Can cities increase trips while reducing CO2 emissions?
Innovating to decouple movement abundance from pollution overload
The “Abundance movement” is gaining traction in certain policy circles in the US. There will be a time and moment to comment on Ezra Klein and Derek Thompson’s book, as well as the many incisive reviews that have come out in the past month or so. A core argument of this movement is that governments should push for an agenda that puts growth (building and invention) and effective delivery of public goods at the core and center of their policy programs. This means reinvigorating the government machinery and removing the barriers that prevent it from advancing bold policies and innovations.
The appeal of this agenda is evident, even more so in areas where supply has fallen so way behind demand, such as housing. In other sectors, like transport and mobility, the push for increased supply has been received with more caution. David Zipper, former city official and VC funder, as well as insightful writer and mobility policy expert, recently noted the risks of an abundance agenda for transport: “the vast majority of Americans travel by car. Dramatically expanding driving even further would threaten the planet, public health and urban life.”
Of course, simply promoting cars is not the only way to increase mobility “supply”. Cities can add public transit offerings or build infrastructure for bikes or electric vehicles. They can also provide permits to new mobility operators, such as car-sharing, car-pooling, or shared e-bikes and e-scooters. The problem is that promoting this supply is not always easy - building new infrastructure is expensive, and aligning incentives with new mobility providers has proved challenging.
How can then cities support peoples’ movement - to work, to school, to play… - without pushing congestion and pollution to even higher levels?
For some, this decoupling is impossible. They think that the only way to achieve lower emissions is to reduce the number of trips people make. The 15-minute city concept is partly driven by such thinking.
Today, however, I would like to focus on two innovations that do not seek to suppress people’s movement, but change the way in which people move (more). How? Not so much by subsidizing supply, but by incentivizing the “right” kind of demand. What does “right” mean? Basically incentivizing people to move in ways that are cleaner, healthier, safer, and better for urban living.
This startup is trying to tackle two main challenges that cities face when trying to promote new mobility services. First, cities often find it hard to steer how these services are provided in terms of coverage, pricing, etc. Permits try to include some of those conditions, but they are often too broad-brushed and difficult to monitor. Operators frequently feel that cities’ requirements are too stringent, making their business models difficult, and cities in turn feel cheated when operators do not fully abide by the rules. When added to a history of mutual distrust in many places, the result is a recipe for failure.
In other cases, mostly in fixed shared-bike schemes, the city puts the service to tender. Procuring these services through lengthy, cumbersome, and inflexible procurement processes has also proved to be a challenge, with many fiascos that highlight how this approach often falls short.
How does Mobility Impact Market try to overcome these challenges?
Basically, by paying mobility operators based on their results, not inputs or fleet sizes. The philosophy is akin to that of social impact bonds. City governments allocate money to a fund, managed by Mobility Impact Market. This money is then distributed to mobility operators based on whether they meet certain objectives such as reduced CO2 emissions, decreased congestion, or improved health outcomes. This way, operators are incentivized to push up the demand for better mobility modes and meet it with their services. Some of these funds can then be distributed to users who choose healthier and cleaner modes of transport as an alternative to the car.
Source: Mobility Impact Market
Too complicated? Well, it is not an easy operation, but the truth is that a similar scheme is already operating in countries like Spain and France with the certificates of energy savings for carpooling. Enter the second example:
Spanish Certificates for Energy Savings
The Certificados de Ahorro Energético (CAE) for carpooling launched by the Spanish Government in 2023 are designed to incentivize people to share car journeys instead of driving alone. They represent a standardized unit of final energy saving (1 CAE = 1 kWh saved) achieved through verified carpooling activities. These certificates can then be traded, primarily sold to energy companies who need to meet national energy-saving obligations. Essentially, it turns verified energy savings from carpooling into a tradable asset.
The system relies on standardized calculation methods defined in official technical sheets ("fichas técnicas") approved by the Spanish Ministry (MITECO). An accredited third-party verifier must confirm the data reported by the entity promoting the carpooling (e.g., a carpooling platform such as BlaBlaCar or HoopCarpool). There are different CAEs for long-distance and short-distance (“urban and metropolitan collaborative mobility”) carpooling services, which have slightly different calculation methods.
While the system is still in its early stages of implementation and market development, it's impressive to see that Spain's CAE system is already validating significant energy reductions, clocking in at 1,984.8 Gigawatt-hours (GWh) in granted savings so far.
How does this translate into actual monetary incentives? A substantial market value of anywhere between €228.3 million to €277.9 million, showcasing the considerable economic - as well as transformational - potential of these incentives.
The available data does not specify how much of the granted energy amount is specifically allocated to carpooling, but we know that transportation accounts for around a fifth of this total energy savings (between €45 and €55 million). And we also know that companies such as BlaBlaCar have already acquired a substantial share of that amount and distributed it among 1.5 million users. If this market grows at the rate that the data suggests (see graph below for the savings requested by March 2025), the opportunity for CAEs to incentivize more energy efficient mobility is quite something!
Source: Spanish Ministry (MITECO) available here
If you have arrived all the way down here, my brave reader, you may be telling yourself all this sounds really cool but, hold on, wasn’t abundance all about promoting supply? Isn’t this post squarely focused on demand?
Well, if we see abundance less about promoting any kind of supply and more about reducing barriers to foster plenty of “good” things, then, helping people move more (or as much as they want, really) but in better ways, then these innovations are fully aligned with the abundance agenda.
Because supporting the government to be more effective at delivering public goods is essential, but often, the best way to push the “right” supply is to foster the “right” demand!