Predicting the shape of the future is an imperfect science, littered with predictions so off the mark they are laughable. Consider the famous assertion back in 1899 by Charles Duell from the US patent office that, "Everything that can be...
Predicting the shape of the future is an imperfect science, littered with predictions so off the mark they are laughable. Consider the famous assertion back in 1899 by Charles Duell from the US patent office that, “Everything that can be invented has been invented.” Or the statement made in 1895 by Lord Kelvin, president of the Royal Society, that, “Heavier-than-air flying machines are impossible.”
Nevertheless, transportation companies do require a vision of the future and the various factors that could shape their business in order to strategize for future growth and protect against possible threats. And that is exactly what a panel of experts at the Future of Trucking Symposium in Winnipeg attempted to provide. The panelists – Antonio Benecchi of Roland Berger Strategic Consultants, Bill Van Amburg, senior vice-president with CALSTART, and Rick Whittaker, vice-president of investments with Sustainable Development Technology Canada – looked 20 years into the future of transportation, focusing specifically on the challenges that will drive change and the energy solutions that will drive mobility. David Hughes, formerly a geologist with the Geological Survey of Canada, addresed the Symposium just before the panel and also contributed to the discussion on how oil depletion and climate change will define the future.
Benecchi outlined a number of factors certain to impact the future direction of transportation in Canada, including population growth, urbanization, energy consumption, energy policy, and technological innovation.
By around 2030, Canada’s population will have grown by five million and the country will be home to about 39 million people, according to Statistics Canada estimates cited by Benecchi. But that demographic will be considerably different from today’s and is certain to impact the available pool of labour, transportation mobility and government policy. Within 20 years, we can expect to see the setting of a dramatic benchmark in the country’s demographics. For the first time in the history of our country, the percentage share of our oldest citizens will be greater than our youngest. As of the 2006 Census, Canadians over age 65 made up 13% of our population, while Canadians 14 years or younger made up 17%. After 2015, senior citizens will outnumber our youth to the point that by 2031 senior citizens will comprise 23% of our population, while youth 14 years or younger (our future workforce) will make up just 15% of the population, according to Statistics Canada estimates. The 15-64 age bracket, which currently makes up 69% of Canada’s population, will also decline down to 62% by 2031.
By 2030, the country’s natural growth will turn negative. We just won’t be having enough babies to keep up with the annual death rate. The growth of our population would then become dependent on immigration. One in five Canadians by 2030 will be a visible minority, and visible minorities will become the largest selection of people entering the workforce. This will impact the face of the labour pool available to the transportation industry, but also future mobility in our transportation network. Benecchi said most of the new immigrants will settle in urban areas and he foresaw even more densely populated cities than we have now. Ontario and British Columbia can expect to see the greatest amounts of immigration.
In fact, Ontario’s urban areas will be home to 15 million people by 2030 or about 40% of the Canadian population.
“This will define where business will be and where transportation corridors and services will need to concentrate,” Benecchi said. “With urbanization comes congestion. For goods delivery, it means continued constraints and costs going up and a further push towards reducing emissions.”
Speaking of emissions, Benecchi’s vision of the future includes a continually growing need for oil. He forecasted a greater than 30% increase in energy demand by 2030 compared to 2010. A bit more than quarter of that total energy demand would be from the transportation sector. And he also saw petroleum-based fuel playing an even larger role in the energy consumption of 2030. He expects up to 50% of our energy consumption to come from petroleum-based fuel compared to the 42% reliance we had back in 2004.
“The addiction to oil will continue to grow, despite increased efforts on renewable energy. And so fuel costs will go up,” Benecchi warned.
Hughes, who has studied Canada’s energy resources for 32 years, doesn’t soft peddle the future likelihood of oil shortages and steep pricing. The existing paradigm of cheap energy fuelling constant economic growth is over, according to Hughes. Global new oil discoveries peaked back in 1965 and since then, our depletion rate of existing reserves has been accelerating, Hughes pointed out. About 64% of oil production in 2008 was from countries which had already surpassed their peak.
“The US is most optimistic about when we will reach world oil peak production. It believes it won’t be until 2044. Most other countries believe it will be much sooner, perhaps within the next few years,” Hughes said, adding some experts believe we already reached that peak back in 2008.
