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At the GreenEST Summit 2019 – Mobility and Logistics

29.10.2019

Unstoppable development of technology and industrial revolutions have shaped our Earth drastically and driven us to a point where crucial decisions need to be made.

Even though we represent just 0.01% of all life on the planet, our impact on ecosystems has been disproportionally big.

Once again we are moving through uncharted territory where many expectations are put on new technologies. It reminds me the Heroic Age of Exploration where technology, which was yet missing was replaced by the never-ending curiosity, courage, and patience of man to discover our planet. Climate change and environmental degradation are indeed the greatest challenges humans have ever faced.

Mobility has always been closely coupled with globalization and economic growth. Modern patterns of mobility, evolved by personal interest like tourism and employment or by cargo trade, were developed in a world where increasing mobility couldn’t be seen as a threat. Increased possibilities to move meant more freedom and added opportunities for both private people and companies.

For the latter, expanding the market increased chances to grow and make more profit. It all became possible because of the progress of transportation and logistics. Innovation made travelling faster, more feasible. As a result, we have never been as mobile as today.

The planet is physically still the same size, but travel distances measured in time have diminished remarkably. Jules Verne's classic adventure novel „Around the World in 80 Days” would certainly need some adjustments in its’ title if it was written today.

Global tourism has increased exponentially since the end of the Second World War.

In the fifties when most of the travelling was still done by ships and trains, about one in a hundred people were taking part in international tourism. As soon as commercial air traffic started to climb, international tourism went up, too.

Today people fly more and further every year. The growth of budget airlines has made travelling affordable for many. In 2018 a record of 1.4 billion international tourist visits was made, which makes every sixth person travelling internationally today. This number keeps rising and after the next twenty years, it will have almost doubled.

Tourism is playing an increasingly important role in the global economy. According to the latest research, it is already responsible for about 8% of global CO2 emissions, the number being four times larger than previously thought.

Around 40 million flights with 4 billion individual passenger journeys take place in one year. The air transport doubles in size at least once every 15 years.

Even more dramatic growth has been taking place in domestic mobility, at least in most countries. Seven times more cars are produced today than it was 60 years ago. Production is reaching over 70 million cars in a year and continues to grow at an astonishing rate of doubling every 20 years. We can expect to see some 2.8 billion vehicles on the planet in 2036. Most of us would not be even retired by that time.

International trading has increased fast and is now a fundamental part of economic activity. It has grown faster than global GDP.

Today about one-fourth of total global production is exported. Exports soared exponentially in 1950 and are today more than 40 times larger than a hundred years ago.

By volume, more than 80% of this global trade floats from place to place on ships. Global fleet of 50 000 vessels is the backbone of world trade.

Our own Baltic Sea has the highest concentration of ships in Europe. It is estimated that about 2000 sizeable ships are at the sea at any time.

This all can be seen as positive.

However, in the sixties and seventies, the first signs of environmental concern started to rise and sparked the modern environmental movement.

In 1972 the report „The Limits to Growth” was published by the Club of Rome. This was the beginning of a big discussion for sustainability, based on an intricate series of computer models developed by MIT professors, predicted exponential growth in economy and population. It warned that the chasing of ever-greater economic growth will end with a climate catastrophe.

Selling millions of copies in more than 30 languages, affecting both environmental policy and global awareness for decades later. Technological optimism from the fifties and sixties started to show the first signs of the side effects. However, unlike today it was too easily forgotten, as real effects were still missing. But its predictions were, in fact, correct and today we already see the real effects.

Technological advancements in transportation have strongly influenced our mobility. This sector is now responsible for approximately a quarter of human-caused CO2 emissions. In Europe, it is the single biggest source of anthropogenic CO2.

