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2

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White Paper

Towards Low-Carbon Mobility

Using Economic Instruments

Michelin Challenge Bibendums publications

- Rouler Demain. Vers une mobilit routire durable, 2010, 142 p.

- White Paper for Safe Roads in 2050. Achieving Zero Work-Related Road Deaths, 2010, 120 p.

- White paper for Road Safety Investment. Making Business Case for Road Safety Investment to Achive

Sustainable Road Mobility, 2011, 234 p.

- Lets Drive Bio! Challenge Bibendum Booklets, 2011, 20 p.

- More Air! Challenge Bibendum Booklets, 2011, 31 p. - Lets Drive Electric! Challenge Bibendum Booklets,

2011, 24 p.

- Lets Drive Smartly! Challenge Bibendum Booklets, 2011, 24 p.

- Lets Drive Safely! Challenge Bibendum Booklets,

2011, 20 p. - Vers une mobilit bas carbone. Actes de la journe de

travail sur les enjeux conomiques de la mobilit bas

carbone, CEC-MCB, 2013, 122 p.

All publications are available for free at the following

address: www.challengebibendum.com

Climate Economics Chairs publications

All publications are available for free at the following

address: www.chaireeconomieduclimat.org.

You may download large size tables and figures at :

http://www.chaireeconomieduclimat.org/?page_id=3770

&lang=en

Bndicte Meurisse Claire Papaix Directed by Alain Ayong Le Kama

White Paper

Towards Low-Carbon Mobility

Using Economic Instruments

Follow-up to the one-day expert seminar on the issues of

low-carbon mobility organised in partnership between the

Climate Economics Chair and Michelin Challenge

Bibendum on 6 December 2012 in Paris

Michelin Challenge Bibendum Editions

27, cours de lIle-Seguin 92105 Boulogne Billancourt

About the Authors

Alain Ayong Le Kama is Professor of Economics at the

University of Paris Ouest Nanterre la Dfense and Head of

the Mobility in a low-carbon society Research Initiative

(IR3) at the Climate Economics Chair.

Bndicte Meurisse is a research fellow at the University

of Paris Ouest Nanterre la Dfense and is an associate at

the Climate Economics Chair (Mobility in a low-carbon

society Research Initiative, IR3).

Claire Papaix is a research fellow at IFSTTAR, the French

Institute of Science and Technology for Transport,

Development and Networks and is an associate at the

Climate Economics Chair (Mobility in a low-carbon

society Research Initiative, IR3).

ISNB : 978-2-9537120-8-7 EAN : 9782953712087

Michelin Challenge Bibendum 27, cours de lIle-Seguin 92105 Boulogne Billancourt France challengebibendum@fr.michelin.com

May 2013

7

Contents

Contents 7

Foreword 11

Acknowledgements 19

Introduction 21

1. Specific transport issues 27

1.1. An integrated approach to the complexity

of the transport system 27

1.1.1. Transport diversity 27

1.1.2. Multi-objective public policy instruments 28

1.1.3. Multi-externality impacts 30

1.1.4. Interdependent policies by sector 36

1.1.5. A multi-level decision-making process 37

1.1.6. A transport system with multiple stakeholders 40

1.1.6.1. Multiple public players 40

1.1.6.2. Multiple private players 42

1.1.6.3. Public-private cooperation 43

1.1.7. Economic and social impacts, an intelligent

economic calculation 45

1.2. Inertia in the transport system 49

1.2.1. Inertia in the decision-making process 49

1.2.2. Inertia due to infrastructures 50

1.2.3. Inertia due to technology 52

1.2.4. Inertia due to mobility behaviours 54

8

1.3. Factors influencing behavioural change

in the short and medium term 57

1.3.1. Shifting demographics 57

1.3.2. Shifting mobility offer 58

1.3.3. Shifting mobility demand 61

1.3.4. Shifting world geopolitics 65

2. Tools for making the transition to low-carbon

mobility 69

2.1. Tools at the urban level 69

2.1.1. In road transport 71

2.1.1.1. Urban tolls 71

2.1.1.2. Flow pooling 73

2.1.2. In waterway transport 74

2.2. Tools at the interurban level 75

2.2.1. Motorway tolls 75

2.2.2. Rail electrification 77

2.2.3. Investment in inland waterways 78

2.3. Tools at the national level 79

2.4. Tools at the international level 82

2.4.1. Road transport emission standards 82

2.4.2. Air transport 87

2.4.3. Marine transport 90

2.4.3.1. Energy efficiency standards for ships 91

2.4.3.2. Reducing ship cruising speeds 93

3. Working together to create the toolkit 97

3.1. A coordinated approach to carbon regulation 97

3.2. Creating carbon regulations in practice 102

3.2.1. Sharing experience at the local level 102

9

3.2.2. Consulting stakeholders on a wider scale 103

3.2.3. Lobbying practices 107

Conclusion 109

Appendix 1. Speakers at the expert workshop

on the economic stakes of low-carbon mobility 115

Appendix 2. Presentation of the London,

Stockholm and Milan toll schemes 119

Bibliography 123

Abbreviations and acronyms 133

11

Foreword

As we fast approach the hour of reckoning, when

stringent measures will have to be taken to stop the rise in

greenhouse gas emissions and urban pollution, this first

White Paper contributes to economic thinking on how to

generate real opportunities for sustainable growth and job

creation in all sectors of the transport industry.

The challenges are clear:

1. The human and economic development of a world whose population is rapidly rising cannot take place without

increasing the mobility of people and goods.

2. The reduction of greenhouse gas emissions required from 2020

1 onwards to meet (with a probability of 50%) the

objective of keeping to 2C the rise in global temperature

by the end of the century will force the transport industry

to adopt modes of operation and development very

different to the models we know today.

1 In 2015, the United Nations is due to announce "legally binding"

measures, to be applied in 2020, to achieve the target of 2C. But 2015 is

tomorrow!

12

3. Reducing congestion and noise and improving air quality in cities require new means of urban transport and the

vehicles to go with them.

4. The disproportionate weight of transport-destined oil imports in the trade balance of very many countries is

also a factor of instability to be addressed.

5. The massive development of alternative solutions to the "internal combustion engine + petroleum" combination

and of new infrastructures such as Intelligent Transport

Systems and smart grids demands significant funding,

and new means.

Meeting these major challenges requires public policies,

standards and regulations, technological advances and

appropriate economic tools. But what tools? And to what

purpose? That is the focus of the work initiated with this

White Paper which therefore goes well beyond the "low-

carbon" commitment in seeking to promote forms of

mobility which are modern and dynamic.

We have no choice. Today, the transport sector represents

nearly 25% of world energy consumption, 95% of which is

based on the use of petroleum products with all their

attendant externalities greenhouse gas emissions, local air pollution, noise, problems of road safety, congestion, etc.

Moreover, there are strong interactions between these

externalities.

The action we take will be determined by taking into

account four realities:

1. The mobility ecosystem faces enormous changes,

which are different in nature but all of high intensity. In

13

this foreword, I will select two categories about which

there is little uncertainty:

a. Demographic and socio-economic transformations:

- Population growth will mainly take place in cities, some of which have already reached saturation today.

In Europe, the cost of congestion will increase by

50% between now and 2050, reaching almost 2

billion Euros a year if nothing is done.

- A growth in average incomes in the most populated countries of the world, which will considerably push

up the demand for mobility in China, India,

Indonesia, African countries, etc., and which will

lead us to imagine a mobility that is cheaper and

more widely available.

b. Changes in mobility behaviours linked to the arrival on the market of new "connected" generations, or

growing numbers of "senior citizens", or even the

appearance of new offers corresponding to latent

mobility demands.

These behavioural changes already lead the

ecosystem and its players to become less interested in

the ownership of a vehicle and more and more in the

use which can be made of the vehicle, in the new

economic models it makes possible, and in demands

for transport which is safer, better connected, better

available, better adapted to each kind of use and

which better respects the environment.

