Transport and energy are two sectors of strategic importance that have always relied on each other. Ongoing transformations in the global landscape are now making these linkages more obvious than ever.
First, both sectors are being fundamentally disrupted by new technologies. Innovations in digital platforms and data analytics are opening the door to improved efficiency and lower costs across the transport and energy industries: [“smart” power plants are reducing the number of outages, the digitization of logistics is streamlining supply chains, etc.] In addition, technology is changing the competitive dynamic and the relation between producers and consumers, creating new opportunities to match supply and demand. On the energy side, individuals—once electricity users only—can now connect to large utility companies as small energy producers and sell to the grid. On the transport side, mobility-as-a-service offers a unique gateway for users to access a range of mobility services and interact directly with multiple providers in real time. And this is all just a foretaste of what the future holds.
Transport and energy are also grappling with the same challenge: reducing carbon emissions. Transport accounts for 30% of total final energy demand, but less than 5% of that energy comes from renewable sources. Three years after the Paris Agreement, the transition toward cleaner energy and transport remains an uphill battle: in fact, new evidence shows that the development of renewable energy is slowing down, while the contribution of transport to overall carbon emissions continues to grow.
In my role as the lead of Sustainable Mobility for All (SuM4All) and as a member of the WEF global council on advanced energy technologies, I’ve had the chance to work closely with representatives from both transport and energy… and have witnessed time and again that each community seems to be moving on separate tracks, despite having so much in common.
This is, in my view, a missed opportunity. If we want to find credible solutions to the climate challenge, it is imperative that the two sides start speaking the same language and unite their efforts. The case of electric vehicles (EVs) provides the perfect example.
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To reduce carbon emissions from transport, many countries have been actively promoting electric passenger vehicles, light duty trucks, and trains. EV sales have been rising steadily and could reach an estimated 4.5 million units by 2020—around 5% of the global light-vehicle market. The growing popularity of EVs will have a profound impact on the energy market and will significantly increase electricity demand—a welcome development for power utility companies which have been struggling with declining electricity prices. In the United States, for instance, EVs could increase power demand by up to 38% by 2050.
But these two perspectives have yet to be tied in. Unless they are connected, developments in these respective industries are unlikely to result in lower carbon emissions—worse, they may exacerbate the problem. To avoid this scenario, transport and energy professionals must join forces and keep in mind three important messages:
1. Although EVs themselves don’t release greenhouse gas into the atmosphere, we can’t ignore the carbon footprint of the electricity that powers them. When looking at the full picture, you quickly realize that EVs can only make a real difference if they run on clean electricity. Unfortunately, renewables currently account for a mere 1/4 of the world’s total power generation. Progress in most markets has been far too slow. In fact, nine of the G20 countries have seen their share of renewable electricity generation go down in recent years. The global community clearly needs a more ambitious vision, along with policy mechanisms that provide concrete incentives for both EV adoption and renewable energy.
2. To move toward green mobility, we need to minimize emissions from the production and operation of vehicles over the entire lifecycle. At the moment, some estimates suggest that emissions associated with the extraction of raw material like lithium and the manufacturing of batteries decrease the CO2 emission advantage of EVs by about 40%. However, continued improvement in battery technology will likely strengthen the environmental case for EVs in the long term.
3. Technology is no silver bullet, and could actually reinvigorate existing transport and energy systems by making them cheaper and more efficient. Autonomous vehicles, as an example, may ultimately boost the appeal of private cars and increase the number of vehicles on the road. To counter this, policymakers have a responsibility to anticipate all consequences of technology, good or bad, and to promote innovations that will lead to sustainable outcomes.