The cold reality is that there are 5.3 times as many people consuming 8.6 times as much energy today compared to 1850. And yet China and India, with their massive populations, are industrializing and aspiring to consume energy at the current levels of western industrialized nations. By 2008, China was importing 53% of its oil demand.
“The world would need six Saudi Arabias to keep up with the expected increase in demand by 2030…And even if we quadruple unconventional oil production (e.g., Venezuelan heavy crude and the Alberta Tar Sands) it would add just 12.6% to world oil production,” Hughes said.
With such dire energy challenges, Benecchi foresees environmental policy and regulation continuing to be a factor in shaping the transportation industry’s future.
“We expect to see more and stricter regulations. To limit global warming, CO2 emissions have to be reduced on a global basis and transportation, of course, is a key contributor. There is not a lot left to do in the area of smog. Significant progress has been made on emissions standards for smog and the emission standards are becoming quite comparable among the developed countries. No further regulation is expected,” Benecchi says. “But the next focus will be on carbon reduction, through improved fuel efficiency. In the US, we expect a standard by 2013 and enforcement by 2016. By 2030, most countries will have enforced strict CO2 standards.”
If we carry on at our current pace, we can expect a 45% increase in global CO2 emissions until 2030, which would likely lead to a disastrous 5° C global warming. Major reductions to CO2 emissions are required to keep global warming below the 2° C rise most climate scientists believe is safe.
Currently, transportation activity contributes approximately 37% to Canada’s total energy-related GHG emissions inventory, according to government data cited by SDTC’s Whittaker. Roughly half of transportation emissions are attributed to freight transportation, and more than half of those are attributed to trucking, so the industry carries a large bull’s eye.
The SDTC’s 2030 vision for Canada’s trucking industry includes the following goals:
– Reduce energy intensity by 40% in Class 8 and 80% in Classes 6 and 7;
– Reduce absolute energy consumption by 50% from projected levels by the year 2030; and
– Reduce GHG emissions by a corresponding 50%.
“The vision can be achieved through the development of new technologies, the adoption of advanced policies and regulations, and the emergence of more sophisticated risk management techniques for investors,” Whittaker said.
SDTC estimates that about $1.5B is needed to fully commercialize the new technologies in its portfolio of high assay projects.
Benecchi foresees a distinct future for alternative power in commercial transportation. For example, the shar
e of hybrid vehicles in sales of Class 4 and 5 vehicles is forecasted to grow from the current 1-2% to 15% by 2015 and 20-25% by 2020.
Van Amburg from CALSTART also forecasted a “blossoming” of natural gas options along with the ability to blend renewable natural gas. But he cautioned that hybrid truck production is still too low to realize prices that would make it feasible for industry to seriously invest in such trucks. However, he believes only modest volumes – 3,000 to 5,000 unit sales per year – are necessary to move prices to within business cases’ needs. He called for government incentives to provide a big kick-start to this number by helping drive volume up in a targeted effort.
Hughes, meanwhile, was not as optimistic about the ability of alternative fuels to meet our growing energy needs.
“You really have to look at the scale of what we do with renewables versus what we do with hydrocarbons,” Hughes reasoned. “Renewables will only add about 6%. Renewables are no panacea.”
Van Amburg said there is no simple, all-encompassing solution to the transportation industry’s energy requirements.
“There is no silver bullet. What you need is a silver buckshot. We need to have a lot of different solutions in play. What’s needed to make the transition? We need multi-year coordinated plans with aligned investments, requirements, incentives and polices, even if we are looking at multiple technologies,” Van Amburg explained.
CALSTART is a non-profit clean transportation organization. Its stated goal is to create a clean technologies industry. Based in California, with projects across North America, its focus is on commercializing technology as well as helping fleets implement new technologies.
More efficient movement is also needed to reduce GHG emissions and Benecchi foresees the confluence of two events contributing to this. First are federal and provincial government investments in trade corridor infrastructures design to speed up commerce. By 2030, he also expects to see further advancements in technology – such as electronic collision notification and warning, driver assistance and auto-piloted vehicles – to create a fully intelligent transportation system.
The most important thing is to figure out how to radically reduce consumption, according to Hughes.
“Not burning fossil fuel is the biggest source of future energy. The climate change dialogue, for the most part, excludes the likelihood for diminished energy use,” he said. “The energy sustainability dilemma will be the defining issue of our time as it limits growth.” MT