Foremost, more than 95% of the world’s transportation energy comes from fossil fuels, and the sector is responsible for 14-15% of global greenhouse gas emissions. By far the largest contribution comes from ground transportation, followed by air and then marine transportation, but the sector as a whole is under pressure to take climate action – and more so in the coming years, with a growing political focus on how to limit the sector’s climate footprint.

Furthermore, the sector is highly weather dependent – turbulence on the North Atlantic flight corridor could increase by 40-170% if carbon dioxide emissions double by 2050, as the International Energy Agency forecasts, which will inevitably lead to costs from wear and tear, damaged infrastructure and disrupted flights connections.

The regulatory landscape is about to become a considerable disruptor of the mobility and transportation sector, as government and international organisations slowly start to acknowledge the sector’s environmental impacts. Some nations are already pushing to phase out fossil fuel-powered vehicles – which are major contributors to air pollution and climate change – and incentivise electric vehicle use. Sixteen countries have already planned to ban fossil fuel car sales, most by 2030 to 2040, and major cities are following suit, with some even banning the use of petrol and diesel cars. More nations will most likely join, which will effectuate a surge in demand for EVs (which are forecast to reach full cost parity with fossil-fueled light vehicles in 2024), improved electric charging infrastructure, and alternative fuels such as biofuels and hydrogen for trucks and ships. There is even the possibility of overhead wiring on major roads for long-distance electric trucks.

Sixteen countries have already planned to ban fossil fuel car sales, most by 2030 to 2040, and major cities are following suit, with some even banning the use of petrol and diesel cars.

Cities are also reacting rapidly to growing climate issues related to land transport. One-third of greenhouse gas emissions from C40 cities come from transport, and cities such as London, Paris, Los Angeles, Seattle, Mexico City, and Tokyo, have already committed to creating zero-emission areas by 2030. This will induce a great transformation of the entire mobility sector – calling for new collective transportation solutions and for new carbon neutral land transportation.

For the maritime shipping industry, 2018 became a turning point, as it was the year that extensive climate regulations were finally introduced. A new international agreement by the International Maritime Organisation obliges the industry to cut carbon emissions by at least half by 2050. The International Air Transport Association has already passed laws and initiatives for reduction in aviation carbon emissions of 50% by 2050, relative to 2005 levels. To safeguard this ambitious target, a reduction and monitoring scheme has been launched that aims to stabilise carbon emissions at 2020 levels by requiring airlines to monitor emissions on all international routes and offset the growth of their emissions after 2020.

These goals will be hard to meet, given the fact that large growth rates in flight transport and shipping are projected due to the expanding middle class in emerging countries. The number of flight passengers are expected to reach 16 billion by 2050, a 384% increase on today’s numbers – a huge pressure on the climate, but also a huge opportunity for the companies pursuing sustainable solutions.

For the transportation sector, the business opportunities of the new market reality should be clear. The sustainable mobility market as a whole could unlock a staggering $4 trillion by 2030 according to the Better Business Better World report.

The sustainable mobility market as a whole could unlock a staggering $4 trillion by 2030 according to the Better Business Better World report.

In fact, the total market for sustainable mobility solutions – including public transport, circular models in the automotive industry, manufacturing of electric and hybrid vehicles, car sharing, new smart solutions etc. – is estimated to be $2 trillion annually.

The realisation that pursuing market opportunities as first movers carries massive advantages has gained momentum amongst some companies. EasyJet, the British-based budget airline, has pledged to develop a fleet of electric planes to cover short-haul routes of less than two hours by 2030, which would significantly reduce carbon emissions and noise from its operations: They are projected to be 50% quieter and 10% cheaper than traditional aircraft for airlines to buy and operate. Another example is the Volkswagen Group, that has made aspiring claims to have electric vehicles as good as Tesla’s for half the price by 2020 based on continuously growing consumer demand in global markets.