14

2. To face these major changes, we have at our disposal

some powerful tools:

- New Information and Communication Technologies which, among other things, should enable us to make

intelligent and discriminating use of the appropriate

economic tools. For example, the "polluter pays" rule

and taxation differentials based on location, time of

day and type of vehicle which allow us to better

target the negative externalities of transport. We also

have more sophisticated business models such as the

flow pooling of goods traffic in cities so as to combat

its effects more rationally.

- Innovations in technologies (vehicle and tyre) which reduce harmful emissions while improving safety,

and also new public policies, standards and

regulations which are giving an impulse to the

changes we hope for.

3. The phenomena to be dealt with are complex and

strongly interrelated.

Should we regulate at the European level, nationally or

locally?

You will notice that our research community is

particularly interested in what can be done at the local

level. Principally, because local externalities such as

congestion, noise, particle emissions, and road accidents

are more numerous and closer to people's daily concerns

than global externalities, of which CO2 emissions are the

most important.

We also need to take account of the very many "lock-

in" effects. For example, improvements in the

15

environmental performance of the internal combustion

engine are pushing back the date at which electric

transport will become viable.

A drastic reduction in CO2 emissions will only be

possible if the systems of production, distribution and

consumption and practices relating to housing also

change, and that adds to the complexity.

Moreover, we are faced with strong inertia due to the

long development and maturity cycles of certain new

vehicle technologies and transport infrastructures which

are only profitable in the very long term.

4. It is therefore legitimate and necessary to think in a

systemic fashion and in consultation with all the

private and public players united in a single

Community of Interest.

This is the very reason for our research initiative on

low-carbon mobility.

Progress in mobility which takes into account the issue

of climate change cannot be achieved without the

involvement of all the stakeholders, and private

enterprise in particular.

Measurement of the possible impacts of the climate

policies envisaged often depends on the initial

assumptions which are made about the movement of oil

prices, the discovery of new resources such as shale gas

and the use of gas in the transport sector, the dates at

which new technologies will arrive on the mobility

market, etc.

16

That is why we also need to share a common vision

and agree on the assumptions and key success factors.

The objective of the European 2050 roadmap is

ambitious: just in the transport sector, to reduce

greenhouse gas emissions by 60% compared to 1990. We

will not achieve this objective without full cooperation

between all parties manufacturers, experts in information and communication technologies, public

authorities, universities, etc.

The aim of this first Community of Interest is to invent

new forms of partnership between the players, to share

the results of experiments conducted worldwide and to

propose new action plans (see Green Paper to be

published mid-2014). In short, a Community of Interest

in which you are all warmly invited to take part.

Finally, I would not like to end this foreword without

mentioning a few success stories and concrete actions some

of which figure in this White Paper and which will, I am

sure, encourage you to read on.

- "Green growth" areas in Chicago, (in China in the Pearl River delta with its 95 million inhabitants and 11 mega

cities, or in Europe, the Randstadt in the Netherlands, the

Rhine-Ruhr conurbation in Germany and the Stockholm

region) which are developing new forms of governance

regarding low-carbon mobility.

- A net reduction of 10% in CO2 emissions thanks to a motorway toll scheme set up in Germany, despite the fact

that the original objective was to fund infrastructures

rather than to improve the carbon footprint.

17

- Motor manufacturers for whom the CO2 component is already a selling point.

- The SNCF which is considering how to make productive use of travel time.

- A major oil producer who draws our attention to the alternative energies which can already be used.

- As cities sprawl outwards, the French Post Office (La Poste) has to cover greater distances and organise more

rounds to deliver letters and parcels. Volumes are

growing as e-commerce develops. And yet, those extra

rounds are not increasing CO2 emissions because they

are saving individuals from having to travel to purchase

the goods.

- And many other university studies and analyses...

This White Paper will have fulfilled its purpose if it helps

each of us to better anticipate the changes facing us, to ease

the transition to sustainable mobility and to find in it sources

of opportunity and innovation.

Erik GRAB

Director Strategic Anticipation

Michelin

19

Acknowledgements

We sincerely thank: Yves Baron (PSA Peugeot Citron),

Virginie Boutueil (Climate Economics Chair and Ecole

Nationale des Ponts et Chausses), Vanessa Chocteau

(Greenovia), Yves Crozet (Transport Economics

Laboratory), Bruno Costes (EADS/Airbus), Franois

Cuenot (International Energy Agency), Michael Fanning

(Michelin), Pierre Franc (French Ministry of Ecology,

Sustainable Development and Energy), Erik Grab

(Michelin) Pierre-Andr Jouvet (Climate Economics Chair

and University Paris Ouest Nanterre La Dfense), Sir David

King (Smith School of Enterprise and the Environment,

Oxford University), Martine Liotard (Ile-de-France Urban

and Territorial Planning Agency), Sylvie Moulet (EDF),

Jincheng Ni (SNCF), Patrick Oliva (Michelin), Akshay

Patki (European Commission), Antoine Person (Louis

Dreyfus Armateurs S.A.S.), Christian de Perthuis (Climate

Economics Chair and University Paris Dauphine), Marco

Ponti (Polytechnic School of Milan), Emile Quinet (Ecole

Nationale des Ponts et Chausses), Kulveer Ranger (Serco

Group), Arthur Reijnhart (Shell International), Werner

Rothengatter (University of Karlsruhe), Phlippe Schulz

(Renault), Pierrick Travert (Michelin), Kurt Van Dender

20

(International Transport Forum/Organisation for Economic

Co-operation and Development) for their in-depth

contribution to the subjects discussed in this White Paper.

21

Introduction

In 2010 intra-European freight transport attained

3,831 billion tonne-kilometres. It grew by 1.5% annually in

the period 1995-2010 and, after a downturn in 2008 due to

the economic crisis, by 5.3% between 2009 and 2010

(European Commission, 2012). Road transport accounts for

nearly half of the traffic (45.8%), followed by shipping

(36.9%), while inland waterways, railways and air transport

share the last fifth. During the same period, passenger

transport grew by 1.3%, but fell more sharply between 2009

and 2010. It is estimated that in 2010 it reached 6,424 billion

passenger-kilometres, an average of 12,869 kilometres per

person. The car once more takes the largest share at 73.7%2.

However, road transport gives rise to a number of

externalities. In 2009, road transport was responsible for

72% of CO2 emissions produced by the transport industry,

which itself accounts for 25% of total CO2 emissions in

Europe. During the period 1990-2006, CO2 emissions due to

transport rose by 26% whereas in other sectors emissions fell

(EEA, 2011). Road transport was also responsible for 34,814

2 Excluding cars, the distribution of passenger transport in Europe in

2010 was: air 8.2%; bus and coach 7.9%; rail 7.7%, including tram and

subway 1.4%; motorised two wheel 1.9%; maritime 0.6%.

22

deaths and is at the origin of the majority of traffic-linked

local pollutants.

The same ratios can be observed in France, where

transport is the primary economic sector in terms of energy

consumption, amounting to 49.8 million tonnes of oil

equivalent (Mtoe) in 2009, or 31.9% of consumption, and

greenhouse gas (GHG) emissions, representing 132 Mtoe of

CO2 in 2009, or 25% of emissions (MEDDE, 2013a).

Moreover, transport is the only sector where CO2 emissions

have risen since the 1990s. The fall in emissions which

started in 2004 is not enough to offset the 19% increase

observed between 1990 and 2004 (MEDDE, 2013a).

And yet, for the most part, these emissions are not

covered by the traditional economic instruments of carbon

regulation, except for a few initiatives to put a carbon tax on

road vehicle fuel, in Denmark, Finland, Norway, Sweden,

Switzerland and British Colombia, and also under discussion

in France (OECD, 2012), or the postponed project to include

aviation in the European Union Emission Trading System

(EU-ETS). Stringent objectives have been defined for

Europe and France. Indeed, a potential for reducing

greenhouse gas emissions by 60% in the transport industry

has been identified by the European Commission as part of

its roadmap for 2050 (European Commission, 2011a), and,

in France, a national reduction objective of 20% by 2020 has

been laid down by the Grenelle I legislation (JORF, 2009).

And at a local level, the Grenelle II legislation also provides

for the mandatory evaluation of CO2 savings by creating an

Urban Mobility Plan (PDU) which from 2015 will cover the

emission of other greenhouse gases (JORF, 2010).

