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Central Banks Becoming Leaders in Blockchain Experimentation

MD Staff

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Although central banks are among the most cautious institutions in the world, they are, perhaps surprisingly, among the first to implement and experiment with blockchain technology. Central banks have been quietly researching its possibilities since 2014. Over the past two years, the beginning of a new wave has emerged as more central banks launch large-scale pilots and research efforts, including rapid and complete cross-border interbank securities.

The Blockchain and Distributed Ledger Technology team at the World Economic Forum interviewed dozens of central bank researchers and analysed more than 60 reports on past and current research efforts. The findings were released today in a white paper, Central Banks and Distributed Ledger Technology: How are Central Banks Exploring Blockchain Today?

“As the blockchain hype cools, we are starting to see the real use cases for blockchain technology take the spotlight,” said Ashley Lannquist, Blockchain Project Lead at the World Economic Forum. “Central bank activities with blockchain and distributed ledger technology are not always well known or communicated. As a result, there is much speculation and misunderstanding about objectives and the state of research. Dozens of central banks around the world are actively investigating whether blockchain can help solve long-standing challenges such as banking and payments system efficiency, payments security and resilience, as well as financial inclusion.”

It is not widely known, for instance, that the Bank of France has fully replaced its centralized process for the provisioning and sharing of SEPA Credit Identifiers (SCIs) with a decentralized, blockchain-based solution. SEPA, or Single Euro Payments Area, is a payment scheme created by the European Union and managed on a country-by-country basis for facilitating efficient and secure cross-border retail debit and card payments across European countries. The solution is a private deployment of the Ethereum blockchain network and has been in use since December 2017. It has enabled greater time efficiency, process auditability and disaster recovery.

The fact that dozens of central banks are exploring, and in some cases implementing, blockchain technology is significant, according to the white paper. It is an early indicator of the potential use of this emerging technology across financial and monetary systems. “Central banks play one of the most critical roles in the global economy, and their decisions about implementing distributed ledger and digital currency technologies in the future can have far-reaching implications for economies,” Lannquist said.

Top 10 central bank use cases

Following interviews and analysis, how central banks are experimenting with blockchain can be highlighted by 10 top use cases.

Retail central bank digital currency (CBDC) –
A substitute or complement for cash and an alternative to traditional bank deposits. A central-bank-issued digital currency can be operated and settled in a peer-to-peer and decentralized manner, widely available for consumer use. Central banks from several countries are experimenting, including those from the the Eastern Caribbean, Sweden, Uruguay, the Bahamas and Cambodia.

Wholesale central bank digital currency (CBDC) – This kind of digital currency would only be available for commercial banks and clearing houses to use the wholesale interbank market.Central bank-issued digital currency would be operated and settled in a peer-to-peer and decentralized manner. Central banks from several countries are experimenting, including those from South Africa, Canada, Japan, Thailand, Saudi Arabia, Singapore and Cambodia.

Interbank securities settlement – A focused application of blockchain technology, sometimes involving CBDC, enabling the rapid interbank clearing and settlement of securities for cash. This can achieve “delivery versus payment” interbank systems where two parties trading an asset, such as a security for cash, can conduct the payment for and delivery of the asset simultaneously. Central banks exploring this include the Bank of Japan, Monetary Authority of Singapore, Bank of England and Bank of Canada.

Payment system resiliency and contingency – The use of distributed ledger technology in a primary or back-up domestic interbank payment and settlement system to provide safety and continuity in case of threats, including technical or network failure, natural disaster, cybercrime and others. Often, this use case is coupled with others as part of the set of benefits that a distributed ledger technology implementation could potentially offer. Central banks exploring this include the Central Bank of Brazil and Eastern Caribbean Central Bank.

Bond issuance and lifecycle management – The use of distributed ledger technology in the bond auction, issuance or other life-cycle processes to reduce costs and increase efficiency. This may be applied to bonds issued and managed by sovereign states, international organizations or government agencies. Central banks or government regulators could be “observer nodes” to monitor activity where relevant. Early implementation is being conducted by the World Bank with their 2018 “bond-i” project.

Know-your-customer (KYC) and anti-money-laundering (AML) – Digital KYC/AML processes that leverage distributed ledger technology to track and share relevant customer payment and identity information to streamline processes. This may connect to a digital national identity platform or plug into pre-existing e-KYC or AML systems. Central banks exploring this include the Hong Kong Monetary Authority.

