Passing on a $26 Trillion by 2030 Opportunity: How Heavy Transport Can Reduce Emissions and Save Money

The world is vastly underestimating the benefits of acting on climate change. Recent research from the Global Commission on the Economy and Climate finds that bold climate action could deliver at least $26 trillion in economic benefits through 2030. This ground-breaking research, produced by the Global Commission and more than 200 experts, highlights proof points of the global shift to a low-carbon economy, and identifies ways to accelerate action in five sectors: energy, cities, food and land use, water and industry. Our blog series, The $26 Trillion Opportunity, explores these economic opportunities in greater detail.

by Faustine Delasalle and Delger Erdenesanaa, WRI, July 12, 2019, Print

A fuel-efficient airplane takes off during NASA's Green Flight competition.
A fuel-efficient airplane takes off during NASA’s Green Flight competition. Photo by Bill Ingalls/NASA.

Heavy duty transportation—freight trucking, shipping and aviation—accounts for approximately 13% of global greenhouse gas emissions. Although the sector has long been a major challenge to clean up—especially as demand for transporting goods increases—research shows it can now reach net-zero emissions as soon as 2050. Remarkably, getting to zero doesn’t need to cost much, either given recent progress in clean technologies. The same research shows that decarbonizing heavy transport, along with heavy industry (cement, steel and plastics) would cost less than 0.5% of global GDP by mid-century.

Companies are beginning to buy in. At the end of 2018, Maersk, the world’s largest shipping company, made waves by pledging to become carbon neutral by 2050.

<p>Maersk, the world\'s largest container ship company, pledged carbon neutrality by 2050. Photo by Bernard Spragg/Flickr</p>

Maersk, the world’s largest container ship company, pledged carbon neutrality by 2050. Photo by Bernard Spragg/Flickr

These commitments by Maersk and other transportation companies are critical elements of the global climate action effort, which could bring $26 trillion in global economic benefits by 2030. By acting quickly and ambitiously on climate change, the world could generate 65 million new low-carbon jobs in 2030, and avoid more than 700,000 premature deaths from air pollution by 2030. Here are some of the biggest opportunities in the transportation sector:

Make Way for Electric Trucks

Only five countries—Canada, China, Japan, the United States and India—have national fuel-efficiency standards for freight trucks. Others including Brazil, the European Union, Mexico and South Korea are considering regulations. Implementing standards across the world’s major economies is step one to greening the trucking industry.

Step two is embracing electric vehicles. Companies are beginning to produce electric trucks, some with batteries and some with hydrogen fuel cells. Tesla starts production of electric battery semi-trucks this year, and Mercedes-Benz will follow in 2021. Last year, Anheuser-Busch ordered a fleet of 800 hydrogen fuel cell trucks from U.S. company Nikolas. Researchers predict that electric trucks will become cost-competitive with diesel and gasoline vehicles by about 2030. As road transport goes electric, the power grid that charges these vehicles needs to go low-carbon, by swapping out fossil fuels for renewables.

<p>Workers charge an electric hybrid freight truck. Photo by Dennis Schroeder/NREL</p>

Workers charge an electric hybrid freight truck. Photo by Dennis Schroeder/NREL

Better Fuels & Efficiency for Shipping and Aviation

Between 2008 and 2015, tighter air pollution regulations across the shipping industry resulted in 30% greater fuel efficiency. There’s still further savings to be had. The least efficient tankers use five times more fuel than the most efficient ships. Taking full advantage of available efficiency measures could save shipping companies more than $30 billion in fuel costs each year. What’s more, the International Maritime Organization has issued efficiency standards for the design of new ships, which should save an additional $200 billion in annual fuel costs by 2030.

There’s also a strong case for airlines to invest in energy efficiency. American Airlines spent $300 million on fuel-saving programs since 2005, but saved $1.5 billion on fuel. Industry-wide, fuel accounts for one-third of airlines’ operating costs.

For shorter distances over sea and air, electric ships and airplanes are a viable solution. Hybrid and electric ferries already operate in Finland, Norway and Taiwan. Operating Norway’s electric ferry is 80% cheaper than operating fuel-powered counterparts, and the electric model produces 95% less emissions.

Otherwise, long-distance shipping and aviation will require biofuels or synthetically made fuels. For longer trips, pairing energy efficiency with low-carbon fuels is crucial.

