money on fertilizer and that, in the end, will lead to more emissions.” Putting a price on carbon may be the best way to make biofuels the stuff of the future.