Information exchange and data sharing – The use of distributed or decentralized databases to create alternative systems for information and data sharing between or within related government or private sector institutions. Central banks exploring include the Central Bank of Brazil.

Trade finance – The employment of a decentralized database and functionality to enable faster, more efficient and more inclusive trade financing. Improves on today’s trade finance processes, which are often paper-based, labour-intensive and time-intensive. Customer information and transaction histories are shared between participants in the decentralized database while maintaining privacy and confidentiality where needed. Central banks exploring this include the Hong Kong Monetary Authority.

Cash money supply chain – The use of distributed ledger technology for issuing, tracking and managing the delivery and movement of cash from production facilities to the central bank and commercial bank branches; could include the ordering, depositing or movement of funds, and could simplify regulatory reporting. Central banks exploring this include the Eastern Caribbean Central Bank.

Customer SEPA Creditor Identifier (SCI) provisioning – Blockchain-based decentralized sharing repository for SEPA credit identifiers managed by the central bank and commercial banks in the SEPA debiting scheme. This is a faster, streamlined and decentralized system for identity provisioning and sharing. It can replace pre-existing manual and centralized processes that are time- and resource-intensive, as seen in the Bank of France’s Project MADRE implementation.

Emerging economies may benefit most: Cambodia, Thailand and South Africa and others experimenting

The National Bank of Cambodia will be one of the first countries to deploy blockchain technology in its national payments system for use by consumers and commercial banks. It is implementing blockchain technology in the second half of 2019 as an experiment to support financial inclusion and greater banking system efficiency.

The Bank of Thailand and the South African Reserve Bank, among others, are experimenting with CBDC in large-scale pilots for interbank payment and settlement efficiency. The Eastern Caribbean Central Bank is exploring the suitability of distributed ledger technology (DLT) to advance multiple goals, from financial inclusion and payments efficiency to payment system resilience against storms and hurricanes.

“Over the next four years, we should expect to see many central banks decide whether they will use blockchain and distributed ledger technologies to improve their processes and economic welfare,” Lannquist said. “Given the systemic importance of central bank processes, and the relative freshness of blockchain technology, banks must carefully consider all known and unknown risks to implementation.”

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How Nuclear Techniques Help Feed China

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With 19% of the world’s population but only 7% of its arable land, China is in a bind: how to feed its growing and increasingly affluent population while protecting its natural resources. The country’s agricultural scientists have made growing use of nuclear and isotopic techniques in crop production over the last decades. In cooperation with the IAEA and the Food and Agriculture Organization of the United Nations (FAO), they are now helping experts from Asia and beyond in the development of new crop varieties, using irradiation.

While in many countries, nuclear research in agriculture is carried out by nuclear agencies that work independently from the country’s agriculture research establishment, in China the use of nuclear techniques in agriculture is integrated into the work of the Chinese Academy of Agricultural Sciences (CAAS) and provincial academies of agricultural sciences. This ensures that the findings are put to use immediately.

And indeed, the second most widely used wheat mutant variety in China, Luyuan 502, was developed by CAAS’s Institute of Crop Sciences and the Institute of Shandong Academy of Agricultural Sciences, using space-induced mutation breeding (see Space-induced mutation breeding). It has a yield that is 11% higher than the traditional variety and is also more tolerant to drought and main diseases, said Luxiang Liu, Deputy Director General of the Institute. It has been planted on over 3.6 million hectares – almost as large as Switzerland. It is one of 11 wheat varieties developed for improved salt and drought tolerance, grain quality and yield, Mr Liu said.

Through close cooperation with the IAEA and FAO, China has released over 1,000 mutant crop varieties in the past 60 years, and varieties developed in China account for a fourth of mutants listed currently in the IAEA/FAO’s database of mutant varieties produced worldwide, said Sobhana Sivasankar, Head of the Plant Breeding and Genetics Section at the Joint FAO/IAEA Division of Nuclear Techniques in Food and Agriculture. The new mutation induction and high-throughput mutant selection approaches established at the Institute serve as a model to researchers from around the world, she added.

The Institute uses heavy ion beam accelerators, cosmic rays and gamma rays along with chemicals to induce mutations in a wide variety of crops, including wheat, rice, maize, soybean and vegetables. “Nuclear techniques are at the heart of our work, fully integrated into the development of plant varieties for the improvement of food security,” Liu said.

The Institute has also become a key contributor to the IAEA technical cooperation programme over the years: more than 150 plant breeders from over 30 countries have participated in training courses and benefited from fellowships at CAAS. 