23

To introduce the right economic signals, change the

travelling practices of individuals, who are at the very least

constrained by their travel requirements, and thus reduce

greenhouse gas emissions from transport, economic theory

offers public policy makers a number of levers and tools. But

these instruments remain extremely theoretical. When

applied to the problems of mobility in the real world they do

not have the same effectiveness nor the same relevance as

the theoretical models predict. In practice in fact, reducing

greenhouse gas emissions in different transport activities

raises particular issues, which will be covered in the first

part of this paper, and requires a more detailed analysis

covering at the same time the source of the emissions, the

tools, their field of action, the appropriate application level

of the regulatory instruments and the possible forms they

might take.

The general philosophy guiding the work of this White

Paper, and more widely the work of the Community of

Interest created as part of the "Mobility in a low-carbon

society" research initiative launched by Michelin and the

Climate Economics Chair (CEC), is the shared conviction

that a drastic reduction in CO2 emissions linked to the

transport of people and goods will be one of the structural

shifts in the transport system. More directly, our key

message, which goes against a certain number of received

ideas, is that there will be no salvation for the players of the

transport industry without giving more value to outside

environmental factors, and to carbon in particular. As a

consequence, to anticipate these shifts and the public policy

instruments which will trigger them will enable the industry

players to transform what seem today constraints into as

many opportunities for innovation and growth.

24

We know however that there is no miracle solution to

meet all the objectives of sustainable mobility at the same

time, especially as these objectives are applied locally in

very different ways from one country to another. But it is

important to reflect because, given the urgency, the choices

of societies and governments have to be made today. On the

other hand, we also realise that there is a significant source

of potentially profitable and sustainable investments in

hybrid vehicles, rail electrification, etc. which is not yet

tapped because of the barriers and shortcomings of the

market, such as the very considerable inertia that

characterises the transport system and a form of irrationality

inherent in the supply behaviours of the industry.

The chief aim of this White Paper is to analyse the

economic instruments, the toolkit, available to the public

authorities to regulate the environment (see the second part

of the paper). The regulations have, and will continue to

have in the future, a significant impact for all stakeholders in

transport. The main focus is thus on enabling the players of

the industry, public and private, by understanding the

expected impacts of these instruments and their

effectiveness, to better anticipate future changes, and thus for

some to put into effect the policies and measures which will

give impulse to the transition towards sustainability mobility,

and for others to find the opportunities and sources of

innovation. Building in harmony, consulting and sharing

with the different stakeholders of the industry, discussed in

the third part of the paper, could turn out to be a real

driving force in transforming and creating value in the

industry in the pursuit of sustainable mobility. It appears as

the only way to create "win-win" development in the

industry.

25

It is however important at this stage to point out that if we

have deliberately chosen to call this document a White

Paper, it is because we are conscious of the complexity of

such an exercise. So its objective is not to provide turnkey

solutions for all players, and even less, as some would wish,

fully operational solutions, which would make no sense

scientifically, but to bring to light the main issues in

sustainable mobility. It is also to show how in this

perspective the different forms of regulation could be

deployed at the same time to different modes of transport --

road, rail, sea, air, waterway, etc. -- and at different

geographical levels -- urban, interurban, international, etc.3--.

Emphasis will be placed on mobility in the urban

environment, because it is precisely at this level that all the

questions concerning low-carbon mobility come together:

CO2 emissions and climate change issues but also

externalities such as congestion, local air pollution, road

accidents, noise, etc.

It is also the priority level for action in the present world

context of rising urbanisation seen in the majority of

developed countries since the end of the 1990s. In France at

that time, 77% of the population was already living in urban

areas. Furthermore, this White Paper will concentrate on

road transport, as this is the sector responsible for the

majority (94%) of greenhouse gases released by the transport

industry (MEDDTL, 2011).

3 A Green Paper is planned for mid 2014. It will contain the first

proposals for solutions arising from research conducted within IR3 and

the CEC in general and will make international comparisons.

27

1. Specific transport issues

A particular feature of the transport system is its extreme

complexity. It has multiple objectives, multiple externalities,

multiple sectors, multiple levels and multiple players. This

complexity creates problems when it comes to implementing

public policies in the sector and requires, at the very

minimum, an integrated, cross-functional vision.

1.1. An integrated approach to the complexity of the transport system

1.1.1. Transport diversity

A study of the transport system can cover on the one hand

the transport of goods and/or passengers and on the other the

different modes of mechanised transport (road, rail, air, river,

sea), considered as a whole (see the urgent issue of

multimodal and intermodal transport) or individually. The

situation is even more complex at the urban level. Firstly, the

means of transport can be broken down more finely, for

example, bus versus passenger car for road transport, tram

versus subway for rail transport, and secondly the non-

mechanised transport modes of cycling and walking have to

be added to the equation.

28

"Average emissions of CO2 per kilometre differ from one

mode of transport to another (for example, emissions by

tonne-kilometre travelled are on average 20 grams for

marine transport as against 100 grams for road transport) and

also between different activities within the same mode (for

example, in marine transport, long-distance bulk and

container shipping generally releases less than 15 grams of

CO2 per tonne-kilometre, whereas road transport generally

releases more than 50 grams)" (Excerpt from the address by

Pierre Franc, French Ministry of Ecology, Sustainable

Development and Energy, MEDDE).

Moreover, the interchangeability of transport modes

differs according to whether it is passengers or goods which

are being carried, and also according to the kinds of goods

being carried. For example, required delivery times are not

the same for fresh produce as for textiles.

In a very general way, these initial elements illustrate the

complexity of studies of the transport system and of the

sources of its environmental impacts.

1.1.2. Multi-objective public policy instruments

One of the main objectives of this White Paper is to

discuss the instruments of environmental regulation. To

ensure the effectiveness of a public policy in an optimal

situation, Tinbergen (1952) associates a regulatory

instrument to each objective pursued. However, in reality 3

situations are often encountered.

The first situation can be summarised as the "fiscal

paradox of environmental taxation" whereby revenues

disappear or diminish considerably as the tax becomes fully

effective. It is the example of the carbon tax on fuel whose

29

aim is to reduce CO2 emissions from fossil fuels. Its prime

objective is solely environmental and must remain so, but the

revenues it produces tend to decline when transport practices

evolve, for example the switch to biofuels, power unit

changes or simply reduced energy consumption linked to

travel restraints or more efficient energy use.

Figure 1. Diversity and frequency of

pricing differentiation objectives

(Cases studied by DIFFERENT)

Source: CGDD (2009)

In the second situation, a single instrument can serve

several objectives (Bennear and Stavins, 2007). As an

illustration, transport price differentiation can at the same

time meet the objectives of covering costs (in first place in

30

the cases studied by DIFFERENT4), of economic efficiency

(second), of environmental protection (third) and of reducing

congestion (fourth) (see Figure 1). Multiple objectives can

thus be pursued at the same time by a single instrument,

more precisely between one and ten in the cases studied by

DIFFERENT.

In the third situation, several instruments can serve the

same objective and that is one of the principal messages of

this work. Indeed, the impacts of the instruments cannot be

separated one from another, or, in other terms, the effects of

different policy measures are not cumulative. These policies

have thus all to be approached at the same time. The effects

of one policy can cancel out another, which reduces the

global effectiveness of the system. But one policy can also

amplify another in such a way as to increase effectiveness

globally. One of the main messages of this White Paper is

to draw attention to the fact that it is absolutely necessary

to approach the impacts of environmental policies in the

transport sector simultaneously and endogenously, in

particular when it comes to the urban environment.

1.1.3. Multi-externality impacts

That an instrument can pursue several objectives is partly

due to the fact that transport, particularly in densely-

populated areas, brings into play a series of externalities,

positive and negative.

4 Research project funded within the 6

th EU Research Framework

Programme, User reaction and efficient DIFFERENTiation of charges

and tolls 2006-2008

31

Of the external benefits of transport systems, which are

harder to measure than the negative factors, the most often

cited are: economies of agglomeration (that is to say gains of

competitiveness and effects on innovation and employment

which come from the development of transport networks

enabling businesses to be located near to each other), the

redesignation of buildings or the "Mohring effect", that is to

say the increased returns on public transport investment.

