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ECO-MOBILITYThe end of the road for fossil fuels?    The best ideas can    appear in the most    unexpected places
ECO-MOBILITY: ThE End Of ThE rOad fOr fOssIL fuELs?ThE VIEW frOM 2030If we couldn’t travel by road, our       Faith Birol,...
sOME BusInEss MOdELs fOr 2030                                   But not everyone agrees – evenWhat if in 2030:            ...
recycling depot                                                                                                    Glass  ...
Health will improve, too, because ofthe reduction in pollutants, since roadvehicles currently create 46 per centof nitroge...
faCTOrs affECTInG ThE fuTurE Of EVsTaxaTIOn                                   Already, more than 75 per cent of a      THE...
•    It is certainly possible that     personal carbon allowances will     be in place by 2030. These will     have the ef...
EnErGY InfrasTruCTurE                                    Pure EVs and hybrids including           THE BUSINESS CONSEqUENCE...
responsible, 63 per cent expect        •   There will be techniques that fast-    oil companies to offer recharging       ...
InTELLIGEnT MOBILITY                                  It may be counter-intuitive but            •    The reduction in acc...
OWnErshIP                                    Today, the average cost of running a      •      For companies, timing the mo...
We hope Views has providedyou with some interesting insightand perspective into ecomobility.The opportunities it presents ...
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The Future For Eco-Mobility


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The Future For Eco-Mobility

  1. 1. ECO-MOBILITYThe end of the road for fossil fuels? The best ideas can appear in the most unexpected places
  2. 2. ECO-MOBILITY: ThE End Of ThE rOad fOr fOssIL fuELs?ThE VIEW frOM 2030If we couldn’t travel by road, our Faith Birol, chief economist oflives would disintegrate. We the International Energy Agencycouldn’t deliver goods, get to work, believes that, on current trends, oilsee friends, go to events and will peak in 2020. “One day – 2030entertainments. And road transport or 2040 – oil will run out. We havedepends on oil – more than 99 per to leave oil before oil leaves us,”3 hecent of vehicles are powered by said.petrol or diesel. We had similar fears about energyOne way or another, that’s about to in general in 2005, putting forwardchange. the prediction that the UK could face an energy gap of 16 per cent atSome people believe that we have average demand in 2020 and a 31.5about 50 years of oil left. Others per cent gap at peak. And that wasthink that oil production has peaked on a conservative analysis4. We haveand we’re already on the fast track seen no evidence that changes thatto empty. As Saudi Arabia’s then- prediction.regent and now king, Abdullah binAziz Al Saud, told his subjects in If this is the case, we need to ask1998, “The oil boom is over and some hard questions.will not return... All of us must getused to a different lifestyle.”1 SadadAl Husseini, the former head ofSaudi Aramco’s production andexploration, held the same view tenyears later. He thinks it likely thatoil production reached its peak in20062. 1 Peak Oil could trigger meltdown of society, Energy Watch Group 2007 2 Dave Cohen (October 31, 2007). The Perfect Storm. ASPO-USA 3 Interview with Faith Birol, 4 Logica: Mind the Gap: The black hole at the heart of the UK’s energy supply 3 2
  3. 3. sOME BusInEss MOdELs fOr 2030 But not everyone agrees – evenWhat if in 2030: within the same company. Abdullah • Oil does run out? Jum’ah, president and CEO of Saudi Aramco, said in 2008, “We have • We have to find new ways grossly underestimated mankind’s school of getting around? ability to find new reserves of • We need to rebase petroleum, as well as our capacity transport from oil to other to raise recovery rates and tap forms of fuel? fields once thought inaccessible or impossible to produce.”5 A five per cent increase in extraction from current proven fields would maintain world oil supplies for decades. If we managed to improve extraction techniques by around 30 per cent, we would have another 300 years of oil. Dr Christoph Rühl, BP’s chief economist, thinks this is more than possible. “Peak oil has been predicted for 150 years. It has never happened.” But he adds a rider, “[Global warming] is likely to be more of a natural limit than all these peak oil theories combined.”6 So perhaps we need to ask some different, but equally hard, questions. 5 CEO Offers Positive, Realistic Energy View, Saudi Aramco News 2010 6 BP: ‘We should see volatility increase’, updated January 2010 3