Indonesia’s nuclear agency, BATAN, and CAAS are looking for ways to collaborate on plant mutation breeding and Indonesian researchers are looking for ways to learn from China’s experience, said Totti Tjiptosumirat, Head of BATAN’s Center for Isotopes and Radiation Application. “Active dissemination and promotion of China’s activities in plant mutation breeding would benefit agricultural research across Asia,” he said.

From food safety to authenticity

Several of CAAS’ other institutes use nuclear-related and isotopic techniques in their research and development work and participate in several IAEA technical cooperation and coordinated research projects. The Institute of Quality Standards and Testing Technology for Agro-Products has developed a protocol to detect fake honey, using isotopic analysis. A large amount of what is sold in China as honey is estimated to be produced synthetically in labs rather than by bees in hives, so this has been an important tool in cracking down on fraudsters, said Professor Chen Gang, who leads the research work using isotopic techniques at the Institute. A programme is also in place to trace the geographical origin of beef using stable isotopes, he added.

The Institute uses isotopic techniques to test the safety and to verify the authenticity of milk and dairy products – work that was the outcome of IAEA technical coordinated research and cooperation projects that lasted from 2013 to 2018. “After a few years of support, we are now fully self-sufficient,” Mr Gang said.

Improving nutrition efficiency

Various CAAS institutes use stable isotopes to study the absorption, transfer and metabolism of nutrients in animals. The results are used to optimize feed composition and feeding schedules. Isotope tracing offers higher sensitivity than conventional analytical methods, and this is particularly advantageous when studying the absorption of micronutrients, vitamins, hormones and drugs, said Dengpan Bu, Professor at the Institute of Animal Science.

While China has perfected the use of many nuclear techniques, in several areas it is looking to the IAEA and the FAO for support: the country’s dairy industry is dogged by the low protein absorption rate of dairy cows. Less than half of the protein in animal feed is used by the ruminants, the rest ends up in their manure and urine. “This is wasteful for the farmer and the high nitrogen content in the manure hurts the environment,” Mr Bu said. The use of isotopes to trace nitrogen as it travels from feed through the animal’s body would help improve nitrogen efficiency by making the necessary adjustments to the composition of the feed. This will be particularly important as dairy consumption, currently at a third of global average per person, continues to rise. “We are looking for international expertise, through the IAEA and the FAO, to help us tackle this problem.”

IAEA

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When neuroscience meets AI: What does the future of learning look like?

MD Staff

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Photo: MGIEP

Meet Dr. Nandini Chatterjee Singh, a cognitive neuroscientist at UNESCO MGIEP (Mahatma Gandhi Institute of Education for Peace and Sustainable Development) where she has been leading the development of a new framework for socio-emotional learning. MGIEP focuses on mainstreaming socio-emotional learning in education systems and innovating digital pedagogies.

Dr. Singh answered five questions on the convergence of neuroscience and Artificial Intelligence in learning, ahead of the International Congress on Cognitive Science in Schools where she will be speaking this week.

What are the links between neuroscience and Artificial Intelligence when it comes to learning?

The focus of both neuroscience and AI is to understand how the brain works and thus predict behaviour. And the better we understand the brain, the better designs we can create for AI algorithms. When it comes to learning, the neuroscience – AI partnership can be synergistic. A good understanding of a particular learning process by neuroscience can be used to inform the design of that process for AI. Similarly, if AI can find patterns from large data sets and get a learning model, neuroscience can conduct experiments to confirm it. 

Secondly, when neuroscience provides learning behaviours to AI, these behaviours can be translated into digital interactions, which in turn are used by AI to look at learning patterns across large numbers of children worldwide. The power of AI is that it can scale this to large numbers. AI can track and search through massive amounts of data to see how that learning happens, and when required, identify when learning is different or goes off track.

A third  feature is that of individualized learning.  We increasingly also know that learning has a strong individual component. Yet our classrooms are structured to provide common learning to all children. Sometimes these individual differences become crucial to bring out the best in children, which is when we might tailor learning.  Neuroscience research on individual differences has shown that detailed information on that individual can reveal a wealth of information about their learning patterns. However, this is extremely cost and labour intensive. Yet, this detailed learning from neuroscience can be provided to AI in order to scale. AI can collect extensive detailed data at the personal level, to design a path to learning for that child. Thus, what neuroscience can study in small groups, AI can implement in large populations. If we are to ensure a world where every child achieves full potential, such personalized learning offers a great promise.