Additionally, investing in public transport gives the local

authority concerned specific assets for endogenous growth

(Pittel and Rbbelke, 2010) which are especially useful in a

situation of heightened territorial rivalry. Indeed, increasing

public transport capacity in an area can, for example,

encourages new businesses to locate there and creates

growth. However, increasing the attractiveness of an area

can induce higher taxation to fund the initial investment

which has the opposite effect, that is to say a loss of

attractiveness in the longer term.

Figure 2 illustrates the interactions (self-augmenting or

self-reducing effects) between the negative externalities of

urban mobility. It will be seen that on this scale all the

externalities are interrelated, so that it is impossible to only

target one of them. This calls into question the expectations

of standard economic theory which holds that for each

imperfection of the market, each external factor, there should

be a single regulatory instrument.

In connection with what has been said on the different

ways of coordinating the instruments and objectives of

public policy (see 1.1.2 above), combining the so-called

"bottom-up" tools can affect the travel behaviours of users

over time (changing the time of travel, the number of

passengers, the equipment, the mode, etc.) and in space

32

(relocation, etc.) and thus ultimately alter all the externalities

of the urban mobility system (congestion, problems of road

safety, illness and death, noise, etc.) and in particular the

level of CO2 emissions.

Figure 2. Interactions between the negative

externalities of urban mobility

Source: Hran, 2011

"Taking into account this system of interactions between

the negative externalities generated by urban mobility (see

Figure 2) and investigating the common benefits in terms of

reducing CO2 emissions which could be created by

activating the usual levers of urban transport policies are of

particular interest to local policy makers" (Excerpt from the

address by Claire Papaix, French Institute of Science and

Technology for Transport, Development and Networks,

IFSTTAR).

33

Acting for the climate at the level of urban mobility and

taking into account simultaneously all the effects produced

by the action reinforce the social benefits of the action,

whereas if the action had been considered in isolation, it

would have been of no interest to the policy maker. Indeed,

CO2 emissions often seem to be the least of the planner's

concerns when estimating the costs and benefits of an urban

transport project. In 2012 they represented, for example, at

2009 rates, 0.45 Euro cents per passenger-km in high density

areas compared to other external costs, and in particular to

congestion, whose cost is evaluated at 16.6 Euro cents per

passenger-km (see Table 1).

Table 1. Evaluation of the external costs of passenger

transport (France, 2012. Euro cents at 2009 rates per

passenger-kilometre)

Urban

dense

Urban

sparse

Rural

Environment 2.24 1.17 0.74

CO2 0.45 0.45 0.29

Local air pollution 1.15 0.62 0.44

Noise 0.64 0.1 0.01

Lack of safety 4.75 1.83 1.14

Congestion 16.6 2 1.19

Infrastructure use 0.57 0.57 0.37

Total 24.2 5.6 3.4 Source: CGDD (2012)

34

Figure 3. External costs of car usage

(27 countries of the EU, 2008)

Source: Dpartement des sciences des transports, Institut de la

planification des transports et du trafic routier, 2012

(Technishe Universitt Dresden, 2012).

On the other hand, if the situation is examined at the

European level, the external road-related cost values are

much less varied. As an illustration, figure 3 breaks down the

external costs specifically linked to car usage in Europe. It

can thus be seen that the costs associated with climate

change and road accidents are of the same order of

magnitude and that they represent the largest share, greater

than the costs of atmospheric pollution. Moreover, the total

costs to the community associated with car usage for all

countries amount to 373 billion Euros, or 750 Euros a year

for each resident of the European Union (Technishe

Universitt Dresden, 2012).

35

Figure 4. Local authority coordination of

transport organisation and urban planning

Source: CERTU (2011)

Even before introducing innovation to the measures

applied, and especially to the way they are evaluated, the

main challenge for the policy maker in promoting low-

carbon urban mobility solutions is that of the opacity and

inertia of decision-making processes. Using the example of

the Urban Mobility Plan (PDU), figure 4 shows the complex

hierarchical relationships between city planning documents

and highlights the problem of sharing competencies and

responsibilities between players. The absence of integration

36

between city planning documents is in large part the source

of serious inefficiencies standing in the way of the objective

of evolving urban mobility towards more sustainable

transport systems.

1.1.4. Interdependent policies by sector In the current situation of marked urban growth in the

regions, transport policies are not alone in looking for

existing benefits at the local level (see the specific

endogenous growth assets mentioned above). Housing,

shops, offices, etc. are seeking to cohabit in city centres, to

such an extent that "short-distance" cities (Taveau, 2013)

will only be able to develop if, on the one hand, the place of

the car at the heart of the city becomes less important and, on

the other, if all citizen-focused activities, that is to say shops,

universities, housing, transport, offices, etc. are relocated.

More generally, the interdependence of public transport

policies and policies in other sectors creates a major

challenge for public policy makers, in France as in other

countries. For example "in 2000 in the United Kingdom, the

Labour Party then in office wished to make the reduction of

CO2 emissions a priority through a 10-year Transport Plan.

They ran into difficulties because they had to take account at

the same time of different transport modes (road, air, sea), of

urban development policies and of energy policy, within

inappropriate administrative boundaries" (Excerpt from the

address by Sir David King, Smith School of Enterprise and

the Environment, Oxford University). In other words, "it is

important to consider the transport system within its

environment, that is to say take into account all the market

mechanisms and government decisions which can affect

transport supply and demand" (Excerpt from the address by

37

Kurt Van Dender, International Transport Forum, ITF). In

the same way, "we consider that a drastic reduction in CO2

emissions will only be possible if production and distribution

systems and living styles evolve together in a rational and

coordinated way" (Excerpt from the address by Maurice

Bernadet, Transport Economics Laboratory - LET).

Against this background, local authorities are invited to

coordinate their transport policies with urban development

policies, housing policies and economic development

policies (see Figure 4).

In France, policy-making areas are less

compartmentalised since the passing of the Chevnement

law in 1999 and the creation of Urban Transport Authorities

(AOTU). In spite of this, "with regard to sustainable

development, it is still difficult to coordinate, for example,

the energy savings of an eco-neighbourhood and the

reduction of car traffic, or the rational development of

geothermal energy, within a larger scope" (Excerpt from the

address by Martine Liotard, Ile-de-France Urban and

Territorial Planning Agency, IAU).

1.1.5. A multi-level decision-making process

Beyond the necessary coordination of public policies by

sector, transport policies also need to be coordinated

mutually. In France, "one of the major issues of public

policies on transport comes from the governance models.

The uncertain vertical coordination by the public authorities

(see Box 1) hinders the implementation of economic and

environmental policies (planning contracts, 2009-2010

recovery plan, commitments made at the Grenelle

environment summit, etc.) and responses from the private

38

players in the transport system. However, new tools (Agenda

21s, climate plans, etc.) are beginning to bring together

experimental actions" (Excerpt from the address by Martine

Liotard, IAU Ile-de-France).

This division of responsibilities for transport, and notably

the transfer of transport management to the local level

(municipalities or groups of municipalities), leads to the

widely different situations which, for example, motor

manufacturers have to face. "A global manufacturer is

confronted with decisions that are inconsistent, in time and

in space. A good example is that of Low Emission Zones

(LEZs). The cities of Europe are free to define their solutions

(geographical scope, for example) and their LEZ criteria

(vehicles concerned, EURO norms, etc.). The motor

manufacturers, as solution providers, can be faced with very

different requirements, that is to say a set of constraints

which are inconsistent from one place to another" (Excerpt

from the address by Yves Baron, PSA Peugeot Citron).

Box 1: Examples of difficulties caused by lack

of coordination between stakeholders in establishing

low-carbon transport policies

Example 1. In France, the French Biofuels Plan (Bordet et

al. 2006) sets a minimum objective for biofuel content in

fuels of 7% for 2010 and 10% for 2015. These objectives are

more ambitious than those defined in the European

Commission Directive on the promotion of biofuels

(2003/30/EC) which are 5.75% for 2010 and 10% for 2020.

