Navigant Research Blog

Carbon-Saving Innovation in the Airline Industry

— July 7, 2015

Relative to the rapidly changing automotive industry, which pumps out new models every year, the airplane industry has evolved at a considerably slower pace. This is not surprising, given that around 1,000 aircraft are made by Airbus and Boeing, the leading manufacturers. Unlike cars, changes in design and function take longer to incorporate into planes. For some time, the airline industry has been under pressure to increase its fuel efficiency and lower its greenhouse gas (GHG) impact. While airplanes contribute to 2%–3% of global GHG emissions annually, some posit that the high altitude of those emissions has a greater impact on climate change.  This past month, the U.S. airline industry has been put on notice to reduce the amount of GHG from air travel.

Citing the right to regulate emissions as part of the Clean Air Act, the U.S. Environmental Protection Agency (EPA) reported that almost one-third of global aircraft emissions originated from U.S. aircraft. To address this, President Obama has charged the EPA to begin crafting rules similar to the draft Clean Power Plan (111(d)) that addresses power plants and utility energy use.  European carriers have been under similar pressure from the European Commission.

The Path toward Change

There are two fundamental ways that airplanes can reduce fuel use: they can use a lower GHG fuel source and they can make more efficient planes.

For airplanes, the lower GHG fuel source has been biofuel, either from biological sources or waste products. As discussed in Navigant Research’s Aviation and Marine Biofuels report, choosing biofuels also helps hedge against increases and variability in fuel costs. The volatility of aviation fuel cost over the last 5 years can be seen in the figure below.

Monthly Cost and Consumption: 2000-2015

carbon airlines

(Source: U.S. Department of Transportation)

It is interesting to note, however, how relatively flat U.S. and international fuel consumption has been over the past 15 years. The United Nations’ International Civil Aviation Organization (ICAO) projections have cited the rapid growth of European plane travel in forecasting that fuel demand for air travel could result in a 300% to 700% growth in emissions by 2050.

U.S.-based United Airlines just announced an unusual step in securing biofuels for its planes. In late June, it was announced that the company is investing $30 million in Fulcrum BioEnergy. Once production of the waste-to-jet fuel has matured, United will be able to purchase up to 90 million gallons of jet biofuel.  Fulcrum already has a deal with Cathay Pacific and has received funding from the U.S. Department of Defense with the aim of becoming another military jet fuel provider.  Yet, United is not putting all of its eggs in one basket; it already had a deal with AltAir Fuel, which began in 2009.

 

Could Privacy Concerns Inhibit Smart Mobility?

— July 6, 2015

Smart mobility is a hot topic in the media, among policymakers, and with non-governmental organizations (NGOs) and startups.  The idea that connected technology is opening up new mobility options that are more sustainable and more available is inherently appealing.  Carsharing, rideshare apps, increasingly sophisticated city mobility mapping services, and smart parking services are all part of the connected, on-demand mobility ecosystem that cities are enthusiastically embracing. In the recent report, Urban Mobility in Smart Cities, Navigant Research forecasts that revenue from smart mobility technologies, infrastructure, services, and solutions will reach $5.1 billion in 2015 and rise to $25.1 billion in 2024.

The appeal of smart mobility to cities is clear. With rising urban populations, city officials are facing pressure to ensure they have a range of readily accessible and affordable transportation options to minimize congestion and to control emissions levels. Budget constraints can make this challenging, so cities are looking to less capital-intensive ways to make transportation improvements. Ubiquitous connectivity offers the potential for crowd-sourced data collection, new transportation services like carsharing and ridesharing, and sophisticated traveler information systems that are truly multimodal. But it’s not a sure thing for all of these new offerings.

In the rush to embrace new mobility options, there is the potential to overlook some issues that could generate backlash. Privacy is at the top of this list.

Tracking Your Movements

Privacy concerns are nothing new in the world of big data, but the multitude of new data-gathering methods for transportation can raise privacy concerns among the public. These concerns can revolve around how data is being gather or how it used. For example, New York-based start-up Placemeter has officially launched its new data intelligence platform, which relies on smartphone video recordings in buildings to track pedestrian traffic. Pedestrian movements have been one of the black holes in the city’s pictures of travel patterns, so the service could prove tremendously valuable. It offers much more comprehensive data collection than current tracking methods. But will the public feel squeamish knowing that there are multiple smartphone cameras trained on them? For cities that have comprehensive security camera installations, this may seem more of the same, but it could be a concern in cities that haven’t already made that adjustment. Placemeter’s video data is anonymized, and the videos are discarded, but since pedestrian don’t opt in to being recorded, it could raise some concerns.

Opting In

Opting in is going to be the main way forward for many companies looking to use crowdsourced data. For example, Ford is unveiling a parking app that uses data from its vehicles’ driver assist sensors to track available parking spaces. Ford figures this will be less expensive than installing sensors throughout parking spots. The company has made a commitment to asking its customers to opt in to data-gathering solutions. Similarly, Uber’s new partnership with Starwood Preferred Guest program lets Uber customers opt in to sharing their data with Starwood for points.

However, these new data collection methods also require trusting companies to handle the data appropriately.  Uber was forced to beef up its internal privacy procedures after a couple of scandals involving inappropriate use of its customer data, so similar breaches could also lead to public backlash.

The reality is that many transportation services used today already rely on personal location data, so we’ve already entered this brave new world. But an incident where customer data is accidentally revealed or used inappropriately could spur the public to place more scrutiny on the how data is being collected and how it is being used.