How do we create a structure around AI to ensure learning standards globally?

One thing AI capitalizes on and constantly relies on is large volumes of data. AI algorithms perform better if they are being fed by continuous distributed data. We need to keep in mind that humans are the ones designing these algorithms. This means that the algorithms will only do as well as the data that they have been trained on. Ensuring that we have access to large amounts of data that comes from various situations of learning is crucial. What sometimes becomes an issue for AI algorithms is that most of the training data has been selected from one particular kind of population. This means that the diversity in the forms of learning is missing from the system.

To return to reading and literacy as an example, in neuroscience, a large part of our research and understanding of how the brain learns to read has come from individuals learning to read English and alphabetic languages. However, globally, billions of people speak or read non-alphabetic languages and scripts that are visually complex, which are not really reflected in this research. Our understanding is built on one particular system that does not have enough diversity.

Therefore, it is important that AI algorithms be tested in varied environments around the world where there are differences in culture. This will create more robust learning models that are able to meet diverse learning requirements and cater to every kind of learner from across the world. If we are able to do that, then we can predict what the learning trajectory will look like for children anywhere.

Human beings have similarities in the way they learn, but pedagogies vary across different situations. In addition, those differences must be reflected in the data provided. The results would be much more pertinent if we are able to capture and reflect those differences in the data. This will help us improve the learning of AI, and ultimately understand how the brain works. We would then be better suited to leverage the universal principles of learning that are being used across the world and effects that are cultural in nature. That is also something that we want to hold on to and capitalize on in trying to help children. People designing AI algorithms so far have not given a lot of attention to this, but they are now beginning to consider it in many places across the world.

How do you see AI’s role in inclusive education today, especially in the context of migration?

Societies have become multicultural in nature. If you go to a typical classroom in many countries, you will find children from diverse cultures sitting in the same learning space. Learning has to be able to meet a variety of needs and must become more inclusive and reflect cultural diversity. Innovative pedagogy such as games, interactive sessions and real-life situations are key because they test learning capabilities focused on skills that children should acquire.  AI relies on digital interactions to understand learning and that comes from assessing skills and behaviours. We now recognize that what we need to empower our children with are skills and behaviours – not necessarily tons of information.

Digital pedagogies like interactive games are among the ones emerging rapidly to assess children’s skills. They are powerful because they can be used in multicultural environments and can assess different competencies. They are not necessarily tied to a specific language or curricula but are rather performance-based. How do you assess children for collaboration in a classroom? In the context of migration and 21st century skills, these are necessary abilities and digital games provide a medium to assess these in education. When such interactive games are played by children across the world, they provide digital interactions to AI. AI might discover new patterns and ways to collaborate since children have ways of doing things that are often out of the box. A skills-based approach can be applied anywhere, whether it is in a classroom in India, France or Kenya. In contrast, curriculum-based methods are context-specific and show extensive cultural variation.

What are the risks and the challenges?

Data protection and security is of course still a huge issue and is the biggest challenge in this sphere. We have to ensure that children are never at risk of exposure and that the data is not misused in any way. This is something that needs more global attention and backing.

Another crucial point is that learning assessments should not be restricted to just one domain. There are multiple ways, and time and space to learn. Learning is continuous in nature and should be able to be adapted to the child’s needs at that particular point. The assessment should also be continuous in order to get a full picture of the improvement that the child is demonstrating. If there is no improvement, then we can provide interventions to help and find out why learning is not happening. From what we know from neuroscience, the earlier you can provide intervention, the better is the chance of the child to be able to change and adapt. The ability of the brain to learn and change is much easier and faster in childhood compared to adulthood.

Yet, we want to be cautious about the conclusions we draw about how to intervene with children. Poor academic performance might have a social or emotional reason.

Thus, learning today needs to be multi-dimensional.  Along with academic competencies, social and emotional skills also need to be assessed.  If this information is used wisely, it can provide a lot of insight about the child’s academic and emotional well-being. Based on the combination of the two, the right intervention can be provided. Unless multiple assessments all converge on the same result, the child’s learning abilities should not be labeled. AI gives a great opportunity to conduct multi-skills assessments, rather than just one. And that is something that we should leverage, rather than abandon. The standards for the baselines for the algorithms must be properly taken into consideration for any type of assessment. They must come from a large quantity of distributed data in order to provide more accurate results. That is something that we should not compromise under any condition.

How is the teaching community responding to this new way of learning and assessing?