These differences between the standards on the minimum

biofuel content make the distribution strategy of

39

international fuel suppliers more complex as they have to

meet two different specifications. Meeting the two standards

in the same production unit entails additional costs, notably

inventory and transport costs.

Figure 5. Division of responsibility for a typical highway

Source: LMCU Lille Mtropole Communaut Urbaine (2007)

Example 2. In France, 3 tiers of local government share

responsibility for transport since the domestic transport

framework (LOTI) legislation of 30 December 1982: the

municipalities or groups of municipalities, the dpartements

and the regions. As an illustration, the region is responsible

for organising the Regional Express Rail (TER) network, the

dpartement is responsible for interurban public transport

and municipalities or groups of municipalities are

responsible for urban public transport. This division of

powers can lead to problems of coordination between the 3

transport authorities, notably an inadequate handling of the

exchanges between modes, in space and in time, and a

decline in usage. A second illustration could be the

distribution of responsibilities for highways (see Figure 5).

40

1.1.6. A transport system with multiple stakeholders

1.1.6.1. Multiple public players

At the different levels of mobility management, urban,

interurban and national, are to be found a large number of

players. They can be local authorities (municipalities and

groups of municipalities, dpartements and regions) or

public bodies and establishments. The examples below,

taken from road, rail and waterway transport, are intended to

show how complex is the coordination needed between these

players to actually implement low-carbon transport systems.

In France, as figure 4 shows, within a given geographic

area (for example the PTU or scope of the Urban Mobility

Plan (PDU)) there are myriad public stakeholders with

different fields of responsibility (Krattinger, 2012). Under

the domestic transport framework legislation (LOTI) of

1982, the urban transport authorities (AOTU) are responsible

for drawing up the Urban Mobility Plan (PDU) for the

corresponding perimeter or PTU. They bring together the

municipalities, groups of municipalities and public sector

transport agencies, but also consult the dpartements and

regions, who are themselves responsible for organising

interurban public transport.

The creation of an Urban Mobility Plan (PDU) requires

consultation with the municipal councils, conseils gnraux

for the dpartements (before a decree is issued by the

prefect) and regional councils, as well as with the local

population through public enquiries.

At the interurban level, the region is responsible for the

organisation of regional road transport services, that is to say

41

regular non-urban road services covering the region and

coach services replacing rail services which are also part of

the Regional Express Rail (TER) network.

Regarding rail transport, intercity and national services

are less obviously decentralised. The State still retains a

marginal management role in what has not been transferred

to the SNCF (see the decree of 1983) or the regions.

Since 1 January 2002, the region is responsible for the

organisation of regional passenger transport. The region,

which now possesses the technical experience and strategic

and financial5 expertise, focuses on the planning, pricing and

quality of services and information to travellers whereas the

SNCF as sole incumbent operator runs the trains. An

agreement has been signed between the regions and the

SNCF for the operation of rail services which cross their

respective boundaries of responsibility, that is to say services

which have both a national and a regional interest. This is the

case, for example, of regional trains which run on the

national rail network.

Since 2009, new players in the form of Local Rail Operators

(OFPs) have taken a share of rail freight (MEDDE, 2012a) to

promote short-haul goods traffic in local areas and ports.

Working alongside the principal railway operators, these

small- and medium-sized rail firms convey, for example,

long-distance bulk goods to an interchange point (delegated

infrastructure management).

5 The financial burden supported by the regions is considerable. That is

why the State gives them a subsidy of nearly 2 billion Euros to cover the

operating costs of the TER regional express network (Krattinger, 2012).

42

Begun in 2009, the construction of the Seine-Nord Europe

Canal linking the Oise river to the Dunkerque-Escaut canal

illustrates the initial public coordination between

governments and state operators (in the case of France,

French Inland Waterways Authority (VNF) and French

Railways Infrastructure Operator (RFF)) for the

modernisation of the waterways network in this region and

the transfer of road freight to the railways and waterways

(see MEDDTL, 2011 and Seine Nord Europe, 2013).

However the project was put on hold in 2012 because the

public authorities in the 3 countries concerned (France,

Belgium, the Netherlands) are struggling to overcome the

problems of funding and raise the expected amounts of

private capital (see the Competitive Dialogue engaged in

2011with Vinci-Eiffage and Bouygues Construction; Actu-

Environnement, 2012). Increasing the contribution of local

authorities remains one of the priority solutions, with the

start of discussions with Europe, notably for recourse to

"project bonds" granted by the European Investment Bank.

1.1.6.2. Multiple private players

Today's mobility players are more and more diversified.

For example, certain players in the new Information and

Communications Technology (ICT) sector are penetrating

the transport sector, in the footsteps of Orange whose

reasoning is close to that of a transport operator. "New

information and communication technologies enable us to

measure personal mobility. This capacity to measure

personal mobility in detail is a response to the problem of

stowaways which for transport is a major economic issue"

(Excerpt from the address by Jean-Marc Josset, Orange).

43

Moreover, the mobility players, and more especially those

from the motor industry, are diversifying their activities. As

an illustration, starting in 2006, the Italian car body maker

Pininfarina developed its manufacturing activity to produce

small series for Ford and Alpha Romeo (Normand, 2012)

before becoming the manufacturer of the BlueCar for

Bollor. It is also the example of the tyre manufacturer

Michelin which has produced a motorised wheel comprising

the electric motor, the gearing and the braking system. This

last example also shows that the modern motor industry is

creating its own definition of modularity6. These first 2

trends mean that an increasing number of players are

affected by measures aimed at a particular market.

In addition, the development of mobility services has seen

the emergence of new players such as vehicle rental firms.

Short-term car-sharing networks are developing, for example

in Paris with Autolib' which is the first car-sharing network

to use electric vehicles exclusively. It was launched in

December 2011 by the Bollor group in partnership with the

city of Paris. But there are also long-term rental networks,

generally limited to businesses. This is a market covered, for

example, by LeasePlan in which Volkswagen has a 50%

holding. (LeasePlan, 2013).

1.1.6.3. Public-private cooperation

Whereas the public players on the one hand and the

private players on the other are more and more numerous,

the 2 are increasingly associated through Public-Private

Partnerships (PPPs) to provide mobility services and thus

6 Modules are macro components, physically compact multifunctional

blocks (Volpato, 2004)

44

share their resources and their competencies as well as the

associated risks. The European Commission Green Paper on

PPPs distinguishes between Public Service Delegation

Contracts (DSPs) and partnership agreements.

The DSP is a widely used instrument. Motorway

concessions in France are a good illustration. Since

31 December 2011, 8,798 km of motorways have been

sourced to 18 motorway and bridge operating companies in

20 concession contracts (MEDDTL, 2011b). The concession

allows the State to delegate funding, building, operation and

infrastructure maintenance to the operator. The Directorate-

General of Infrastructures, Transport and the Sea of the

French Ministry for Sustainable Development is responsible

for drafting and administering concession contracts and for

verifying that the operator meets obligations (MEDDE,

2012b). The verification is all the more important because

the quality of service to users is the condition upon which

the toll charges, which the operator's source of revenue, are

accepted by the users. In the event of a breakdown in the

contract, the State would take back the concession with a

resulting cost for the taxpayer. (MEDDTL, 2011b).

Concerning partnerships agreements, judicial decisions

(Tribunal des Conflits 2013)7 have obliged Mixed Economy

Companies (SEMs)8 to invite tenders when they act on

behalf of a public body, most often to operate a public

service. "In association with the public authority, the private

operator brings his operating expertise, his management and

financial resources to create synergies for innovation" says

7 Tribunal des conflits, entreprise Peyrot, 8 July 1963, arrt n 01804

8 Socits d'Economie Mixte, private companies whose capital is held by

one or more public authorities

45

Francis Chaput of Transdev (Mobilicits, 2013a). It is worth

noting that since its merger with Transdev, Veolia, the

historical leader of the mixed economy in transport, has

inherited some 20 SEMs. Moreover, in early 2012, the SNCF

created a new subsidiary, SNCF Partenariat, which has

already won a partnership contract with the railways of

Corsica and won the bid for the urban transport systems of

Metz, with Keolis, and more recently Strasbourg.

