Who’s driving this thing?

Home, R2D2, and once around the park

Home, R2-D2, and once around the park

In my last post, I discussed the trouble with government incentives that focus on technologies. Alternative vehicle fuels such as compressed natural gas and electricity are the current favourite technologies for a post-carbon transportation era, but there’s another game in town that could prove far more disruptive: driverless cars.

When considering driverless cars, the first thing to do is to recognize that they promise to bring about a complete break from the current norm of private car ownership. The real potential of driverless cars lies not in a set of features available to individual car buyers – cruise control on steroids, say – but in the transformation of transportation from product to service. The driver (sorry, pun) for this transformation is economics.

The average car spends 95% of its time parked, according to Paul Barter of Reinventing Parking. If such a car were fully utilized, it could replace somewhere between two and 20 conventional cars. A shared driverless car service could offer mobility for at least 50% – and possibly as low as 5% – of the cost of personal car ownership.

The savings don’t end there. The end of car ownership also means the end of the line for most parking facilities, and the transformation of the few that endure. For single-family homes, the need for a garage goes away, as does the need for a driveway. For multi-unit residences, parkade structures become redundant and the space becomes liberated for more valuable uses. The same goes for workplaces, retail establishments, and so on. For the minimal periods of time when automated vehicles are not required, parking becomes a first-in-first-out model, situated on the cheapest real estate available – brownfield sites, for example – with cheek-by-jowl spacing since there’s no longer any requirement for people to get in and out. This unlocks a huge amount of high-value real estate currently relegated to low-value use.

There are infrastructure savings as well. Municipalities – at least those in Canada – struggle with a significant gap between the need to maintain infrastructure, and the funds available to meet that need. Self-driving cars, networked together to allow instant sharing of information regarding road conditions, would be able to operate safely with bumper-to-bumper spacing, even at highway speeds. This would dramatically increase the capacity of existing roadways, rendering a whole lot of asphalt redundant. The amount of pavement to be maintained would plummet. (On the flip side, some significant sources of municipal revenue – parking fees, fines for various violations related to motor vehicle operation – would also disappear.)

This same ability to increase awareness of the vehicle’s surroundings by networking with other vehicles, or with sensing technology embedded in the road surface or streetlight poles, would allow much more fluid flow of traffic. It would largely eliminate the start-stop dynamic that is so frustrating to drivers, especially when traffic lights on major arterial routes are poorly sequenced. This simulation video by CityLab illustrates how dramatically different a driverless intersection would perform. The result would be faster trips and better fuel efficiency. The opportunity for platooning mentioned in the previous paragraph (and described in more detail here) offers similar fuel efficiency improvement.

Mobility, real estate, and infrastructure savings are all well and good, but a there’s another saving – lives. Car accidents cause over 2,000 deaths and 10,000 serious injuries per year in this country, according to Transport Canada. The major safety topics in this report are dominated by the human factor, also known as the four D’s – drinking, drugs, drowsiness, and distraction – as described by eTrans Systems CEO John Estrada in a recent podcast. The Transport Canada report doesn’t go so far as to connect the causes with the casualty stats, but it’s pretty clear that removing the human from the driving equation would drive down the human cost of driving. This cost includes the hard economic cost of lost productive years from premature death or disablement, the hard cost to the health care system to treat injuries, the hard cost of damage to vehicle and property, and the soft but very real cost of the pain and suffering of survivors. This was the very factor motivating Google’s Sebastian Thrun to search for a better way to get around.

The economic force behind this innovation is massive and inescapable – a tsunami, in fact. There will be speed bumps along the road to widespread penetration of this technology, but the question is not if, but when.

So what does this mean for energy policy, and for municipal planning in general? With such a revolution around the corner, how can society prepare? How do we avoid making major investments that will be rendered redundant long before they live out what was expected to be their useful lives?

Take parking, for example. The City of Guelph is grappling with what to do about this issue in the downtown core. Finding a spot on a busy shopping day is a major pain – nothing compared to what Torontonians face, but a nightmare by Guelph standards. When customers can’t find a place to park while they shop, they won’t shop. They will go to malls and big-box retailers on the city periphery where parking is plentiful, and downtown businesses will suffer.

The obvious solution is to dedicate more space to parking. Surface parking is one way. Multilevel parkades make better use of scarce real estate, but at a substantial cost. Finding a way to fund this investment is a challenge.

If mass adoption of the driverless car is on the horizon, the logic for investments like this is no longer clear. The problem is pressing and must be solved in the short term, but any solution must be designed with an eye to how it might be re-purposed should technology send it the way of the electric typewriter.

That is no easy task, but inaction is not an option. Forward-looking design is the only way to avoid kicking ourselves when a significant societal transformation arrives.

There is a precedent. When Toronto’s Bloor Street Viaduct entered service in 1918, designer R.C. Harris had ensured it would be ready to accommodate two-way subway train traffic. The Bloor-Danforth subway began using it a full 48 years later.

With a mobility revolution on the horizon, today’s public infrastructure investments will need that same sort of vision.