There are teachers who worry about the future of learning but that is also because they do not necessarily have the full picture. People working and promoting the use of AI in learning must play a crucial role in telling teachers that they will not be obsolete. Teachers will be more empowered and be able to meet the needs of every kind of learner in their classrooms. The ideal world would be to have one teacher per child but that is of course impossible. AI is a tool to guide teachers when it comes to finding the right intervention for a student that might be struggling to learn. That intervention comes from data that has been checked for bias and diversity and does not use ‘a one size fits all ‘approach and therefore teachers can be more certain that it will fit the needs of the child. AI gives the opportunity for the teacher to tailor learning for the child. In addition, we do not really know all the different kinds of learning. Sometimes we have to be prepared to learn from children themselves. Children can give us insights into the different ways that learning actually happens, and teachers should be able apply them back into the classroom. Teachers are extremely powerful individuals who are able to shape the brains of so many children. If they are doing a good job, they are making individuals for life.    

UNESCO

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Shared, automated… and electric?

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Authors: George Kamiya and Jacob Teter*

Automated driving and shared mobility could dramatically reshape road transport over the coming decades, with major implications for vehicle electrification and the broader electricity system. But can we assume that shared and/or autonomous vehicles of the future will be electric?

While electric vehicles (EVs) tend to be more expensive to purchase, they have lower fuel and maintenance costs than conventional vehicles. As shared and/or autonomous fleets would typically have heavier use patterns than with privately owned vehicles, the lower running costs could make EVs cheaper overall. But whether EVs could fulfil all the operational and technical requirements of shared and/or autonomous vehicles is less certain.

Building upon our look at emerging mobility technologies and services, we discuss the opportunities and challenges of electrifying shared mobility car fleets today and examine prospects for electrifying autonomous vehicles in the future. We explore how we might need to begin to re-think EV-related policies and investments to capitalise on synergies between the three revolutions – sharing, automation and electrification.

Shared and electric?

Car sharing services, which emerged in major cities in the early 2000s, allow members to borrow cars on a short-term basis. As car sharing fleets tend to have shorter trip distance profiles and higher utilisation rates compared to privately owned vehicles, EVs might be a good fit. In fact, several car sharing programs already operate all-electric fleets, including Moov’in.Paris, BlueSG (Singapore), Carma (San Francisco), car2go (Stuttgart, Amsterdam, Madrid, Paris), and DriveNow (Copenhagen).

Most car sharing services operate in one of two ways: free-floating systems where cars can be parked anywhere, or hub/depot services where cars must be left in designated parking spots. In recent years, smartphones and mobile connectivity have made free-floating systems (and by extension one-way journeys) easier to access and pay for.

But free-floating systems using EVs face operational challenges as they rely on a limited number of public fast chargers. These challenges could be overcome through larger batteries, a better-designed charging network (e.g. faster chargers, more stations), or user incentives. In comparison, hub/depot car sharing systems can schedule slower and cheaper charging on their own chargers during vehicle downtimes.

Just as smartphones have changed the way car sharing services operate, they have fostered the rapid expansion of app-based ride-sourcing services provided by so-called transportation network companies (TNCs) such as Uber, Lyft, Didi Chuxing and GrabTaxi. The adoption of EVs in TNC fleets has been slow, despite the significant fuel and maintenance savings potential of EVs for full-time drivers working with TNCs. EV shares on the major ride-sourcing platforms remain below 1% with the exception of Didi at 1.3%, which already has over 400 000 EVs on its network. In California, EVs represented about 1% of vehicle share and trip miles in 2017.

There are also several barriers to EV adoption in taxis and ride-sourcing fleets. First, EVs are generally more expensive to purchase, and few EV models available today meet all the operational requirements of taxis and ride-sourcing services – notably long electric range, seat capacity and large trunk space.

Second, the combination of limited driving range, long charge times, and/or limited access to fast charging can pose challenges – searching for available chargers and long charging times could mean foregone revenues for drivers. Some taxi fleets are demonstrating the use of fuel cell electric vehicles (FCEVs) which could address some of these operational challenges.

Third, TNCs have limited ability to influence purchase decisions of their drivers, including in most jurisdictions where they cannot specify the use of particular vehicle models. But several TNCs are initiating programs to encourage usage of EVs on their platforms. Uber’s Clean Air Program in London provides financial incentives to drivers to switch to or drive more in EVs while Lyft ExpressDrive’s short-term lease options allow drivers to try EVs with little risk. Maven, GM’s car-sharing spin-off, offers a service of short-term rentals of the Chevrolet Bolt BEV to drivers working for TNCs and other shared platforms.