Lastly, public procurement allows public authorities to

call upon the expertise of the private sector. In 2011, a

buying consortium led by the French Post Office (La Poste)

and coordinated by the French Central Public Purchasing

Office (UGAP) enabled the 20 partner members to purchase

electric vehicles at a price comparable to internal combustion

vehicles (AVERE, 2011). Using public procurement, in this

case via a competitive dialogue procedure, presented a

challenge for the members of the consortium like La Poste

which are not usually obliged to use public procurement.

1.1.7. Economic and social impacts, an intelligent economic calculation

Mr Boiteux emphasised that "a cost/benefit analysis

remains the best way of measuring the effectiveness of

public policies by allowing the figures to be compared and

an evaluation made of how a policy uses economic and

environmental resources" (Bureau, 2003). Since the passing

of the domestic transport framework legislation (LOTI) in

December 1982, the theoretical socio-economic profitability

of major projects has to be evaluated and the results

published before authorisation is given to launch the project.

46

These major projects can be grouped under the heading of

"transport services" and classified in descending order of

materiality: traffic, access or parking infrastructure, a vehicle

(except when operating), different consumables (energy) and

driving, guidance and flow management services (Leurent,

2012).

Following the introduction of a new transport service or

its modification, the "well-being" (labelled profit) of the

service provider and also of the user of the service (labelled

utility) varies. In theory, the a priori public economic

calculation should precisely take into account these

variations in well-being or "producer and consumer surplus".

However, in practice, to be integrated into the evaluation,

these variations in producer and consumer surplus have to be

modelled and simulated (Leurent, 2012). It should be noted

that among all the elements that make up the producer

surplus on the one hand and the consumer surplus on the

other (listed below) very few are actually taken into

consideration in the economic calculation.

The potential increases or decreases of the producer

surplus following the creation or modification of a transport

service are:

- The consequences of changes to the way the transport system functions (traffic volumes, operating costs, etc.)

for the operators (economies of scale and mass

production particularly in the motor industry, or the

"Mohring effect", that is to say the creation of increased

demand for public transport following an improvement

in the quality of service, etc.).

47

- The knock-on effects of transport services on economic activity on the one hand and the creation of a "value

flow" within the different layers of the transport itself on

the other (that is to say at the levels of energy production,

maintenance services, vehicle insurance and

depreciation, etc.

As to the consumer surplus, the following points can be

highlighted:

- Gains linked to the quality of service for the user (travelling time, comfort, etc.).

- The effects on the choice of route, the mode of transport, the time of travel, etc., (in other words the superficial

consequences which are felt particularly when

travelling), and also the longer term effects relating to

decisions about buying a vehicle or a public transport

travel pass for example.

- The retroactive effect on the organisation of daily activities, on where and when they should take place, and

consequently on travel. It should be noted that these

effects are all the more complex in that they concern the

surplus of both the domestic consumer and the corporate

consumer. So issues have to be considered are specific to

businesses, such as the relocation of manufacturing

plants or the resizing of production to respond to markets

which transport has opened up.

- Environmental impacts.

- Impacts on space: for the socio-economic players, considerations of housing and location contribute to the

overall effects such as (i) property prices, (ii) site

configuration and accessibility, which determine the

48

economic advantages of producing locally, in particular

economies of agglomeration.

To summarise, improving the socio-economic balance of

a low-carbon transport project would require:

1. That the producer and consumer surpluses be taken into account in their entirety, while considering the effects

described above.

2. That action (1.) be repeated before but also after the deployment of the project in question, without

neglecting, as is often the case, the calculation of the

producer surplus before the project (emphasis is often

placed almost exclusively on the comfort, time saving,

accessibility, etc. for the user), or the calculation of the

consumer surplus after the project (post-deployment

studies still focus mainly on questions of competition and

competitiveness for the operator rather than on CO2

emissions avoided, effects on health, etc. from a user

point of view). "Arguments for the development of new

transport infrastructures (high speed trains, motorways,

etc.) tend implicitly to create the belief that the consumer

surplus obtained from faster journey times is translated

into a producer surplus in terms of employment and

economic growth. That is rarely so and it is vital to focus

on the difference between the consumer surplus (linked

to time savings, improved comfort, cost savings, etc.),

the producer surplus and finally the surplus for the

community" (Excerpt from the address by Yves Crozet,

LET).

We have recently come to realize that there is a toolkit

available to public policy makers to regulate the transport

system so as to produce less CO2 and more generally limit

49

the impacts of the industry on the environment. But the

practical application of the tools in the sector is made

difficult by its extreme complexity, as we have seen above.

This complexity is reinforced by the numerous examples of

inertia that we find in the sector.

1.2. Inertia in the transport system

Very many forms of inertia characterise the transport

system: some are due to the slowness of the decision-making

processes, some to the very long lifespan of infrastructure,

some to the time it takes for technological innovations to

penetrate and some, finally, to the rigid mobility practices of

the stakeholders in the sector.

1.2.1. Inertia in the decision-making process

The characteristics of the transport policies presented

above (multiple objectives, multiple externalities, multiple

sectors, multiple levels, and multiple players) imply that

public decision making is generally slow. Indeed, the

conflicts of interest, for example, are all the greater because

the associated sectors (energy, housing, etc.) and the players

concerned are numerous. Moreover, in the area of

environmental policies, the difficulty in obtaining the data

necessary to carry out prior economic evaluations

(quantifying CO2 emissions, for example) further slows

down the process.

"Recently, policy divergences between the State and the

local authorities in the Ile-de-France region have hindered

the implementation of concerted "green" policies

(sustainable policy planning by the region and the Greater

Paris metropolitan area, sustainable neighbourhoods, etc.)

50

even if there is a common base often influenced by Europe.

The new configurations should facilitate operational

integration and the convergence of national, regional and

local policies and funding" (Excerpt from the address by

Martine Liotard, IAU-Ile-de-France).

To the difficulty of arriving at a political consensus

between decision makers is added the challenge of sharing

information openly. "In large urban administrations,

information is often shared between players of different

status and can, for that reason, be incomplete. An organising

authority like the Ile-de-France public transport authority

(STIF) has the means to plan projects and investments

because it brings together the majority of public transport

operators, but without the Socit du Grand Paris or the

Paris public transport operator (RATP). Financial

information can thus be lacking to measure the overall cost

of transport services which is vital for important future

investments" (Excerpts from the address by Martine Liotard,

IAU-Ile-de-France).

1.2.2. Inertia due to infrastructures

According to Williamson (1988), infrastructures are non-

redeployable assets (Josselin 1997), and that justifies the

interest given to irreversibility models in the choice and

funding of infrastructures (see Freixas, 1997 for an

application to transport infrastructures).

The irreversible nature of transport infrastructures means

that, on the one hand, a portion of the construction costs of

the project cannot be recovered, whereas the revenue flow

created by the project is uncertain, and on the other that

transport infrastructures have a long lifespan. Port facilities,

51

railway infrastructures and major motorway routes have a

life expectancy of between half a century and a century

(Dessus, 2009). As for road networks, they are generally

built in successive stages, rural roads or unpaved tracks of

local interest become busy national trunk roads.

Because of their longevity, which is often considerable,

transport infrastructures create inertia in the use of transport

but are highly structuring for many activities such as

production, distribution, social activities, etc.

To the factors of irrecoverable costs and longevity should

notably be added the costs of maintenance due to the wear

and tear that comes with use over time, inertia in the use of

infrastructures and the impacts they have on many activities.

That is why studies are relatively long, especially as it is

more and more difficult to get agreement on the route of a

railway or motorway. On top of that, the complexity of the

work implies a construction time of several years. As a

consequence, between 10 and 15 years are needed for the

study and construction of a transport infrastructure (Didier

and Prudhomme, 2007). This has to be kept in mind when

creating an infrastructure project, in response to the

challenge of global warming for example. Also, the National

Transport Infrastructure Plan (SNIT) reiterates that "State

policy must give priority to making optimum use of existing

networks before envisaging their extension" (MEDDTL,

2011c), especially as "taken alone, an infrastructure policy

has very little impact on changing transport modes: change is

marginal and is offset by the creation of newly generated

traffic" (Excerpt from the address by Emile Quinet, Ecole

Nationale des Ponts et Chausses, ENPC).