  4. 4. recycling depot Glass Cans Card Faith Birol, the Chief Economist of the OTHER ASPECTS ARE ALSOWhat if in 2030: International Energy Agency, who dRiVing thE EV REVOlutiOn • Oil isn’t the issue but C02 even refuses to buy a car because As oil supplies in the developed and other global warming they pollute, points out that nearly world become scarcer, its countries gasses are? 95 per cent of growth in oil demand become more reliant on oil from comes from transport and that • We have to change road less stable regions, with the risk that “business as usual is not an option. transport to save the supplies will be withheld or prices will Current policies [continuing to rely on planet? rocket. The West will therefore push oil] would lead us to a catastrophic to develop low carbon technologies result.” and to retain control over their Both the end of oil and the effects production. of global warming point to the same There is also a need to protect our conclusion: we need to move to auto industry. In the UK alone, the alternatively powered vehicles that sector accounts for a value-added have little or no dependence on oil share of GDP of more than three and very low or zero emissions. These percent, employs 820,000 people include electric vehicles, hybrids directly and indirectly and generates (powered by a mix of fossil fuel and exports worth £20 billion a year9. electricity), fuel cell vehicles (for A move to EVs will safeguard the example, cars powered by hydrogen) industry and should boost exports. and cars using alternative fuels, such Further employment and growth as bio-fuels. Together, we refer to will come from installing new them as ultra low carbon vehicles. infrastructure. In the foreseeable future, electric vehicles (EVs) are likely to dominate Congestion is another factor – one the landscape. They are practical which, according to UK government for short journeys – 80 per cent of estimates, will cost England alone all UK journeys by distance are by £22 billion a year by 2025. EVs car, half of all car journeys cover less with intelligent vehicle systems than three miles and a quarter are that anticipate traffic conditions less than two miles. Around 20 per would mean that more cars can cent last for a mile or less7. Electric safely use the roads and traffic flow vehicles also have an edge because will improve. Intelligent transport more research and development systems, or Intelligent Mobility as work has gone into them. the UK government is starting to call it, will connect private and public Electric cars will make up 20 per cent transport to move more people faster of UK auto sales by 2016 as drivers – and, again, safely. Overall, there take advantage of government should be a reduction in serious subsidies and lower fuel costs, road accidents, which currently cost according to National Grid Plc Chief Europe two per cent of its GDP10. Executive Officer Steve holiday8. 7 Department for Transport 8 Taken from article by Kari Lundgren, Bloomberg: news/2010-11-30/electric-cars-to-reach-20-of- u-k-vehicle-sales-by-2016-grid-ceo-says.html. Electric cars to reach 20% of UK vehicle sales 9 SMMT 10 European Road Assessment Programme 5 4
  5. 5. Health will improve, too, because ofthe reduction in pollutants, since roadvehicles currently create 46 per centof nitrogen oxides (NOx)11.If climate change is the main reasonfor switching to EVs, we will alsohave to ensure that the electricitypowering them is not generated fromfossil fuel. Today, fossil fuel powerstations account for another 21 percent of NOx12.Instead, we will need a network ofrenewables, such as wind farms,tidal and wave barrages; solar andheat exchangers; and nuclear powerstations.the move to EVs will be part of anoverall, fundamental restructuringof our economies. As Sir DavidKing, former UK chief governmentscientific adviser and currentlydirector of the Oxford UniversitySmith School of Enterprise and theEnvironment, puts it, “I think we needa 21st century renaissance – and bythat I mean a transformation at leastequivalent to the Renaissance or theIndustrial Revolution – if we are goingto manage this in a way that doesn’tlead to massive breakdowns of ourglobal economies.”1311 Foresight Vehicle technology Roadmap12 Defra ‘Wanted, a 21st Century Renaissance’,13Oxford Today volume 22, 2010 5
