Brace yourselves: according to a new study, fossil-fuel enterprises and investments will go out of business as soon as 2025. “By 2030, within 10 years of regulatory approval of autonomous vehicles (AVs), 95% of U.S. passenger miles traveled will be served by on-demand autonomous electric vehicles owned by fleets, not individuals, in a new business model we call “transport-as-a-service” (TaaS),” reveals a study entitled “Rethinking Transportation 2020-2030” that was released this month.
Key players in the transport sector as well as city leaders have been talking about this tech-driven transport evolution since the introduction of autonomous technology. According to the study, TaaS will have strong impacts on both the transportation and fossil-fuel industries, “decimating entire portions of their value chains.” It will result in a drastic drop in fossil-fuel demand and prices, and while it destroys trillions of dollars in investor value, it will also create trillions of dollars in new business opportunities, consumer surplus and GDP growth.
The report was published by RethinkX, an independent think tank that analyzes and forecasts the speed and scale of technology-driven disruption and its implications across society. “Rethinking Transportation 2020-2030” is the first in a series of reports.
According to the study, the earthquake of the impact that is a result of the collapse of oil prices throughout the fossil-fuel industry value chain will be felt as soon as 2021. By 2020, fossil-fuel demand will peak at 100 million barrels per day, however, 10 years later, it will drop to 70 million barrels. “That represents a drop of 30 million barrels in real terms and 40 million barrels below the Energy Information Administration’s current “business as usual” case,” finds the study. This will have a ‘catastrophic effect’ on the oil industry through price collapse (an equilibrium cost of $25.4 per barrel), affecting companies, countries, oil fields and infrastructure in different proportions, depending on the degree of their reliance on high-cost oil.
Starting with the countries that are to be affected, the geopolitical importance of fossil-fuels will vastly diminish. The speed and scale of the collapse in oil revenues may lead to the destabilization of oil-producing countries and regions with high dependence on oil “rents.”
On the environmental level, the TaaS disruption of fossil-fuel combustion is expected to result in a drastic reduction or even complete elimination of air pollution and greenhouse gases from the transport sector and improved public health. The study foresees that the TaaS transport system will reduce energy demand by 80% and tailpipe emissions by over 90%; assuming a concurrent disruption of the electricity infrastructure by solar and wind, “we may see a largely carbon-free road transportation system by 2030,” the study states.
On the social level, TaaS is expected to dramatically lower transportation costs and in the meantime increase mobility and access to jobs, education and healthcare – especially for elderly and disabled citizens who often bear the brunt of the disadvantages of today’s model. This reshuffle is expected to create trillions of dollars in consumer surplus, contributing to cleaner, safer and more walkable communities.
“We foresee a merging of public and private transportation and a pathway to free transportation in the TaaS Pool model; [which is] a subset of TaaS that entails sharing a ride with other people who are not in the passenger’s family or social group — the equivalent of today’s Uber Pool or Lyft Line,” the study adds. RethinkX also imagines that corporations might even sponsor vehicles or offer free transport to market goods or services to commuters.
Of course, with all this change, the role of public transportation authorities (PTA) will especially change dramatically from owning and managing transportation assets, to managing TaaS providers to ensure equitable, universal access to low- cost transportation. “Many municipalities will see free TaaS as a means to improve citizens’ access to jobs, shopping, entertainment, education, health and other services within their communities,” the researchers predict.
Cities like Orlando, Pittsburgh and K-City are chasing time to make autonomous technology a reality. However, many are wary about this intervention not out of fear of abandoning fossil-fuels, but because of the “smart crimes” and hacks that come with it, and the difficulty of combating them.