Mobility services and circular economy – a match made in Heaven or a mismatch made in Hell?

By Laura Eiro | ITS Finland

The transport sector is often seen as a source of negative externalities and as an expenditure in the national budgets. Owning a car is a major expense for a household and also involves a lot of running costs. What if we would turn the sector into a sustainable engine for circular economy and at the same time could provide people with better mobility services?

It is more and more evident that our economic competitiveness and well-being can no longer be based on the wasteful use of natural resources. Rather than offering products, the foundation for earnings will be services, the recycling of products and intelligence-based digital solutions.

Finland was the first country in the world to prepare a national road map to a circular economy already in 2016, under the leadership of Sitra. The updated version of the roadmap was published in March 2019. The pursuit of a carbon-neutral circular economy has created the world’s fastest growing market: by 2030, global investments amounting to 90 trillion US dollars would be needed for the targets set in the Paris Agreement to be reached. Combine this with the other rapidly growing market, mobility, and the business opportunities are huge. Already the global Mobility as a Service Market is estimated to reach 1.75 trillion US dollars by 2028, not to speak about the growth forecasts of the rest of the mobility sector.

The consumers are ready for the change: in fact 87 % of the Finns regard it as very important or fairly important that Finland’s transition to a circular economy takes place before year 2025. A shared use of goods, renting and reuse are becoming more popular. Everybody needs to play their role: the state administration, towns and cities, business life and the Finnish people. Everyday choices have to be made by all of us.

This all is true to transport sector as well and we should play our part. In Finland, traffic emissions account for around one fifth of the total greenhouse gas emissions. Half of this originates from private cars, the equivalent of approximately 5.7 million tons of CO2.

Already the first version of the circular economy road map recognized transport and logistics as one of the focus areas. The goal of this focus area is for Finland to be recognised as a country in which seamless, smart transport that is developing in a fossil-free direction and logistics form the cornerstone of the circular economy. Mobility as a Service (MaaS), sharing economy transport solutions, and optimised and clean transport will take the energy and resource efficiency of transport and logistics to a new level.

All these actions are needed simultaneously. Clean or automated vehicles are not enough to make the change, if they are used as they currently are. Five vehicles are still five vehicles occupying roads and public space. We need shared transport and services to complement public transit to make it as an attractive option for a private car.

And we are very well on our way in implementing this vision. The National Growth Programme for the Transport Sector was published at the end of 2017 and has now been identified as one of the key measures in the updated circular economy roadmap. In the Growth Programme the mitigation of climate change has been identified as a key driver for creating large growth market for solutions and services that reduce emissions. The measures of the Growth Programme are related to enabling legislation, proactive research, competence and ecosystems of innovative enterprises, market trials and pilots in cities, public procurement, the use of information and funding. The growth programme is being implemented as a collaboration between various organisations.

Sitra also recently published a list of the most interesting companies in the circular economy in Finland and amongst 124 examples were a good number of transport sector companies. The list of companies includes MaaS service providers like Kyyti and MaaS Global. In practice, MaaS is helping to eliminate the need for car ownership, reduce road congestion and improve air quality.

Here you have to be careful on what is meant by MaaS. For us Finns, MaaS as a concept is a service that fulfills mobility needs by combining public transport, taxis, on-demand ridesharing and the use of private cars in a single digital service. Also, bike share, scooter share, other new modes, and one’s own bike and walking are part of MaaS. There is no one single form for MaaS and different kind of business models can be developed around that.

However, public transport is always the backbone of MaaS. To put it simply, there is no MaaS without public transport. It also needs to be acknowledged that in most cases public steering via policy and/or regulatory measures are needed to ensure the sustainability of the whole transport system.

However, the change will take time, and driving needs to be made more efficient through all available means. As a remedy for this, Sitra lists companies offering parking space-sharing platforms. Also several car-sharing companies with varying commercial models as well peer-to-peer platforms are listed. It has been estimated that a city car replaces eight privately owned cars, which reduces the problems caused by parking and traffic.

Boats are very similar to private cars – they cost a lot of money and they still are docked a lot of the time in the harbor. With a Skipper’s service anyone could rent a boat. The service makes it easier to try sailing and the boat owners can earn some extra money. Waiting for this to be included in my MaaS offering!

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