Directionally challenged

Tesla-Roadster-blue

Dream on, Alex…dream on.

Where energy policy is concerned, transportation is a tough nut to crack.

Energy end use falls into three broad categories: Industry, buildings, and transportation. Ontario consumption is roughly equal in each. So far, Guelph’s Community Energy Initiative (CEI) has focused on buildings. Industry already gets a lot of love from Conservation and Demand Management (or Demand-Side Management, if you’re talking about natural gas rather than electricity). Plenty of CDM/DSM incentive dollars are available to industrial enterprises, since energy consumption is concentrated and a single efficiency project can go a long way. Industry has gotten some CEI attention as it can be both a supplier and customer of a thermal energy utility, and again big demand is concentrated in a relatively small space.

Transportation has been largely left out in the cold. This is because any incentive program will be difficult to formulate for a specific target population, and will struggle to produce a fast payback.

Transportation is, by definition, mobile. Vehicles plying the streets of Guelph are either based here, or they come here from somewhere else. A program aimed at reducing transportation energy use may be aimed at the home base for a vehicle, or alternatively at the destination. It’s difficult for a municipality to justify a program that will primarily affect vehicles that drive here from elsewhere (fuel trucks, say), nor does it make sense to target vehicles that are based here but spend a good chunk of their life outside of the City limits (because they commute to Kitchener-Waterloo or the GTA, for example). Ideally a program would pick out the vehicles that are based in Guelph and rarely leave Guelph, but that’s a tall order.

Another challenge is how to devise a program to reduce energy use for transportation with reasonably quick results. You can stimulate active transportation by providing bike lanes, and Guelph is doing this (recently winning a silver award for being one of Ontario’s most bike-friendly cities). You can also plan urban development so that people don’t need to drive so much to clear their to-do lists, and Guelph is doing this as well. However, these are programs that pay off only in the medium to long term. Transportation energy usage stubbornly resists the quick-win improvement.

It is tempting to score a short-term victory by stimulating uptake of a particular energy-efficient technology. However, picking technology winners is something that governments have rarely done well, whether this is for a particular player in a given industry, or for an entire sector. As an example of the former, the Obama administration got burned by a US$536 million loan guarantee to the solar company Solyndra, which went bankrupt in 2011. As for the latter, if you’d surveyed the market for alternative vehicle drive systems fifteen years ago, you might well have bet on fuel cells. A survey of today’s urban streets would yield exactly zero examples of such vehicles.

If you get into the game before the market has pronounced judgement, it’s a great way to lose your shirt. If you wait too long, the incentive will not change the outcome from what would have happened anyway. Timing is key.

These days, a number of alternative fuel technologies are showing broad market acceptance. For small vehicles, electric drive systems are becoming ever more prevalent, starting with hybrid electric vehicles (HEVs) like the Toyota Prius, then moving on to plug-in hybrid electric vehicles (PHEVs) like the Chevy Volt, and then true electric vehicles (EVs) like the Nissan Leaf and my own personal dream car, the now-out-of-production Tesla Roadster (I know, I’m dreaming in technicolour if I think I’ll ever afford such a ride on a municipal employee’s salary). For larger vehicles, Compressed Natural Gas (CNG) shows a lot of promise.

HEVs and PHEVs offer energy efficiency improvements over traditional internal combustion vehicles, but they both still have gasoline engines. Money spent on gasoline fuel leaves the community, never to return. EVs, however, run exclusively on electricity, which can be generated locally, injecting cash back into the community rather than bleeding it away to faraway refiners and producers. This makes EVs the most attractive target out of the three for an incentive program.

Two key barriers to EV adoption are range anxiety and cost literacy. Although the “fuel” for EVs is everywhere that society is found, the chargers – Electric Vehicle Supply Equipment (EVSE), to use the industry jargon – are far from ubiquitous. Prospective owners worry that they might get stuck somewhere en route with a dead battery. A program to provide more EVSEs, either at home base or typical destinations (malls, say, or employee parking), can alleviate this so-called range anxiety.

Cost literacy is another barrier. Car shoppers look at sticker price, but that has nothing to do with their ability to pay. When costs are expressed as a monthly payment, they can actually be compared to a household budget. However, with EVs, this cost is only part of the story. The base cost is higher, but the operating cost is peanuts. I attended a seminar at the Waterloo Institute for Sustainable Energy, where I learned that when cost is expressed as total monthly figure – fuel included – EVs win hands down against comparable internal combustion vehicles. An incentive program could be geared at simply clarifying this fact for car purchasers.

For larger vehicles, electric drive is still seems iffy, Edmonton’s choice to test electric buses notwithstanding. For this category, Compressed Natural Gas (CNG) is attractive. After a false start in the 1990s, this technology appears ready for prime time. It’s still a fossil fuel, true. However, a CNG vehicle produces 20% less greenhouse gases than a comparable diesel or normal gasoline vehicle, and virtually zero NOx, SOx, and particulates. It also has a significant cost advantage – CNG would be the equivalent of $0.45/L gasoline. Even with gas prices as low as they currently are (by recent, not historical standards), that offers a competitive return on the cost to convert existing vehicles, or the incremental cost to choose a new CNG vehicle over the gas/diesel model.

