COVID-19 has accelerated investment into more sustainable forms of travel
COVID-19 has accelerated investment into more sustainable forms of travel
The pandemic has emphasised that decarbonising the transport industry remains at the forefront of the social agenda. Investment plans and a supportive regulatory framework for green mobility remain intact despite the transport industry's financial strains. We expect the air and rail sectors to reach net zero carbon emissions by 2050 – and not just through carbon offsets. As such, carbon emissions reductions remain a priority for transport. In this report, we argue that rail can certainly achieve this target closer to 2035-40, whilst aviation would need another decade in Europe. We could be at a turning point for global cooperation, which would be a key accelerator, particularly for global industries like marine transport and aviation. The crisis has resulted in incremental investments in green transport mobility: in Europe, through the €809bn Green Deal, and $700bn of investment in China (c.4.8% of GDP), and the $1.9trn proposed stimulus package stepping up the US green agenda. Despite the continued near-term impact on mobility, we expect a recovery through 2021, led by leisure travel and a focus on carbon reduction.
The race to meet net zero emissions by air and rail sectors has been accelerated by the pandemic
The race to meet net zero emissions by air and rail sectors has been accelerated by the pandemic
This report follows on our Q-Series "By train or by plane?": The travellers' dilemma, and aims to provide a better understanding of how and when air and rail transport can be powered by green energy, showcasing Europe and its push to accelerate zero-emissions targets by 2050 for transport as a whole.
We deep-dive into:
- a detailed analysis of rail projects' timing and funds allocation;
- the opportunities for trains and planes to cooperate on routes to regain consumers and financial strength;
- an in-depth analysis of the technological developments that both the air and rail sectors are undertaking – electric and hydrogen platforms, sustainable and synthetic fuels.
In Europe, we think that both sectors could jointly achieve carbon neutrality sooner than 2050: the rail infrastructure is being upgraded and expanded; the renewal cycle of an aircraft fleet has shrunk to 23 years (21-22 years in Europe) from 27+ years; and regulation will trigger high demand for sustainable fuels and investment in new technologies.
The investments remain sound, despite customer distress
The investments remain sound, despite customer distress
Over the past year, we estimate the railway spending budget across Europe has increased from c€100bn before COVID-19 to potentially close to €150bn. High-speed rail (HSR) in particular should benefit from the Green Deal, reaffirming our expectation of a high-single-digit CAGR over current UNIFE estimates (low single digits for rail overall, c10% for HSR). France, Germany and the UK have allocated R&D funds of nearly €3bn to fuel investment in new airplane technologies to be introduced in 2030-2035 and mandated greater use of green fuels. EC support to build a green hydrogen grid is crucial, and represents another €180-470bn investment by 2050.
