The Future of Planes, Trains and Automobiles

The Future of Planes, Trains and Automobiles

Look at any plan to address climate change and you will find the future of the transport industry as a top priority. Transport accounts for 24% of global CO2 emissions from energy, and passenger and freight road traffic account for around three-quarters of transport emissions. Some areas of the industry are better than others; as the chart below highlights rail is the most energy-efficient means of motorised passenger transport and is similar to shipping for freight transport.


Notes: toe = tonne oil equivalent.  The boxes in this figure indicate the range of average energy intensity in various countries, while the horizontal likes represent the world averages.

Sources: IEA Mobility Model (IEA, 2018a), using assessments based on UIC (2018a); UITP (2018a); IDTP (018)a; National Bureau of Statistics of China (2018); Eurostat (2018); Indian Railways (2018a); Japan Ministry of Land, infrastructure and Tourism (2018); AAR (2017) and Russian Federation State Statistics Service (2018)


Key message > Rail is the most energy-efficient means of motorised passenger transport, much more energy efficient than road freight.


What can be done to create a more sustainable transport industry for the future?


Avoid, shift, improve refers to a transport planning framework, which was first developed in Germany during the 1990s. Its aims are threefold:  

  • Avoid unnecessary emissions
  • Shift transport to more efficient modes
  • Improve the efficiency of existing forms of transport.


Avoid measures include policies to dissuade people from taking long haul flights, or to encourage more local forms of production (e.g. via innovative manufacturing processes, such as 3D printing) in order to reduce the amount of goods that are transported. A 2016 Wired article suggested that the components of an iPhone travel around 500,000 miles by the time the phone reaches the customer’s pocket. This highlights just how transport-intensive many modern consumer goods are.


As the above chart suggests, policy measures that promote and encourage a shift from road freight and non-walking/cycling passenger traffic to rail is a great way to reduce greenhouse gas emissions.


Despite the potential benefits of avoid and shift strategies, the Intergovernmental Panel on Climate Change (IPCC) recognises that growth in passenger and freight travel demand is strongly dependent on population growth and GDP growth. The panel’s modelled scenarios, which are consistent with global warming beneath 2.5 degrees, estimate that global freight transport will increase by 1.2-1.7x by 2050. Passenger transport is expected to increase by 1.5-1.8x.  Therefore, improve strategies will need to play the most significant role in successfully reducing transport emissions as part of the world’s effort to limit global warning.

Battery improvements

Decarbonising challenges and opportunities vary by transport mode. The technology for battery-powered electric automobiles is already well established. Battery production, including the associated lithium and mineral extraction will need to be significantly scaled-up in the future. While this will likely present challenges, scaling-up of technologies and the associated raw material extraction is something that humankind has successfully achieved on numerous occasions throughout history. Electricity grids will also require major investment.


The energy density of batteries has improved 5-fold over the past decade and as this continues batteries will increasingly be used in non-automobile modes of transport. This will include buses, coastal and short distance shipping, passenger ferries, and even short-haul light planes. Around 62% of truck journeys in the EU are less than 400km per day and batteries have the capacity to fuel these journeys. For longer distance truck journeys Germany is trialing battery charging via overhead highway cables and it plans to roll this out over 4,000km of autobahns by 2030. Despite trains being relatively clean and efficient, less than 40% of the world’s rail network is electrified. Electrification of existing and new lines can further improve the environmental credentials of rail travel. On parts of the lines where this is not possible or economically viable then batteries will have a role to play.



However, as the mass and range of a vehicle increases, using battery power becomes less feasible. Aviation and shipping are widely recognized as sectors that are hard to decarbonise.  These industries have long touted the use of biofuels to limit future greenhouse gas emissions. Biofuels are produced from either waste or plants and face sustainability issues relating to food-versus-fuel arguments, water resource use, and biodiversity impacts. Feedstock availability and cost-effectiveness issues are also relevant. Other types of fuel will be required for the broader transportation sector to successfully decarbonize.


Hydrogen has the potential to play a major role in fueling modes of transport where electricity is not realistically viable. ‘Green’ hydrogen can be produced by using renewable energy to power electrolysers that split water into hydrogen and oxygen. When hydrogen is used as a fuel it emits only water. The cost of green hydrogen production is declining, and it is increasingly becoming cost-competitive with other fuel sources. The scaling-up of green hydrogen production will require massive investment in electrolysers, storage and distribution infrastructure. It will also require a vast expansion of renewable energy production capacity.


Hydrogen’s energy/weight ratio is significantly higher than that of jet fuel. Hydrogen could therefore be an excellent lightweight and clean aviation fuel of the future. One drawback is that hydrogen’s energy per unit of volume is lower than that of jet fuel. Hydrogen powered planes of the future would need to be designed very differently from today’s planes to create enough fuel storage in both the wings and the fuselage. Airbus is currently developing three hydrogen-powered concept planes and it aims to develop the world’s first zero-emissions commercial aircraft by 2035.  Several other companies are in the process of developing hydrogen-powered aviation technology, including German company H2FLY which has recently successfully flown one of its prototype aircraft (note that whilst hydrogen-powered flight may sound very futuristic, or even fanciful, the world’s first hydrogen-powered flight took place in 1957).  Nevertheless, a world where commercial flights are commonly hydrogen-fueled is likely to be more than a decade away. Moreover, as well as requiring the significant scaling-up of green hydrogen production, it will also depend upon the development of propulsion technologies, aircraft design and supporting aviation infrastructure.


The above-mentioned high volume required for hydrogen storage probably limits the likely use of hydrogen as a shipping fuel because too much cargo storage space would need to be given up for fuel storage. 


Ammonia, which is carbon-free and composed of hydrogen and nitrogen, is a feasible shipping fuel of the future. Its energy/weight ratio is lower than that of hydrogen (limiting ammonia’s potential use as an aircraft fuel) but its energy per unit of volume is higher than that of hydrogen, and this addresses the shipping storage issue. Wartsila already has a proven engine concept using ammonia blends of up to 70% and the company is working on a pure ammonia engine with various industry experts. Wartsila sees ammonia as the future fuel cell technology for long-haul marine transportation and provides great opportunities for direct fuel and electric configuration engines. However, there are challenges yet to overcome relating to nitrogen oxide (NOx) emissions from using ammonia as a fuel.

Renewing an old energy practice

In the meantime, the shipping sector could quickly and significantly benefit from an ancient form of renewable energy-driven transport technology. French based, Airseas has developed a “Seawing” (or sail) that can be installed on both existing and new-build cargo ships. It estimates that the system can be used on virtually any cargo ship and reduce emissions by an average of 20%. Cargill, the world’s largest commodities trader, is exploring the use of fixed-wing sails on some if its ships.  Sometimes the old ideas are the best.

More about the authors

Colin Dryburgh, CFA Investment Manager

Colin Dryburgh, investment manager, is a member of the multi-asset group. Prior to his current role, Colin worked for Aviva Investors, where he was a European equity analyst.

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