52

1.2.3. Inertia due to technology

In the same way as infrastructure investments,

technological solutions are an important lever in reducing the

environmental impacts of transport. However, on the one

hand, a new technology only arrives on the market several

years after the start of the development cycle and, on the

other, because the existing vehicle fleet is replaced slowly,

the effects of technology are long in being felt.

- From design to market

Whereas transport infrastructure studies take several years

(see above), the design of new low-carbon mobility solutions

is also long. In the motor industry, this task falls to the

manufacturers. The development time for a car is estimated

at between 18 and 30 months, while the car remains in

production between 5 and 8 years (Fournier, 2011).

Consequently, "for mobility solutions which will appear on

the market before 2020, the die is already cast, and it is this

inertia which makes the job of the motor manufacturer

complex" (Excerpt from the address by Yves Baron, PSA

Peugeot Citron).

In addition, it is important to note that one technological

innovation can delay the arrival on the market of another

innovation. This can readily be understood from the

following example: "by reducing the fuel consumption of a

standard internal combustion engine, it costs less to use,

which increases its competitive advantage over alternative

technologies: typically in this case electric vehicles, which

are currently being developed and which will arrive

massively on the market in several years. Performance

improvements of the internal combustion engine are pushing

back the date at which the electric car will become

53

competitive, whereas the electric car is more efficient in

terms of CO2 emissions" (Excerpt from the address by Kurt

Van Dender, ITF).

- The low replacement rate of the existing vehicle stock

"With an annual car replacement rate of around 6%

(CCFA, 2012), we are pushing the subject of clean vehicles

very far into the future" (Excerpt from the address by Marc Josset, Orange). "Based on current projections, the

large scale conversion of the existing vehicle fleet to electric

and hybrid models will take place after 2020-2030",

according to the European Commission (Excerpt from the

address by Akshay Patki, European Commission DG

CLIMA). However, increasing vehicle life expectancy has

given rise to new business models allowing certain

components to be replaced during the lifetime of the vehicle.

This approach is being developed notably by motor

manufacturer Renault: "with the ZE vehicle range, Renault is

saying: the battery doesn't belong to you, we'll look after it.

If after 4 or 5 years the battery no longer has the level of

charge specified when you bought the car, we'll change it

and you will benefit from the technological improvement of

batteries. But the low replacement rate of the existing

vehicle fleet is a typically European issue. On the contrary,

the windows of opportunity are opening fast in developing

countries. 75 million vehicles are currently sold in the world

each year and we are expecting that to increase to 100

million vehicles a year in 2020" (Excerpt from the address

by Philippe Schulz, Renault).

If the car replacement rate is dependent on the behaviour

of motorists, the renewal of other "mobility assets" (buses,

54

tram and subway carriages, high speed train rakes, ships,

aircraft, etc.) depend on investment decisions made by the

transport operators. As an illustration, in 2010-2011, Air

France KLM invested in 30 new aircraft, a replacement rate

of over 5% (Air France, 2013). The longevity of mobile

assets explains these low rates. For example, a standard bus

on the Paris network (RATP) is kept 15 years and an

articulated bus 10 years, which explains why the majority of

buses in the Ile-de-France region correspond to the EURO II

or EURO III norms (RATP, 2013). Or another example: "the

life cycle of a ship is of the order of 25 to 30 years, which is

an enormous constraint to innovation" (Excerpt from the

address by Antoine Person, Louis Dreyfus Armateurs).

1.2.4. Inertia due to mobility behaviours

In the area of mobility, the flexibility for behavioural

change is lower than for new information and

communication technologies (ICT). This is for two main

reasons: transport weighs more heavily in the domestic

budget9 and transport is a necessity (Fournier, 2011).

Transport is often a "derived demand", that is to say it is

generally not requested for its own sake but is very largely

associated with the consumption of other goods (CEMT,

1997).

And changes in mobility behaviours are marked by

structural trends which we observe in users and which

9 Total spending on transport represented 11.8% of effective household

consumption in 2007 (INSEE, 2007)

55

explain the slowness of the process. Among the "key

determinants" of transport demand, at least among those

which are linked to the characteristics of individuals, and

excluding the features associated with the transport network

such as topography, we can show that in the case of France,

for example (CGDD, 2010):

- In 2008, the 26-45 age group contained the most mobile individuals with around 4 journeys a day as against 3.3

journeys for the 18-25 age group. We observe moreover

that the number of daily journeys per person initially

increases until the age of 30 (with the exception of the

11-15 age group), remains stable until 45 and declines

regularly thereafter. In addition, the position of the

individual in the cycle of life is a determining factor: in

2008, people in active employment were more mobile

than the unemployed, with 16% more journeys and 42%

more mileage. Among young people, we also observe

that students are markedly more mobile than

schoolchildren and that these 2 categories travel

essentially by public transport, by bicycle and on foot.

Lastly, whereas recently retired people travel quite a lot,

principally by passenger car, mobility falls rapidly after

75.

- In 2008, the majority of passenger car drivers were men, (70% of the home-work segment, slightly less for

women) but the large number of women working has led

to households having more than one car and therefore to

a rising proportion of women drivers.

- Women use public transport and walk more often than men (with respective proportions of the public transport

mode of 15% for women and 10% for men, and of the

56

walking mode of 10% for women and 8% for men). In

2008, on average, men made fewer daily journeys than

women (3.11 against 3.18) but travelled greater distances

(28 km a day compared to only 23 km).

- People who live in sparsely populated areas mainly travel by car, because of the long distances between home and

work or services. On the other hand, people who live in

densely populated areas have a wide choice of transport

modes.

- The higher the domestic revenues, the greater the number of daily journeys per person. It ranges from 2.6 daily

journeys per person for households having an income by

consumption unit of no more than 500 Euros to more

than 3.3 for the best off (more than 300 Euros by

consumption unit).

However, it is essential to make sure that we do not

consider as universal a phenomenon that is purely local,

typically "my neighbour's wife drives a 4x4" from which we

generalise that "women drive large cars". "This exaggeration

machine (see Boudon, R. 1990) should not be reproduced in

the transport sector, given the dynamic inertia characteristic

of the sector. As soon as transport costs fall or speeds go up,

travel increases in spectacular fashion" (Excerpt from the

address by Yves Crozet, LET).

In spite of these different forms of inertia, it is

nevertheless still possible to identify a few key factors which

are likely to influence travel behaviours in the medium and

longer term. Among them, for example, shifts in

demography or supply, particularly in technology, and

certain factors linked to individual preferences.

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1.3. Factors influencing behavioural change in the short and medium term

1.3.1. Shifting demographics

In France, as regards the changes taking place within

domestic categories, the French Office of Information and

Economic Forecasts (BIPE) estimates that between 2010 and

2020 the number of single households will increase by 2.5

million and that single-parent families and couples without

children will go up by 260,000. These statistics suggest, as

has already been mentioned above, that travel behaviours are

largely determined by socio-economic factors (see above),

and consequently, when the structure of the population

changes (by age, type of household, socio-professional

group, etc.) mobility behaviours on a national level will also

change.

If we consider for example the ageing of the population,

which is today a feature of developed countries10

, a parallel

may be drawn with the tendency for travel to level off

because of the smaller proportion of young people, even if

this factor does not explain the full extent of the

phenomenon. It is also forecast that by 2030 the number of

driving license holders in France will have stopped growing.

Moreover, the life cycle of a product or service (in this

case travel) can be interpreted as coinciding with 3 different

explanatory factors (PIPAME, 2010): that of age (the

10

In France, the BIPE report forecasts an increase in the number of

households over 45, of recently retired people and people over 75. We

also observe that the proportion of the population aged over 60 has gone

up from 23.5 % in 1982 to 26.0 % in 1994 and 30.6 % in 2008 (CGDD,

2010).