<p>NASA engineers work on the wing of a test electric airplane. Photo by Tom Tschida/NASA</p>

NASA engineers work on the wing of a test electric airplane. Photo by Tom Tschida/NASA

Railroads to the Rescue

Not all transportation is equal. Just shifting to cleaner forms of transport—from trucks to railroads and ships, or from short flights to rail—combined with streamlined logistics, could cut heavy transport emissions by 20%. Railroads are an underused alternative for trucking especially. Trains move 32% of goods in the United States, but generate only 6% of freight-related greenhouse gas emissions. Meanwhile trucks account for 40% of American freight transport and 60% of freight-related emissions.

Some companies are already changing their practices. UK supermarket chain Tesco is moving from trucks to trains for many of its products, aiming to save 26 million truck miles every year, which would cut its freight-related emissions up to 80%. Since introducing the initiative in 2014, Tesco has saved 15 million gallons of diesel.

<p>A freight train in Heilongjiang, China. Photo by Xue Siyang/Wikimedia Commons</p>

A freight train in Heilongjiang, China. Photo by Xue Siyang/Wikimedia Commons

When It Comes to Moving Stuff Around, Less Is More

As the global middle class expands and spends more on consumer goods, demand for heavy duty transport will rise. The resultant emissions are projected to rise from 4.5 gigatons of CO2 per year to 8.2 gigatons per year by 2050.

Efficiency and renewable energy can do a lot to reduce transportation emissions. But to tackle the problem long-term, managing demand is also important. A more circular economy can help. Instead of a “take-make-waste” business model, companies should design longer-lasting products and services that recycle and reuse materials. By reducing the amount of stuff that enters and exits the economy, we can dramatically lower emissions along the life cycle of these goods—including at the transport stage.

All Aboard for Clean Transport

The burden isn’t on companies alone. Policymakers have the power to encourage cleaner transportation by setting fuel efficiency standards, phasing out fossil fuel subsidies and pricing carbon. Governments should also invest in research and development to further bring the costs down on key technologies like batteries, charging infrastructure for electric vehicles, hydrogen fuel and sustainable biofuels. Many of these technologies rely on electricity, so developing the renewable energy sector will underpin much of the change to come.

In today’s economy, transportation provides the essential arteries for global trade. With concerted effort from companies and governments (including the international governing bodies for shipping and aviation), the transport sector can step into a zero-carbon future right alongside the industries that depend on it. Climate experts consider heavy transportation and industry the hardest sectors to tackle. But research and real-life examples show that the challenge isn’t as big as we thought. There’s no excuse now—every part of the global economy can go green.

TAGS: circular economysustainable transportbusinessrenewable energysustainable businesstransportation

Low-Carbon Growth Is a $26 Trillion Opportunity. Here Are 4 Ways to Seize It.

By Andrew SteerHelen Mountford and Molly McGregor – September 05, 2018, WRI, Print

Solar panels and wind turbines
Solar panels and wind turbines. Photo by Kenueone/Pixabay

The world is vastly underestimating the benefits of acting on climate change. Recent research from the Global Commission on the Economy and Climate finds that bold climate action could deliver at least $26 trillion in economic benefits through 2030. This ground-breaking research, produced by the Global Commission and more than 200 experts, highlights proof points of the global shift to a low-carbon economy, and identifies ways to accelerate action in five sectors: energy, cities, food and land use, water and industry. Our blog series, The $26 Trillion Opportunity, explores these economic opportunities in greater detail.

We are on the cusp of a new growth era, one where growth is driven by the interaction between rapid technological innovation, sustainable infrastructure investment and increased resource productivity. Ambitious climate action across key economic systems—energy, cities, food and land use, water and industry—can lead to higher productivity, more resilient economies and greater social inclusion. It is the growth story of the 21st century.

Yet we are not making progress fast enough in embracing this growth model. The next 10-15 years are a unique use-it-or-lose-it moment for both the economy and climate. The world will invest $90 trillion in infrastructure by 2030, more than the current stock in place globally today. How that infrastructure is built will be a major determinant of future prosperity for both people and the planet. It is also a key moment to turn the tide on climate change. Already, 18 of the last 19 years have been the warmest on record. Disasters triggered by weather- and climate-related hazards were responsible for thousands of deaths and $320 billion in losses last year. This summer, record-breaking heatwaves, wildfires and extreme flooding turned deadly and caused billions in damages. Unless we make a decisive shift now to a low-carbon economy, we risk the enormous costs of runaway climate change.