  6. 6. faCTOrs affECTInG ThE fuTurE Of EVsTaxaTIOn Already, more than 75 per cent of a THE BUSINESS CONSEqUENCESWhat if in 2030: vehicle is recycled at the end of its • Businesses are under legal life. Renault, for example, saved €400 • Your car was partly taxed duties both to comply with million through recycling in 2007 on its recyclability? legislation and to do what is alone and has now set up a joint best for their shareholders. • The tax taken from excise venture with waste specialists SITA Recyclability taxes will therefore duty and VAt on fuel falls? to recycle cars14. Renault’s recycling prompt manufacturers to up • Fuel taxation was based on rate will rise to around 95 per cent their recycling rates and clever driving style? by 2015, partly prompted by EU design may well enable them legislation to make manufacturers to reuse parts and save money. responsible for car disposal and But if the penalties for failing to partly by rising raw material prices. reach recycling targets are low, New types of vehicle design, businesses might well take the manufacture and ownership, view that the cost of compliance perhaps encouraged by waste exceeds the benefits. taxes, should lead to almost total • Road pricing is also likely, as recycling. Vehicles may be designed are new taxes on whatever to be reconfigured for individual powers fuel cell vehicles. The UK users as personal needs change coalition government has already or to be broken up, with individual said it will “work towards the parts reused in new vehicles. introduction of a new system of Environmentally damaging practices, hgV road user charging”15 and such as paint spraying, will disappear the Department of Transport has because of new techniques, such stated this will be put in place as embedding colour in body parts. during the current Parliamentary Oil lubrication may be replaced by term. This may well be the nanotechnology. precursor to road charging for all Excise duty and VAt on fuel raises users. Government will probably upwards of £25 billion a year for try to keep taxes on EVs low to the UK government. As oil use begin with, to encourage mass diminishes, so will the tax take. This take-up, then increase taxes once will certainly have consequences. most drivers are using the new One is that governments will find vehicles. ways of making up the difference. Another is that they could also see this as an opportunity to change 14 public behaviour to make the most of 15 House of Commons Library SN/BT/588 – diminishing resources. Roads: lorry road user charging Dentist 7 6
  7. 7. • It is certainly possible that personal carbon allowances will be in place by 2030. These will have the effect of penalising people whose lifestyles involve above-average carbon use. Choice will still be important and we shouldn’t lose sight of the fact that a vast amount of travel will still be completed by private car, therefore emphasising the need to decarbonise private transport as well as providing energy- efficient or even completely de-carbonised public transport networks.• But you can also expect green behaviour among drivers of petrol and diesel powered vehicles to be rewarded, through innovations such as Logica’s EMO16. EMO measures a vehicle’s emissions as it is driven, sending data back to a collection point. It has been named by The Economist as one of ten global green game changers. Those whose driving creates minimal emissions could be rewarded by lower fuel prices, cheaper vehicle excise duty and insurance discounts (because greener drivers tend to have fewer accidents).16 Declaration of interest: We invented EMO.It’s one of our many ventures in intelligenttransport systems. See 7
  8. 8. EnErGY InfrasTruCTurE Pure EVs and hybrids including THE BUSINESS CONSEqUENCESWhat if in 2030: LPG/electric and very low emission/ • The current electricity electric are being developed in • different types of alternate infrastructure could not cope parallel. This will mean developing fuel vehicles develop at the with EVs – the load would be parallel infrastructures to support same time? too great. We will therefore need them. Hydrogen and other fuel smart grids that balance local • We have to invest in cell technologies are still in their and national supply and demand. multiple infrastructures? infancy. It will be 15 to 20 years Micro-generation from solar before these systems are ready for panels and other sustainable mass manufacture. A new fuelling sources will feed into the local infrastructure will be needed to grid to help power EVs. this is supply fuel cell vehicles. unlikely to be enough and we The UK currently has around 9,000 will need to encourage people petrol stations, many of which could to recharge electric EVs at times become battery exchange or fast of lowest demand, probably charge centres. Many may also through pricing. It is also possible become fuel-cell recharge centres that EVs will power homes during and LPG providers. Alternatively, high-cost hours and will recharge petrol station sites could disappear during low-cost hours, which in the longer term and exchange/ will change business models for recharge centres could be situated in electricity provision. entirely new locations. • An alternative