With all that said, HEVs, PHEVs, EVs, and CNG vehicles don’t hold a candle to the revolutionary possibilities of another emerging transportation technology. More on that in my next post.

Best of both worlds

Canada vs Germany energy efficiencyAccording to the World Energy Council, the average Canadian uses more than twice the energy of the average German. You read that right. Twice.

Guelph’s Community Energy Initiative aims to cut per-capita energy consumption by 50% from 2006 levels by 2031. Sounds ambitious, doesn’t it? However, you could rephrase that to say that Guelph is on a journey so that by 2031, it will arrive at the place that Germany occupied two decades before.

That sounds a lot less ambitious.

As I’ve explained in three of my last four posts (this one, this one, and this one), Guelph is embarking on a program called GEERS – Guelph Energy Efficiency Retrofit Strategy – to ensure that, despite an anticipated 50% increase in population, our overall energy consumption will actually drop from 2006 to 2031. GEERS will start by overhauling our residential buildings, yielding 20-40% decreases in energy use, and move on to the ICI (Industrial, Commercial, and Institutional) building segments after that. GEERS aims to retrofit between 2,000 and 3,000 homes per year between now and 2031. By the end of that time, Guelph will start looking a lot more like Germany as far as building energy efficiency goes. Over 38,000 dwellings will have been touched, and the sustained annual energy savings will be $120 million.

That’s a huge boost for an economy the size of Guelph’s. However, that doesn’t even speak to the direct and indirect benefits of the program itself. During the course of the 16 years that the program runs, it will result in over $30 million per year of spending, most of which will stay in the local economy. That’s a total of about half a billion dollars invested in Guelph, all in the name of keeping more energy dollars in the city.

The first beneficiary will be construction contractors. Based on what Guelph’s building department has told me about the volume of building permits for renovation work, GEERS could increase the size of this market by a factor of ten. If we assume it takes a team of three labourers one week to complete a retrofit project, the volume I mentioned above will yield somewhere between 120 and 180 full-time labourer jobs. Supervisor jobs will be over and above that amount, probably 30-45 jobs, to say nothing of management and back office positions.

Construction contractors will also see a profitability boost, since they won’t need to incur sales and marketing costs to win jobs – they’ll see a steady stream of projects from GEERS just for signing up, as long as they maintain quality standards. They will also see better utilization of human resources and equipment since there won’t be any staff sitting idle waiting for deals to close, giving another profitability fillip.

Contractors will also see a boost to their current, non-retrofit business. Homeowners that have been putting off a major renovation will likely decide to jump, once they can get a contractor mobilized to their home for GEERS. Let’s face it – most folks don’t get excited about the prospect of better insulation, weather stripping, furnace, water heater, thermostat, and (to a lesser extent) windows. However, if you already have a contractor on site, you can save big on extending the project scope to include stuff that GEERS won’t cover – granite countertops, new kitchen cabinetry, and a bathroom makeover. GEERS will provide a direct stimulus for work like this.

Along the same lines, financial institutions will see benefits. Since GEERS won’t cover this extra work, homeowners will use traditional methods of financing home renovations. This means that the big banks will see more home equity line of credit business.

Suppliers will see a boost as well. GEERS will cut deals for bulk pricing, and will likely mandate local warehousing operations to ensure reliable supply of product. Such operations will bring more jobs to Guelph. Some suppliers may even need to set up manufacturing facilities – a Euro-spec window producer is the most likely of these – bringing even more jobs.

GEERS will also help out the utilities with their Conservation and Demand Management (also called “Demand-Side Management”) programs, which some prefer to call “negawatts”. Paradoxically, it costs the utilities less to accommodate new demand not by bringing new energy supply online, but by reducing consumption. (More on that voodoo in a future post.) At any rate, the utilities have incentives available for many energy-saving measures, and GEERS will be implementing some of these exact measures. That means more dollars injected into the program, lower costs for the property owner, and a big fat check mark beside utility energy efficiency targets.

Contractors, banks, suppliers, and utilities – not coincidentally, the same cast of characters that I spoke about previously in the context of the EcoEnergy for Homes program – should all rejoice when GEERS hits the streets. But wait, there’s more.

GEERS may well stimulate the local real estate market as well. If a seller can give their home a boost in value which is effectively free, why wouldn’t they? We may even see people making a habit of buying a home, doing a GEERS retrofit and other quick face-lift measures, and flipping it again for a tidy profit. The market may take some time to adjust to the idea of the extra ongoing cost of the LIC, but soon it will become as pervasive as water heater rental.

Prevailing wisdom is that being green comes only at a significant cost, either in dollars, lifestyle, or comfort. GEERS gives the lie to that idea. It will deliver a stronger economy by cutting the flow of dollars bleeding out of the city to pay for imported energy, and it will deliver a stronger economy by creating well-paying, long-term employment for the energy efficiency industry. It will also take a big bite out of our collective greenhouse gas emissions. The best of all possible worlds.