Today, the New Climate Economy launches its 2018 report, Unlocking the Inclusive Growth Story of the 21st Century: Accelerating Climate Action in Urgent Times. It demonstrates the benefits of a new low-carbon growth model and outlines how we can urgently accelerate efforts to achieve it. Bold action could yield a direct economic gain of $26 trillion (cumulative) by 2030 compared with business-as-usual. And this is a conservative estimate. Ambitious climate action could also generate more than 65 million new low-carbon jobs in 2030—equivalent to the entire workforces of the UK and Egypt combined—and could avoid more than 700,000 premature deaths from air pollution by 2030.

The next 2-3 years are a critical window when many of the policy and investment decisions that shape the next 10-15 years will be taken. The Global Commission on the Economy and Climate calls on leaders in government, business and finance to prioritize urgent action on four fronts:

1) Ramp up efforts on carbon pricing and move toward mandatory disclosure of climate-related financial risks.

Major economies should put a price on carbon of at least $40-80 per ton of CO2 by 2020, along with a predictable rising pathway by 2030. Already, 70 countries, states and provinces have carbon prices in place or planned, covering 20 percent of global greenhouse gas emissions. Major economies should also lead the way in phasing out fossil fuel subsidies and harmful agricultural subsidies and tax breaks by 2025.

Fossil fuel subsidy reform and carbon pricing alone could generate an estimated $2.8 trillion in government revenues per year in 2030, equivalent to the GDP of India today. These funds could be used to invest in urgent public priorities.

Accelerating efforts to disclose climate-related financial risks is essential to deliver radical transparency and shift much-needed finance toward low-carbon solutions. More than 390 companies—including investors with assets of a combined market capitalization of more than $7 trillion—have already publicly committed to support the Task Force on Climate-related Financial Disclosure’s recommendations, and a number of them are starting to apply them in their financial disclosures.

2) Accelerate investment in sustainable infrastructure.

Ensuring that infrastructure investments are sustainable is critical. The G20 should continue its work to develop infrastructure as an investment asset class to improve the mobilization of private and long-term finance. Multilateral development banks should double their collective investment in infrastructure, making sure it is sustainable, aiming to invest at least $100 billion per year by 2020.

3) Harness the power of the private sector and unleash innovation.

By 2020, all Fortune 500 companies should establish emissions-reduction targets in line with what scientists say is necessary to prevent the worst climate impacts. Already, more than 460 companies across all sectors have committed to Science-Based Targets.

A big push on innovation is needed, such as on deforestation-free supply chains or net-energy positive commercial buildings. We need at least $50 billion of new capital committed to breakthrough climate challenges by 2020.

4) Build a people-centered approach that shares gains equitably and ensures that the transition is just.

All governments should establish clear Energy Transition Plans to reach net-zero energy systems. They should work with energy companies, trade unions and civil society groups to ensure a transition to a low-carbon economy doesn’t place unfair burdens on workers and communities.

Women will play a critical role in this agenda. Ensuring their full participation in the economy could boost global GDP by as much as $28 trillion per year by 2025.

A greater focus on adaptation and resilience across efforts and policies is critical as climate impacts continue to negatively affect lives and livelihoods. We can no longer choose between actions for today and those for tomorrow.

The Future We Want

Leaders are already seizing the exciting economic and market opportunities of this new growth approach. The laggards are not only missing out on these opportunities; they’re putting us all at greater risk.

We can deliver on the promise of this new growth era. We can eliminate extreme poverty, prevent dangerous climate change, and improve the lives and livelihoods of millions—but only if we set out to do so decisively now. As this new report makes plain, we have everything to lose and so much to gain.

The Global Commission on the Economy and Climate is a major international initiative that was set up in 2013 to help governments, businesses and society make better-informed decisions on how to achieve economic prosperity and development while also addressing climate change. The Commission, currently chaired by Ngozi Okonjo-Iweala, Paul Polman and Lord Nicholas Stern, comprises leaders from over 20 countries, including former heads of government and finance ministers, leading businesspeople, heads of international organizations, city mayors and academics. They all serve on the Commission in a personal capacity.TAGS: The $26 Trillion Opportunityeconomicsbusiness riskbusiness opportunityclimate changeinvestment


WRI 2018

Globally, we generate about 1.3 billion tons of trash per year, far more than we can properly process or recycle. This leads to environmental tragedies like ocean plastic pollution and geopolitical tensions as Western countries search for new places to stash their trash.

Because we waste so much, we must extract unsustainable quantities of natural resources to keep pace with growing consumption. OECD has calculated that flow of materials through acquisition, transportation, processing, manufacturing, use and disposal are already responsible for approximately 50 percent of greenhouse gas emissions. The UN International Resources Panel projects the use of natural resources to more than double by 2050.