is developing The UK’s New Automotive Innovation superconductors, to reduce and Growth Team(NAIGT)17, an cable energy loss, along with industry-led study into the future of substituting aluminium for vehicle manufacturing, sees this time- copper cables – but this would be line for different types of EV: expensive and very disruptive. • Tens of thousands of charging points must be installed and, since it will take hours to recharge batteries using current technologies, their location will be critical. One obvious option is to site recharging points outside homes but that won’t be enough. Car parks at public transport interchanges could provide top-up services, as could parking meters. Who provides this infrastructure and controls pricing is a moot point. A Logica FutureScope survey shows that 87 per cent of businesses expect utility companies to be This implies that there will be a 17 Department for Business, Innovation and period measured in decades where Skills : multiple infrastructures have to be business-sectors/automotive/new-automotive- supported. innovation-and-growth-team 9 8
  9. 9. responsible, 63 per cent expect • There will be techniques that fast- oil companies to offer recharging feed batteries, with recharges ‘the dog and the toad’ at petrol stations and 58 per measured in minutes rather than cent expect telecommunications hours, but these will also increase companies to provide charging local load. It is highly likely that points, because of their cabling new types of battery will give and billing experience. EVs a much longer range. An alternative is swap-out batteries.• Manufacturers will need to These will need to be controlled work with power companies to and owned by suppliers, or estimate the optimum number owners will complain that new of public recharging points – not batteries in a new car are being every parking space will need replaced by batteries that have access to power, particularly been used many times before. if swap-out batteries are Battery suppliers will want to developed. reuse vehicle batteries once their• The public sector will address retention capacity falls too low for how new EV infrastructures will transport but is still good enough be installed and how EVs will be for energy storage. promoted. One approach will be to lead by example, progressively upgrading public sector vehicle fleets to EV and persuading private sector providers of public transport to move to EVs. Expect legislation to encourage a faster migration than some providers would like.• Local authorities will work with the private sector to encourage EV investment, providing policies and incentives that encourage take-up of the new vehicles. They will not invest much in the infrastructure itself – that will be left to the profit-making private sector. Again, expect legislation that will ensure it is profitable. differentially priced road tolls based on vehicle type may be one consequence.• By 2030, all road-based public transport will use energy-efficient technologies. 9
  10. 10. InTELLIGEnT MOBILITY It may be counter-intuitive but • The reduction in accidents andWhat if in 2030: experts expect no increase in vehicle thefts should result in traffic congestion and a 50 per lower insurance premiums. • Congestion ceases to be a cent increase in journey arrival time Insurance companies and problem? accuracy by 203018. This means that health authorities may pressure • But rising insurance costs not only will pinch points in the travel manufacturers to roll out are? infrastructure effectively disappear, advanced vehicles with crash • Pollution, as well as fuel while the number of vehicles on our and congestion avoidance shortages and CO2, roads increases, but we will also technologies as standard. If becomes an issue? be able to predict our arrival times you think it unlikely that these much more accurately. “I got stuck technologies will extend beyond in traffic,” will no longer be a valid luxury cars, remember that excuse. air bags and assisted braking systems were uncommon just By 2030, emissions should have a few years ago. Now, they are been reduced to 20 per cent of standard. the level achieved by all engines in 1998. Emissions of gases such as • Expect engines that can run on NOx and CO2 will be half the current any fuel by 2030. Waste heat will Euro 4 level for fossil fuel-powered be recovered and will contribute vehicles. to power. Remaining fossil fuelled vehicles, meanwhile, will THE BUSINESS CONSEqUENCES offer much better fuel economy • Congestion targets will depend and much lower pollution. on in-car technology that will Engines will double their power- allow more vehicles on the road to-weight ratio. The International – effectively, the driverless car – Energy Agency is aiming for half and on congestion and road use of all light vehicles to be EVs charging. by 2050. By then, it is possible that hydrogen-powered vehicles • Vehicles will be remotely will be common, in which case controlled to meet variable electrically powered vehicles will speed limits and there will be a be an intermediate technology. significant reduction in accidents Some experts expect fuel cells caused by driver tiredness. to power half of all vehicles by • Remote controls will also 2030 and biofuelled vehicles to eliminate vehicle theft. account for 20 per cent of new registrations. 18 Foresight Vehicle technology Roadmap: Technology and Research Directions for Future Road Vehicles 11 10
