How will the planet keep moving in a post-COVID world?

Many cities have experienced dramatically cleaner air because of a sharp drop in global transport after the seismic changes brought on by the crisis. But is this transport shift here to stay, or will companies and consumers return to their previous habits as soon as travel restrictions are lifted?

At Lombard Odier we embrace the clearer skies and the 5.4% drop in CO₂ emissions in 2020, the largest decline on record. We expect some behaviour to normalise once global travel and trade disruptions ease but we believe many new and cleaner modes of transport may emerge as companies focus on supply chain risk mitigation and embrace the cost effectiveness of greener mobility options.

We also expect policymakers to learn from the cleaner streets and embrace new regulatory approaches to both long and short-haul transportation. Consumers may find that new travel habits stick - the 'flygskam' or flight shaming movement may intensify with more questions raised about the necessity of trips. We expect this behavioural shift in mobility to present multiple investment opportunities, as well as systemic risks for some industries.

As travel drops, the traffic clears

Transport currently accounts for 14% of all global CO₂ emissions. Of those, 74% are road transport, 12% aviation and 11% shipping.

The COVID-19 crisis has seen a dramatic drop in all transportation as countries have imposed restrictions to public movement. In many cities, for the first time in years, roads were traffic-free and air pollution felt more than 50%.

The TomTom traffic index showed that in 2019 the average person spent an extra 87 minutes in traffic than in the previous year. But in 2020, cities with travel restrictions have seen congestion drop by up to 85%. Pre-COVID, the average personal car sat idle in parking spaces for 96% of the time. We believe our transport system was WILD - Wasteful, Idle, Lopsided and Dirty - and urgently needed to transition to being CLIC - Circular, Lean, Inclusive and Clean. Regulators started to push this process with fleet average CO₂ emissions, low emission zones, parking restrictions and electric vehicle incentives. However, the speed of delivery has been slower than that needed to comply with net-zero pledges. One of the few positives that could come out of the current public health tragedy could be a faster transition to “CLIC" mobility.

No matter the problems, personal travel is car-centric

International governments, regulating some 85% of the global light-vehicle market, have committed to or are proposing a ban on internal combustion engine (ICE) vehicles within the next 20 years. In China, the state council has decreed that megacity air quality represents not just a threat to public health – it is now estimated that air pollution kills more people globally every year than smoking - but also to civil order. There are low-emissions zones and bans on older cars in multiple cities globally as a result of worsening urban air quality. The issue of nitrous oxide (NOx) was brought to public attention even more directly by 2015's “Dieselgate".

But despite higher cost and pollution effects, the convenience of the personal car makes it the predominant mode of transport in most developed markets:

Many local governments were initiating ICE restrictions in city centres long before the current crisis. Oslo has closed off certain streets to cars and removed almost all parking spaces, replacing them with cycle lanes and green spaces. Mexico has initiated the 'pico y placa' initiative, where the right to drive depends on your licence plate and Singapore has punitively high taxation on the car to discourage use. In Paris, there are plans to remove 60,000 car parking spaces, or 72% of the total. The Paris mayor announced in January that she wants all Parisian streets to be cycle-friendly by 2024, with plans for a “city of fifteen minutes".

And yet pre-COVID, global traffic data shows congestion is growing dramatically each year, worsened by the popularity of online deliveries and ride-hailing. Average road speeds in many city centres were as low as 5 to 6mph, which helped to hasten the advent of micromobility on small, shared electric two and three-wheel vehicles. Electric scooters and bikes can reach much higher average speeds in congested urban areas.

Could we see a shift post-lockdown?

The impact of lockdown on city streets has been traffic-free roads, greater space and safety for pedestrians and cyclists and clearer air. But will cities just return to normal once travel restrictions are eased? In Wuhan, public transport was shut down entirely during the lockdown, with key workers only able to use the popular shared bike schemes to travel to work. Other cities have shut down micromobility schemes and kept public transport operating. Many cities have had to contend with severely reduced demand for public transport and it is unclear how quickly this demand will recover, with many commuters likely to distrust the health implications of crowded, public transport. In Paris, plans to ease lockdown in the city involve increasing cycle lanes to take the pressure off public transport. Similar measures are being discussed in London to ban cars from certain roads, lower speed limits and widen pavements to enable safer foot and cycle trips.

An increase in foot and bike traffic would be a bonus for air pollution but there is a risk that an ongoing shift away from public transport could also lead to a surge in personal car usage when lockdowns lift. In terms of CO₂ emissions, and congestion and air pollution, this would be a worst-case scenario. After walking, cycling and micromobility, public transport has a much better environmental footprint than a single-occupancy or even dual-occupancy car.

Many public transport systems are in need of support due to a sharp fall in demand. The US Department of Transport has already offered $1bn to the National Railroad Passenger Corporation to support the railroad's activities. We certainly expect to see a shift in how public transport systems are utilised in the coming months. Many private companies are preparing for these changes by offering greater access to travel statistics to enable consumers and policymakers to make better mobility decisions and manage shifting demand. Technology will enable greater understanding of transport patterns - for instance Apple has made mobility data available to aid COVID-19 decision making. More connected transport apps will also offer commuters greater choice over transport mode, particularly for first and last-mile journeys. This is likely to drive a greater uptake of MaaS (mobility as a service) as more commuters prefer flexibility of transport mode and the ability to share journeys via micro-transit rather than public transit. Many businesses are also shifting their business models entirely with Honda converting vehicles to transport patients, US ride-hail operator Lyft helping with the delivery of essential items and London-based taxi service Addison Lee partnering with coach platform Zeelo to provide transport and logistics to support healthcare