How did we get here? In short, most of our global economy is designed for linearity—take, make, waste—rather than circularity. To create a truly circular economy, the world must overcome the following five barriers:

1. Meeting consumers’ expectations for convenience.

Imagine living your life without producing any trash. How would you do it? Bea Johnson, author of Zero Waste Home, coaches everyday people on how to live a trash-free life through habits like bringing linen bags to the grocery store and buying rice, beans and other staples from bulk bins. The lifestyle she models was typical before disposable, single-use plastic products and packaging became the norm, but today we use 20 times as much plastic as we did 50 years ago. Can we expect consumers to change the way they operate and the types of products they buy? Will they abandon commonplace conveniences like plastic bottles and bags?

These consumer choices matter, but much of the problem lies with the business and regulatory environment that keeps our economy running. Which brings me to the next four points…

2. Government regulations can create waste.

Sometimes, laws and regulations unintentionally incentivize wasteful behavior among companies and consumers. This is a common problem in the food and beverage sector. For example, expiration date labels are often required by law to protect the consumer, but may not account for differences in how food is stored—so the date label on eggs in Europe may be labeled for pantry storage, but will last longer when refrigerated. Expiration dates are also often misunderstood to mean that a food is no longer edible, when in reality it is still safe to eat but may not meet the manufacturer’s quality standards. (Good news: a consortium of companies have agreed to fix this.)

3. Many places lack proper waste infrastructure.

Nearly one-third of plastics are not collected by a waste management system and end up as litter in the world’s lands, rivers and oceans. There could be more plastics than fish in the ocean by 2050, shows one study. This problem is especially severe in developing countries that lack strong waste management infrastructure. More than half of plastic litter comes from China, Indonesia, the Philippines, Thailand and Vietnam, so improving waste management and recycling systems in these countries could make a big difference in keeping plastic out of our natural spaces.

<p>Plastics pose a particularly tough challenge. (Flickr/Plastic Pollution Coalition)</p>

Plastics pose a particularly tough challenge. (Flickr/Plastic Pollution Coalition)

4. Recycling technology isn’t good enough.

Most plastics that are recycled are shredded and reprocessed into lower-value applications, such as polyester carpet fiber; only 2 percent are recycled into products of the same or similar quality. This is largely due to limitations in how plastics can be sorted by chemical composition and cleaned of additives. We need better recycling technology that can maintain quality and purity so that product manufacturers are willing to use recycled plastics. Once this technology is deployed at a large scale, we can start recapturing the economic value of plastics, incentivizing their recovery and recycling.

5. We use the wrong business models.

The world is on track to exceed 9.5 billion people by 2050, with far fewer living in poverty than today. Thanks to the rapid industrialization of developing countries like China, Brazil and India, the global middle class is exploding—meaning a lot more people want to buy a lot more stuff.

This is a human development victory, but a grave threat to our environment unless the businesses that produce and sell goods can reinvent how they do so. For example, clothing companies can lessen their environmental impacts by using non-toxic dyes and recycling cloth scraps. But to clothe the booming middle class within planetary boundaries, they will need to upend the current “fast fashion” business model in favor of alternative models such as rental and resale. For example, Rent the Runway allows consumers to rent designer clothing for a fraction of the retail price. This service is great for consumers, and it benefits the planet because an item of clothing is used more than if it were sold to single buyer.

Companies should also design products for circularity. For example, if lithium ion battery manufacturers designed their products with similar mixtures of chemicals, it would allow for more recycling because recyclers could standardize their process.

How Do We Overcome the Barriers? Partnerships Are Key

The barriers listed here prevent companies, governments and consumers from solving our trash problem and making better use of natural resources. Each of these barriers must be overcome, but we cannot rely exclusively on companies, governments or consumers to do it all.

We need innovative public-private partnerships like the ones sought by platforms P4G and PACE. Companies, investors, governments and civil society each offer unique financial, intellectual and operational assets that can be strategically deployed to solve big problems they couldn’t solve alone. For example, the World Bank found that private-public partnerships to build water infrastructure in Africa were most effective when financed by a mix of private and public sources, since public funding reduced risk to private investors and private investors’ return requirements improved efficiency and prevented cost overruns.

We need government policies that provide essential protections while fostering innovation and risk taking by the private sector to advance circular solutions. We also need to ensure that the most vulnerable in society have a strong voice in designing solutions so that their concerns for jobs and health are assured. This is an “all-hands-on-deck” moment in history—and early movers are likely to capture significant market opportunities. The coalitions are forming. If you run a major company, investment vehicle or government agency, you should be securing your seat.TAGS: