Are carbon markets about to disrupt the the transport sector? (for the better)

“Climate change poses one of the greatest risks to the survival of the human species. (…) there are only about a dozen years for global warming to be kept to a maximum of 1.5°C.” 

UN Intergovernmental Panel on Climate Change (IPCC), 2018

With growing concerns about the pressing environmental problems caused by the transportation sector, reducing the adverse environmental impact of urban mobility is emerging as a great challenge. It is important to enable consumers to identify the environmental impact associated with their transport choices and let them make informed decisions about how to make their commutes more sustainable. The transportation industry is undergoing a profound transformation, driven by a need to reduce its carbon footprint. Worldwide, 16.2% of global emissions come from transportation, an increase of 70% over 1990’s levels. In cities, transportation represents 40% of total emissions, far outpacing any other source.

Many international organizations are racing to drive down emissions in the transport sector, including UITP, who has led discussions to address climate change at multiple national and international forums, and partners with a multitude of key agencies including the United Nations, to promote the use of public transport in cities. In September 2019, UITP launched the new campaign #ONEPLANet with its members, along with a Climate Action Manifesto which detailed a four-step action plan to reduce transport emissions in cities. 

Many new and existing solutions help reduce the environmental impact of transportation, but based on the graphs above, more needs to be done.  In recent years, a growing number of technology startups are trying to establish themselves as the go-to provider of ‘quality’ offsets to make people’s commutes net-zero. Startups such as Carbonclick and their partnership with Iomob, or, trying to be the offset provider for corporations by leveraging technology, have the potential to encourage a more sustainable behaviour when commuting. However, as we’ve seen with people offsetting air travel, these tend to be a small minority of the total. A new, powerful incentive is needed if we want to change people’s behaviour, and enable the widespread use of low-carbon technologies in the transport sector.

One of the biggest challenges to achieve widespread deployment of new low-carbon technologies and solutions is their (usually) higher cost. But what if these new technologies could be financed not through public funds but other non-public funding mechanisms? It turns out, the energy sector figured it out more than 20 years ago.

Carbon markets, both regulated and voluntary, have existed for decades. The utility sector has long leveraged them to decarbonize its industriy. The Paris Agreement – Article 6 validated carbon markets as an essential tool to meet the emission reduction goals for our planet. Why is the transport sector not leveraging capital available in carbon markets to accelerate its decarbonization? Despite some early successful project, such as the BRT Transmilenio in Bogota, Colombia, the transportation sector has failed to make offsets projects widespread across the world.

Until recently, there has been no simple yet effective way to develop offset projects in the transportation sector. However, in 2018, Greenlines Technology launched the Cowlines app, a free trip planning app across North America. Thanks to its patent-pending carbon engine, Cowlines automatically quantifies carbon emissions generated by each user trip, determines a baseline and calculates the resulting carbon reductions, aggregating them with thousands of other trips. In 2019, Greenlines completed the first-ever sale of mobility offsets produced by app users commuting with hundreds of public transit agencies, ride-hailing companies, bike-sharing programs, and more. Greenlines is now in discussions with several large mobility players to integrate its carbon engine into their own platforms.

Process to generate verifiable carbon offsets from low-carbon commutes. Source: Greenlines Technology Inc.

Quantifying and monetizing carbon reductions is a game changer for the transportation sector: it enables end users to understand their carbon footprint, and provides direct incentives to use low-carbon transport options. For mobility companies and public transit agencies, it incentivizes them to invest in low-carbon vehicles to generate larger reductions and offset revenues.

Last September, Mark Carney, former governor of the Bank of Canada and Bank of England, announced the launch of a global taskforce to accelerate the development of voluntary carbon markets with top figures from business, finance and academia. Carney warned, “in order to meet the growing demand for offsets, current private-sector carbon markets would need to grow by at least 15-fold on today’s levels, potentially reaching up to 160 times bigger”. 

Clearly, carbon markets can – and will – play a key role in the decarbonization of industry sectors. There is no reason for the transportation sector not to jump on board. Now, the tools are finally here.