OPEC Fund Quarterly - 2022 Q3

SUSTAINABLE TRANSPORT: A SOLUTION ON MANY ROADS

More than just electric cars, rethinking how the world gets around can also address climate change By Nicholas K. Smith, OPEC Fund

Lina Burchardt, Executive Assistant to the Assistant Director-General, Department Financial Operations

“Recycling paper, glass, aluminum and plastic, but also batteries, expired medicine and broken household appliances is second nature to me. When we refurbished our flat, we installed a combo to avoid wasting drinking water. This was easy. But when my husband and I sold our cars we considered it a real sacrifice. Now we are all the happier for it. You explore beautiful places leisurely and stress-free at the slower pace of bike wheels or your own two legs. I think everyone can make

I n 1895, a man named George E. Waring, Jr. was called to New York City to fix a problem. In those days, horse-drawn carriages along railways were the primary way to get around the city. With horses, comes manure… and lots of it. With manure comes a whole host of externalities: poor public health, unsavory smells, irregular cleanup services, and of course, slower transit speeds. In a way, the challenge Waring had to solve was what to do when a transportation system became too popular. The solution was not to build a better horse but to come up with a multi-pronged solution. Waring, in his new position as commissioner of the Department of Street Cleaning, implemented a system of uniformed workers to regularly clean up the street and pushed for laws that would house horses in overnight stables, rather than the streets. The arrival of the “horseless carriage” not long afterwards finally put the horse carriage model of public transit out to pasture. More than a century ago, technology and innovative thinking ushered in a new paradigm, changing from one way that was no longer sustainable to one that was. Today, the shift to sustainable transportation hopes for another large paradigm shift that will rethink how we, and our goods, get around, especially in a world that must be climate-friendly in order to avoid the externalities caused by the age of the automobile. As with New York City’s horse problem at the end of the 19 th century, ensuring sustainable transportation in the 21 st will require many different solutions. Sustainable transportation A world dominated by the automobile may have seemed like science fiction to people more than 100 years ago, but the future of sustainable transportation does not look so strange with today’s eyes.

In a nutshell,

sustainable transportation takes into

account the social and environmental impact of how we get around. Beyond just clean mobility, this also encompasses easy access to mass transit, which carries a much lower social and environmental cost. The United

a significant impact over the course of their life – even if it’s just small things. But it’s never too late to start the good habits!”

Nations Sustainable Development Goal (SDG) 11 aims to “make cities and human settlements inclusive, safe, resilient and sustainable.” Success in the sustainable transportation segment will come in the form of a significant increase in the “proportion of population that has convenient access to public transport, by sex, age and persons with disabilities. (SDG Target 11.2.1)” According to the UN, transportation accounts for one-quarter of greenhouse gas emissions and more than 1.2 million people die each year in traffic accidents.

to phase out the sale of new internal combustion engine vehicles by 2035, a move similar to the European Union’s decarbonization commitments. The US state is a trendsetter when it comes to directing where the country’s auto industry will head, yet both European and North American car makers will have a long road to travel until EV adoption. The International Energy Agency estimates that there are now over 10 million EVs on the road. An impressive- sounding figure, until you realize that this represents roughly 1 percent of all cars on the planet. EV sales may be growing year-on-year but to achieve net zero emissions by 2050, nearly all “light- duty vehicles” will need to be electric or fuel cell-powered in the 2030s. Challenges include making battery technology more efficient, as well as ensuring there is the necessary charging infrastructure in place. Another is

Ninety percent of those accidents happen in developing countries.

In other words, wider access to safer roads and more efficient ways to travel are just as critical to reaching sustainable development and climate change goals as low-emission vehicles. Electric cars The most high-profile solution comes in the form of electric (or at least hybrid) vehicles. While companies like Tesla grab the headlines and the imagination, the reality is that electric vehicles (EVs) are sometimes priced out of reach for many consumers in advanced economies (let alone developing nations). California recently announced a plan

obtaining the materials from all over the world, which are used to make the vehicle batteries. Cobalt and copper come from the Democratic Republic of the Congo, lithium reserves are mined in

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