BUSINESS & CLIMATE SUMMIT 2016
Why the hyperloop is no green transport miracle
By: Brian Baynes, CEO and Board Member, Joule
Demand for mobility is rising rapidly. Some propose electricity as the silver bullet across all modes of transport – but the maths is not in our favour.
By 2050, there will be two billion cars on the road. Airline passengers will double. Freight movements will have quadrupled. Emerging markets will see accelerating consumer growth.
All of these things and more mean that transportation is one of the fastest growing sources of greenhouse gas emissions – and it already accounts for around a quarter of global emissions related to energy use.
At a fundamental level, it is not surprising – the relationship between national income and mobility demand is well documented. As people have more wealth, they move more. As a country prospers, more goods move more as well.
To have a chance at meeting the 2C Paris Climate Agreement targets, we need to embark on deep mobility decarbonization, even – or especially – while all the major trends push us in the opposite direction.
The UN’s IPCC climate science panel estimates the world is going to hit the 2C warming threshold of 1 trillion tonnes of cumulative carbon emissions since 1850. We’ve already spent over half of this budget, with >50 Gt CO2 added every year and growing.
On this current trajectory, we’ll blow our budget in less than 20 years – perhaps even earlier.
Climate change is a cumulative emissions problem, so the challenge is not to just delay reaching these levels. It’s to dramatically bend the curve downwards and never hit them.
This means focusing less on technologies that are 10-30 years in the future, and focusing more on deploying every solution we have available to us right now.
Given the inertia in the global energy system, we need to significantly reposition in the next 5-10 years in order to shift our trajectory. That means deploying massive amounts of capital now, with conviction and with depth. However, the debate over how mobility can be decarbonized gets skewed in the public discourse.
We regularly hear different business interests lobbying for their favourite solution or the flavor of the month. Electric cars. Hydrogen-powered vehicles. Solar powered aircraft. Hyperloops.
The media repeats these solutions because single solutions are simple messages. But the task of decarbonizing transport can’t be reduced to such simplifications.
Sustainable mobility is a complex and challenging problem. Two key challenges stand out.
The means of moving people needs to be both dense and light. Take aviation, for example. To electrify a Boeing 757, it would need lithium ion batteries weighing 15 times its maximum take-off weight.
To run it off solar energy, you would have to somehow make solar panels generate 1,500x as much energy as they currently do. It will be a long way to go before electrification will be practical for jet aircraft.
It takes decades for transport infrastructure to be replaced. Globally, the average car is on the road for around 15 years.
Prominent US airlines have an average fleet age of close to 20 years. We simply don’t have the time to wait for these systems to be replaced – we need “drop-in” compatible solutions, and we need them now.
Joule recently conducted a study on the future of sustainable mobility in order to understand where proposed solutions fit into a long-term vision for each relevant mobility area, such as freight, aviation, and passenger transport.
We focused on technology that is ready or within 5 years of being ready for scale-up, and what we found was a massive need for investment in three areas:
First, ultra-low carbon fuels are necessary in order to provide liquid transport fuels that are compatible with today’s infrastructure – our cars, trucks, ships and aircraft.
Unfortunately, early biofuels made mistakes and the public perception of the entire class of fuels suffered as a result. Many biofuels faced the “food vs fuel” debate and some made dubious sustainability claims. And some potentially breakthrough technologies failed spectacularly during scale-up.
But the fact remains: the world needs ultra-low carbon fuels, and a new wave of technology companies are coming forward with promising solutions.
At Joule, for example, we have multiple technologies for producing such fuels – be it from sustainable grown woody biomass residues– or directly from sunlight, CO2, and brackish water.
Even with today’s engines, a car running on Joule’s fuel has lower GHG emissions than a Tesla charged with US grid power. It’s part of the reason we have joined below50 – to help grow the global corporate market for the best sustainable fuels.
Second, internal combustion engines must become more efficient.
With only modest increases to vehicle production costs, for example, engines and drivetrains can be made >50% more efficient. We need to implement policy mechanisms that ensure manufacturers have a reason to move in that direction.
Third, we must start at least partially electrifying our vehicles.
However, electrification will still be challenging in some applications, such as aviation, ocean shipping, and some heavy land transport – and ultimately the electrons that charge them have to be green.
One scenario in our study shows how each of these components can contribute to bucking the emissions trend, even in the headwind of rapidly growing mobility demand (see the image below). More aggressive cases are possible.
What stands in our way?
Fortunately, the world has begun adopting carbon pricing and a number of jurisdictions have already put a significant premium on low carbon solutions.
For example, the credits in the California Low Carbon Fuel Standard (LCFS) market are trading with the highest price on carbon in the world – US$115-125/t. However, non-technical challenges remain to accelerating the scale-up of sustainable mobility solutions.
First, the longevity of carbon pricing frameworks must be made credible to investors.
Carbon pricing frameworks are too new to be considered investment grade, and financiers question whether they can count on their existence in 5 years.
This criticism exists even for the California LCFS, which successfully withstood almost going to the US Supreme Court.
Policymakers and businesses must band together to find ways to ensure investors do not wait for 10 years of data on these new markets before getting comfortable with incorporating them into their investment cases.
It is not just the size of the incentive that counts, but also their predictability – especially when we need investors to deploy capital over a 15+ year timeframe.
Second, few companies are showing leadership to take risk on new technology and/or new policies.
No executive wants to be responsible for a downside scenario related to an operation that is outside their normal business practice, such as going upstream to procure renewable fuel, yet we cannot get the scale-up momentum we need without bold action from large strategic investors.
Policymakers must work with business to help them take risk and potentially help mitigate it – and business executives must show the leadership to take risk.
We see a number of companies put out bold sustainability mandates – such as 50% by 2030 – but then fail to take meaningful risks to reach them. Perfectly de-risked solutions do not knock on the door. Companies must open the door to those solutions.
Third, we need to lower the cost of capital for industrial sustainability solutions.
Early stage companies scaling up their technologies face brutal financing costs. These companies should have tax-exempt debt and equity available to them.
Corporations should be incentivized to invest in their projects and parent companies – perhaps with some first-loss capital available from government to help protect against downside risk – while the market still selects the winning solutions, mitigating criticism that some direct when government is put in the position of “picking winners”.
If one thing is clear to me, that is that innovative cross-sector and cross-functional mechanisms and partnerships are key to delivering the sustainable mobility solutions we need now and at scale.
This post is part of a thought leader series ahead of the 2016 Business & Climate Summit, in London, June 28 – 29. Brian Baynes, CEO and Board Member of Joule, is a speaker at the session, “Decarbonizing Transport: The Opportunities & Challenges For Business”, at 14:00 on June 28th, organized by the World Business Council for Sustainable Development.