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product or service is associated with a particular age group),

that of era (the product or service reaches all age groups and

disappears as quickly as it appears) and that of generation

(an effect characteristic of a group of people born in a given

period and whose behaviours stay the same throughout their

lives). To the extent that car use benefits from a positive

generation effect (Observatoire Cetelem, 2013), according to

these definitions the ageing of the population (see Figure 6)

should not significantly affect specific demand for cars.

Global mobility demand though is likely to be more greatly

impacted.

Figure 6. Proportion of the population over 65

Source: U.N. Centre for Strategic and International Studies.

1.3.2. Shifting mobility offer

Mobility offer evolves depending on infrastructure

capacity and quantitative and qualitative changes in the

vehicle fleet.

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In terms of infrastructure, "investments on a European

scale have mainly been focused on motorway infrastructure,

from 40,000 kilometres of motorway in the 15-nation

European Union in 1990 to more than 60,000 kilometres in

2010" (Excerpt from the address by Emile Quinet, ENPC).

The same has been the case in France, where the motorway

network has increased from around 5,300 kilometres in 1980

to 11,054 kilometres in 2008 (CGDD, 2010). "We notice a

clear imbalance between the numerous investments in roads

(two thirds) and insufficient investments in public transport

(one third) in France over the last twenty years" (Excerpt

from the address by Dominique Mignot, IFSTTAR).

Regarding the vehicle fleet, cars especially have benefited

from numerous innovations concerning combustion engines,

weight reduction, etc. and will continue to evolve in the

future. "The work of the motor manufacturers is to define

what will be the future "transport objects" in the years 2020-

2030, without forgetting that these objects will have to

function alongside older vehicles, while accepting the idea

that the motor manufacturers will not be the only transport

players. The car was the mobility object and has become one

mobility object among others" (Excerpt from the address by

Yves Baron, PSA Peugeot Citron). Also, new transport

services are starting to appear. While motor manufacturers

are encouraged to diversify their services, new transport

players are also appearing (see Box 2).

The road transport sector and its players are not alone in

investing and innovating. The rail transport offer is also

widening. On the infrastructure side, the French high speed

rail network (TGV) inaugurated in 1981 has increased from

1,574 kilometres in 1994 to 1,847 kilometres in 2008

(CGDD, 2010) while at the European level, the Commission

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has defined an objective of tripling the present high speed

rail network between 2011 and 2030 (European

Commission, 2011a). As for rolling stock, in February 2013,

the SNCF unveiled low cost TGVs. With no first class and

no bar carriage, a Ouigo rake can carry 20% more

passengers than a traditional TGV. Having invested 10

million Euros, the SNCF hopes this new service will break

even in 2017.

Box 2. Examples of new mobility services

MU by Peugeot is a rental service covering vehicles in

the Peugeot range (city cars, Multi-Purpose & Sport Utility

Vehicles, utility vehicles, sedans and estate cars, coups and

convertibles, scooters, cycles and accessories). Customer

fidelity is rewarded when a vehicle is purchased or serviced.

A rental service of this kind allows the dealer to make

optimum use of his vehicle fleet.

Citron MULTICITY is a web portal suggesting

different modes of transport for a given journey and, for

each, their price and carbon balance in compliance with the

norms established by the French Agency for Environment

and Energy Management (ADEME). The portal also enables

users to book train and plane seats and hire vehicles from

approved partners.

BMW Motorcycles has entered the urban transport

market in presenting the prototype of an electric scooter

whose top speed is 120 kilometres per hour. The scooter is

provided with a lithium battery of 8 kilowatts giving it a

range of 100 kilometres. A full range of electric scooters is

awaited for 2014 (Mobilit durable, 2013).

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ZIPCAR is the world's first car share company. It has a

fleet of around 6,500 vehicles used by more than 325,000

signed-up customers. Vehicle sharing reduces considerably

the number of vehicles in circulation. It is estimated that

when a Zipcar is shared, between 5 and 10 other vehicles are

not used. According to a study by Frost & Sullivan (CCFA,

2013), the concept of long term rental has good potential in

Europe, with an annual growth rate of 6.2% between 2011

and 2018 (5.1% in France). The proportion of "low

emission" vehicles in the fleet should increase from 0.7% in

2011 to 13% in 2018, and from 0.1% to 3.2% for hybrid and

electric vehicles. Source: Fournier (2011)

1.3.3. Shifting mobility demand In parallel to the development of the mobility offer,

domestic and enterprise travel preferences have also evolved

over recent years.

Domestic travelling preferences: from the car as object to the car as service?

Although travelling is part of the contemporary lifestyle,

and markedly more so than in the past, consumers today are

less and less inclined to bear the costs of mobility. It may be

a question of external costs such as problems of road safety,

congestion, noise or atmospheric pollution. Indeed "lack of

safety is an important issue with high user expectations (see

the objective of the European Commission to halve the

number of fatal road accidents by 2020, enshrined in the

Transport White Paper of 2011). The question of travel value

is also a major issue. Today, travel time is still seen as time

lost and the aim is to restore value to the journey. That

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requires comfort to improve in public transport, with spaces

for being alone, spaces for working, etc. Other possibilities

are also being explored with regard to individual mobility"

(Excerpt from the address by Yves Baron, PSA Peugeot

Citron). Moreover, "in a connected society, this

representation of travel time raises numerous questions: is

time spent travelling the same as time spent at the cinema? Is

it the same as time spent working and creating wealth and

employment? Must we save time at all costs or spend it

wisely? Beyond the question of whether the notion of time is

the same for all activities, the issue of the money value of

time is important" (Excerpt from the address by Jincheng Ni,

SNCF).

Concerning the demand for passenger cars, costs borne by

the individual such as the cost of ownership, the cost of

maintenance, the cost of parking and the cost of fuel are

going up, which explains why "the new generations are now

more interested in the car as a service than the car as an

object" (Excerpt from the address by Sylvie Moulet, EDF).

Also, the development of the market offering in cars is

leading consumers to make new choices. According to the

interministerial unit monitoring and anticipating economic

change (PIPAME), demand patterns in the car market will

evolve as follows (see Figure 7).

The customer CO2 value represents the average

willingness of the customer to pay for a reduction in CO2 by

a given unit. It is calculated from the price the consumer is

willing to pay for a given technology that reduces CO2

emissions by x units. It is "a key strategic tool for the

manufacturers, enabling them to determine from prospective

scenarios how accessible the innovative technological

solutions arriving on the market will be to the consumer. In

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Europe in 2011, the customer value was on average 52 Euros

per gram of CO2 per kilometre and between 10 and 20 Euros

in emerging countries. It is constantly increasing" (Excerpt

from the address by Philippe Schulz, Renault).

Figure 7. Changing demand patterns in the car market

From the triangle... To the hourglass... To the kaleidoscope ?

Top of range

Bottom of range

Top of range

Bottom of range

Source: PIPAME (2010)

New choices in electricity consumption are also appearing,

in parallel to the development of electric vehicles (see

Box 3).

Company transport preferences

From the point of view of the carriers, the adoption of

just-in-time methods makes the demands in terms of delivery

time, work rhythms and personalised services all the more

urgent today. This explains the falling share in recent years

of freight transport by rail to the advantage of road transport,

which has been better able to adapt (Bergounoux, 2000).

And the expectations of all companies, and not just

transport firms, are changing insofar as ease of access for

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their employees, suppliers, customers or visitors is becoming

a key factor of global performance, giving rise to Corporate

Mobility Plans (PDE).

Box 3. Electric vehicles: assets with multiple uses

Vehicle-to-grid technology allows electric vehicles to

become a means of storing electricity which can be

redistributed according to energy needs (Mobilit durable,

2010). The idea is that when the vehicles are parked,

essentially at night during off-peak hours, the batteries store

the electricity which is then redistributed during the day at

peak hours when the use of electrical equipment is at its

highest. Electric vehicles thus become a tool to optimise

energy resources as well as a means of transport.

Vehicle-to-grid technology was presented in 2010 by the

University of Delaware in the USA and the Magic

Consortium which brings