 

Is the Gogoro E-Scooter Priced Too High?

— July 1, 2015

Taiwan-based electric scooter (e-scooter) battery swap company Gogoro has finally unveiled pricing for the most ambitious e-scooter program in the world. Gogoro’s e-scooter, called the Smartscooter,  and access to a battery swap network will cost consumers $4,100 and about $30 per month, respectively. For the company’s first deployment in Taipei, it is offering 2 years of free maintenance, 1 year of theft insurance, and 2 years of free battery swapping. The Gogoro Smartscooter became available for pre-order in Taipei on June 27.

There are several ways to interpret the pricing announced by Gogoro. On one hand, for an exceptional looking and performing e-scooter, the price seems fair. Gogoro’s Smartscooter has a range of 60 miles and a top speed of 60 mph (going from 0 mph to 31 mph in 4.2 seconds). Advanced features, such as smartphone integration, light-emitting diode (LED) headlights and tail lights, an intelligent security system, a digital dashboard, and an overall sleek design, make this scooter far more attractive than most other electric models. On the other hand, many consumers in Asian megacities, including Taipei, are accustomed to paying $500 or less for low-end gasoline-powered scooters. A higher-end, more comparable 125cc gas scooter costs roughly $2,600, which is still considerably less than Gogoro’s Smartscooter.

Lack of Battery Ownership Remains an Issue

Gogoro CEO Horace Luke had previously stated that the company’s e-scooter would be in the $2,000 to $3,000 price range. The Smartscooter was expected to cost about the same amount as a comparable gasoline scooter since consumers of the Smartscooter won’t actually own the batteries used in the vehicles (which constitutes a large portion of the overall cost and value of the e-scooter). Removing the battery from the purchase price was meant to drastically reduce the cost of the vehicle, using more of a leasing-style mobile phone business model, where the initial purchase price of the e-scooter is reduced to encourage early adoption and subscription fees for the use of the company’s battery swapping network will eventually make up the difference over time. It is somewhat surprising that even without consumers having to pay for a battery, the e-scooter is still more expensive to buy than a gasoline equivalent.

Taiwan Subsidies a Factor

Nevertheless, Gogoro claims that when government subsidies and the cost savings of using the battery swap network instead of gas are considered, the overall cost of owning a Smartscooter will be less than its gas counterpart after 2 years. E-scooters do receive subsidies in Taiwan, with the amount ranging from TWD21,000 ($663) to TWD34,000 ($1,074) in most regions. These subsidies should help narrow the gap in price differential and encourage larger adoption of the e-scooters.

While it remains to be seen if Gogoro can win over thousands of customers to support its battery swap network, if successful, a network like Gogoro’s could become the most impactful development in electric transportation since Tesla introduced the Model S. Nearby, enormous scooter markets such as China, India, and Indonesia could see battery swap networks in their megacities sooner rather than later if Gogoro is successful in Taiwan.

For more information on electric scooters, see Navigant Research’s Electric Motorcycles and Scooters report, which forecasts global cumulative sales of electric scooters will total over 42 million units from 2015 to 2024.

 

Longer-Range LEAF Aims to Alleviate Anxiety

— July 1, 2015

At Nissan’s recent annual shareholder meeting, CEO Carlos Ghosn announced that the driving range of the LEAF battery electric vehicle (BEV) would be extended to 125 miles (200 km). The update is expected to reinvigorate sales of the LEAF in the United States, which fell by 25.5% during the first 5 months of 2015, according to hybridcars.com.

That BEVs have a shorter driving range than internal combustion engine (ICE) vehicles is one of the factors that has limited sales, as drivers on longer trips don’t want to have to worry about having enough juice to get to their destination. If the U.S. Environmental Protection Agency (EPA) gives the LEAF the proposed 125-mile range rating, that would be a boost of nearly 50% over the current 84-mile range. Since 125 miles is well beyond the range of most daily round trip commutes, more car shoppers would likely consider switching to a LEAF.

Ghosn also said the company has a prototype battery that could give the LEAF up to 310 miles of range, which would make it much more competitive with ICEs. Other BEV manufacturers, including Ford and General Motors (GM) are targeting a minimum of 200 miles of range for their next-generation BEVs to battle the upcoming Tesla Model 3.

According to Navigant Research’s Electric Vehicle Geographic Forecasts report, by 2018 (when several 200-mile range BEVs priced under $50,000 are expected to be available), annual sales of all plug-in electric vehicles (PEVs) are expected to have grown by 168% over 2015 sales.

Decoding the Data

The U.S. Department of Energy (DOE) is conducting a study to see how households with both LEAFs and ICE vehicles  apportion their driving miles. As previewed during the DOE’s Annual Merit Review meeting, the study will survey 37,000 consumers and study in depth the driving habits of 144 households. According to preliminary data from the study, 60% of LEAF households drive the BEV more than their ICE car, and the study looks to understand factors such as greater range or access to charging infrastructure that could increase electric miles driven.

BEVs are suitable for two-car (or more) households where the ICE is used for longer trips. However, the share of households with multiple cars (currently at 57%) is expected to steadily fall in the future as carsharing programs and other mobility services remove the need for a second car. According to the recently published Navigant Research report Urban Mobility in Smart Cities, participants in North American carsharing programs are expected to grow by 10% annually to more than 4 million by 2021.

 

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