Navigant Research Blog

Volkswagen Scandal Deflates Clean Diesel Image

— October 5, 2015

We finally have a more important scandal to discuss than air pressure in footballs. On September 18, the U.S. Environmental Protection Agency (EPA) laid out a case for a notice of violation against Volkswagen. The issue? Computer software within Volkswagen clean diesel vehicles that allows the cars to sense an emissions test and activate emissions controls. The vehicles then could easily pass stringent U.S. Tier 2, Bin 5 emissions standards. A Tier 2 vehicle must meet an average nitrogen oxide (NOx) emission slimit of 0.07 grams per mile. However, when the programmed vehicles were not under emissions testing, emissions controls were disabled and Volkswagen vehicles spewed up to 40 times that level of NOx emissions.

Immediate Impacts

In a matter of days, Volkswagen lost $17 billion in shareholder value as the company’s stock plummeted over 30%. Volkswagen recently became the largest car seller in the world, selling nearly 10 million vehicles globally in 2014. The automaker will face up to $18 billion in fines from the U.S. government and has also committed $7.3 billion toward recalling nearly 500,000 vehicles for the reprogramming necessary to comply with pollution standards. Volkswagen has also halted sales of affected 2015 models, and the EPA will not certify the company’s 2016 models.

While the U.S. market accounts for 6% of Volkswagen sales, the damage to the company’s environmentally responsible image is significant. Diesel vehicles account for over half of vehicle sales in Europe, and European government policies have made diesel fuels cheaper than gasoline. Emissions standards for diesels are also less strict in Europe compared to in the United States.

The U.S. Clean Diesel Market

Volkswagen TDIs represented nearly 30% of diesel sales in the U.S. market. Effective greenwashing campaigns by diesel automakers have created a reputation for diesel as a clean fuel source for our vehicles. Diesel has a higher energy density than fuel and diesel engines also operate more efficiently, so higher miles per gallon can be achieved. A clean image and a high fuel efficiency greatly increased the popularity of diesel models in the United States.

Whether arguing for or against diesel as a clean fuel source, it is important to discuss the emissions contents of diesel versus traditional fuel. Traditional fuel-burning vehicles give off higher yields of carbon monoxide and hydrocarbon emissions than diesel vehicles. These emissions are minimized by improved catalytic converter designs. Diesel vehicles emit more NOx, which in turn creates smog (ozone). The EPA is likely to take final action on stronger smog standards before the end of 2015. While diesel automakers utilize a variety of treatment systems to reduce NOx emissions, the Volkswagen scandal has significantly squashed the idea of diesel as a clean fuel source. How the public will respond to this breach of trust is yet to be seen.

Hybrid and Electric Vehicle Market growth

As the smog clears on the Volkswagen scandal, what opportunity is presented to hybrid and electric vehicles? As the image of clean diesel fades, the growing consumer base for fuel efficient and environmentally friendly vehicles is expected to turn toward hybrid and electric vehicles. With the disgrace of the country’s most popular diesel model and growing interest in electrification, the auto industry may soon see a significant restructuring.


Autonomous E-Bikes May Grow Ranks of Cycling Commuters

— September 3, 2015

Bikes_webBicycling safety seems to be gradually improving, as the number of people cycling to work in the United States is growing significantly while fatalities have remained relatively unchanged.

According to the latest American Community Survey executed by the Census Bureau, the number of workers who cycle to work grew from 488,000 in 2000 to about 786,000 in the years 2008–2012, for a 60.8% increase. Cycling as the primary means of transportation grew to 0.6%, while travel by private motor vehicle remained dominant at 86%.

Unsurprisingly, bicycling to work is most popular in larger cities, with Portland, Oregon retaining its spot at the top in the United States with 6.1% of all commutes done by bike. The United States trails bicycle commuting in Europe, where cities such as Hamburg are pushing to have 25% of all city trips completed by bike. The survey also found that men bike to work (0.8%) at more than twice the rate of women (0.3%).

Biking blog graphic

According to the National Highway Transportation Safety Administration (NHTSA), cycling deaths in crashes with motorized vehicles have been increasing over the past few years but haven’t kept pace with the increase in commuting. Approximately 743 cyclist fatalities occurred in 2013, which is up 1% from the year prior and is disappointing for safety advocates. Many cities are addressing safety by adding bike lanes and increasing outreach to drivers.

Electric Bicycles Keeping Pace

Electric bicycles (e-bikes) are expected to be part of the continued growth of cycling commuting trips. According to Navigant Research’s Electric Bicycles report, annual e-bike sales will grow by 76% between 2014 and 2023 to nearly 270,000 units in the United States. E-bikes can extend two-wheeled urban commuting beyond the current average of 19.3 minutes, as they can take over for weary legs on hills and aid cyclists to arrive more quickly than via pedal power alone.

An e-bike that could increase safety was premiered at August’s Eurobike conference by startup company coModule, as reported by Electrive. The Estonian company modified a Veleon electric cargo bike with autonomous driving features that can be remotely controlled via a mobile phone app. In addition to increasing the ability of cyclists to anticipate dangerous situations, the three-wheeled bikes could be used someday to deliver medical supplies to remote areas without the need for a driver.


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.


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