  11. 11. OWnErshIP Today, the average cost of running a • For companies, timing the moveWhat if in 2030: petrol or diesel-driven car is around to EVs will be crucial. A first £22,300 over four years, taking into mover advantage exists in £400 • EVs are much more account depreciation, fuel and other million of grants. Companies will expensive in relative terms costs. The cost of running an electric have to weigh the gains from than current vehicles? car is around £32,600 over four a grant against the speed of • Ownership patterns years. technological change. Currently, change to reflect the higher the UK has earmarked £100 By 2025 or thereabouts, the cost of transport? million for sustainable mobility depreciation cost of a conventional trials and is installing 11,000 car will still be less than an electric charging points. People using car over four years (£14,200 against EVs will be eligible for grants of £16,200) but the running costs up to £5,000 per vehicle. While for conventional cars will have those grants will be phased increased so much that overall, out, the price of EVs will fall electric vehicles become cheaper, at substantially. £28,300 against £31,300, over four years19. • There will be a rise in mobility based web sites that help people Overall, even running a “cheap” plan long journeys involving electric vehicle will be considerably multiple modes of transport. more expensive than running a Again, the public sector will conventional car in 2010, which will take the lead but the sites have an effect on their ownership. themselves may be integrated THE BUSINESS CONSEqUENCES into much larger, more useful social networks that provide • Leasing could become the many services beyond person- standard, with manufacturers to-person communication. taking back vehicles for reprocessing after an agreed age or mileage. To reduce costs, vehicles may be jointly leased by neighbours or be owned by a car club. Journey sharing, organised and booked online, is likely to be commonplace. Vehicles will be seen less as status symbols and more as utilitarian ways to get from A to B. • Expect new value-added services, such as in-built internet, online entertainment services and automatic location and booking of charging points. These developments will necessitate greater co- operation between vehicle and telecommunications companies. Manufacturers will have to design in value-added services. 19 Oliver Wyman: E-Mobility 2025 11
  12. 12. We hope Views has providedyou with some interesting insightand perspective into ecomobility.The opportunities it presents toorganisations are clear, as are thechallenges. This is the start...andwe believe that success will onlybe achieved through sharing ideas,collaboration and innovative waysof working – some of which we havecovered in the paper.If you agree, share this paper withyour colleagues and community. Ifyou disagree, tell us why.One last thought – imagine yourbusiness model without fossilfuels – if the well runs dry – will yourbusiness engine keep running – orwill it splutter to a halt? Logica is a business and technology service company, employing 39,000 people. It provides business consulting, systems integration and outsourcing to clients around the world, including many of Europe’s largest businesses.Logica Logica creates value for clients by successfully integrating people, business and technology. It is committed to longTel: +44 (0) 207 637 9111 term collaboration, applying insight to create innovative answers to clients’ business Logica is listed on both the London Stock Exchange and Euronext (Amsterdam) (LSE: LOG; Euronext: LOG). More information is available at AUSTRALIA / BELGIUM / BRAZIL / CANADA / CZECH REPUBLIC / DENMARK / EGYPT / ESTONIA / FINLAND / FRANCE GERMANY / HONG KONG / HUNGARY / INDIA / INDONESIA / KUWAIT / / MALAYSIA / MOROCCO NETHERLANDS / NORWAY / PHILIPPINES / POLAND / PORTUGAL / RUSSIA / SAudi ARABiA / SingAPORE / SlOVAKiA SPAin / SWEdEn / SWitZERlAnd / tAiWAn / uKRAinE /sustainablemobility UNITED ARAB EMIRATES / UK / USACODE 119 0111