Today we know that the energy sector is relatively easy to revamp and redesign so that the CO2 emissions would stop. Clean transportation systems have proved to be much more difficult. The transportation sector is more fragmented and diverse and the carbon neutrality goal in the transport sector is one of the hardest tasks to solve. There is no single universal solution as there also isn`t in the energy sector, but in that sector, the technologies are developed enough for us to understand how it can move forward. They are not so expensive that we cannot decide today with a clear forward effect that we want to have our energy sector CO2 neutral by 2050.

It`s much more difficult to decide so in the transport sector because there are no readymade solutions on the table. I am one of those who thinks that humankind is never ready to move too much their personal economic goalposts to accommodate sustainability. They are ready when the technologies are there and they see that the expense does not exceed too much – 5–10% maybe, change too much of their lifestyle.

We have reached this now in the energy sector, but of course, in the transport sector, this is still to be seen. Yes, there is electrical transport, we can foresee hydrogen transport coming along and happening on land, railways, on the sea, but what about air transport?

We all know that there are not so many even pilot programs on electrical planes. There are few plans with water planes, small ones to start commercial flights in the coming years. And the hydrogen plains? Not much heard yet.

Therefore, in the transport sector, if we want to continue and not move too much our goalposts whereas development is concerned, then this comes down to smart innovation. Much more than we need it in the energy sector. There this smart innovation cycle has started already, it is there and present. We simply need to do what we know we need to do.

But in transport, we must really try to make sure that at least efficiency gains which can be found will be there.

I know that among you here today are also those who develop smarter logistics systems and we know that smarter systems always mean more information on both the supply and consumer side about what is available. This should lead us to a situation where the prices fluctuate from the peak channels to less important channels in a way that cargo, goods, and people will fill all the channels so that at least in the system there is no loss of resources for some times to travel empty.

This is maybe the lowest hanging fruit in the transport sector where I can see that the role of matching small consumers and small offers will create at one point a big effect. 

I hope you will be discussing today those kinds of developments and solutions.

I don`t think that we are anywhere close to an understanding when these flight systems will be CO2 neutral and therefore this sector needs to shoulder part of this responsibility for carbon capture in our economies.

There are certain ways of doing it, some less, some more developed, some small and some higher scale, but here in Estonia tech companies have made a pledge to become climate neutral by 2035. Among them, by the way, are also few, who actually provide transportation services like Bolt for example. The only way they can see climate neutrality in so quick time – in less than 10 years – is offsetting. I hope you will discuss offsetting measures and how your sector collectively can partake in providing us all with the reliable means of carbon capture.

It means that there will be costs added to what you are doing. But globally we know that if sectors can innovate themselves and come up with market-based solutions themselves then the big market distortions operated by the regulators might not be necessary. This should be your private force participating in it. I admit that unlike in the energy sector regulators don`t dare to give forward guidance on climate neutrality in the transportation sector, because the technologies are not there. But sooner or later they will do it unless the sector itself creates the necessary solutions and can show the way into the clean future.

„Necessity is the mother of invention”, as a well-known proverb says. Coming years shall show how much of an inventor there is in us, and of course, it will depend on how urgent you see the situation to be. I know that the planet can only be saved if these solutions are palatable for the consumers, and if they are based on the market then no one should lose out. As soon as the regulations come in then normally also the subsidies come in and then investing against the market becomes trickier. I see this happening in the energy market right now. I think you can all learn from that and make sure that in your sector when the transformation happens, it will be purely market-based. Yes, it would need smart legislation to create a necessary space for the new technologies, but it has to be a free market where everybody can invest in new technologies against the market. Otherwise, it will be unfair to some companies and some will of course benefit as we know from the state subsidies.

We are from the Nordic area of Europe and here the state has a longstanding habit of choosing what is good and investing in it, sometimes missing some other things which could be as good as well. So while innovating and using the new solutions I also invite you to keep an eye on it that you will keep this vibrant free market which is the transport sector today.

I would also like to say that there are not only costs but also benefits from stopping the anthropogenic climate change – curbing global warming could save us 20 trillion USD.