Shifting to EVs for car sharing and TNCs could lead to much larger per-vehicle reductions in GHG and local pollutant emissions compared to privately owned EVs. High utilisation and faster fleet turnover could also help to accelerate battery innovation cycles and more rapid adoption of increasingly efficient vehicles. In addition, given the importance of EV awareness and experience in influencing purchase decisions, the potential exposure of the benefits of electric drive to millions of potential car buyers could indirectly help to increase adoption of privately owned EVs.

Autonomous and electric?

Meanwhile, rapid advances in sensing technologies, connectivity, and AI are bringing highly automated vehicles – autonomous vehicles (AVs) – closer to market. Waymo recently launched their self-driving car service, Waymo One, while major automakers have announced plans to introduce AVs as early as 2020.

Just as with shared mobility and electrification, there are synergies between automation and electrification. With high utilisation rates, commercial fleet applications (where early adoption of AVs seems likely) tend to favour powertrains with lower operations and maintenance costs, including EVs. Well-coordinated fleets of electric AVs may be able to manage challenges around range, access to charging infrastructure, and charging time management. Automated driving technologies may also be easier to implement in EVs due to the greater number of drive-by-wire components.

However, higher utilisation rates of commercial AVs will also mean greater travel distances per day, requiring larger and more expensive battery packs or more frequent recharging (and downtime). AVs may also require significant power consumption to power on-board electronics, though the efficiency of these chips is improving rapidly, from 3‑5 kW in the first generation to less than 1 kW today.

While there is considerable debate regarding how quickly (and if ever) AVs will enter the mainstream, there are specific use cases where the feasibility and economics favour early adoption. For example, commercial applications where labour costs are high or where automation could enable higher vehicle utilisation (e.g. trucks, buses, taxis and ride-sourcing) have the largest potential for cost-cutting through automation.

Pilots and trials are underway for these applications in over 80 cities around the world, and nearly all are using some form of electrified vehicle. Notable examples include robotaxis from Waymo and nuTonomy/Lyft, autonomous electric shuttles across cities in Europe and North America, and autonomous electric buses in Asia. In California, EVs now account for around 70% of automated vehicle trial miles (mostly plug-in hybrids).

A growing number of trials of autonomous electric urban delivery vehicles are also being undertaken in a number of cities in China and the United States. While testing of autonomous freight trucks has been limited to date, early models and concepts from Einride, Ford, and Volvo  suggest a push towards all-electric. Tesla’s all-electric Semi is equipped with Enhanced Autopilot (equating to SAE Level 2 automation), which allows for automatic lane-keeping, forward collision warning, and automatic emergency braking.

Shared, autonomous and electric vehicles… and the grid

Governments, utilities, and other companies are actively working to build out charging infrastructure to support the growing number of EVs. Recent research (here, here, and here) shows how public charging infrastructure in particular will be critical in catalysing further market uptake of personally owned electric cars.

For fleets, their intensive and distinct use patterns imply greater (and different) needs for charging compared to private EVs. The availability and coverage of public and fast chargers could be a critical factor in how quickly these fleets become electric, and how business models evolve around shared and/or automated mobility.

EVs currently make up only about 1% of all passenger cars globally, but clustering effects in EV adoption at the local level, combined with uncoordinated charging, could cause problems for the distribution grid, and eventually require greater investments in power generation and transmission.

A combination of pricing incentives and digital technologies (including, eventually, coordinated discharging of EV batteries) could better coordinate fleet and private charging of EVs, minimising negative grid impacts, reducing CO2 emissions, and providing ancillary services. A transition to shared, automated, and electric vehicle (SAEV) fleets could also yield significant system-wide benefits for the grid, assuming the necessary digital technologies and incentive structures are in place.

Researchers are already looking at how different fleet compositions of SAEVs and charger availability could impact costs, operations, and grid impacts. For instance, fleet simulations in Austin, Texas (2016, 2018); Zurich, Switzerland (2016); Columbus, Ohio (2018); and Tokyo, Japan (2019) have investigated how varying fleet size, electric range, charger speed, and pooling could impact vehicle travel patterns and wait times. As the electric fleets modelled in these simulations begin to roll out in the real world, empirical data will lead to a far more robust and deep understanding of the opportunities and trade-offs of SAEVs.

In the near-term, appropriate data sharing between policy makers, utilities, and fleet operators could help anticipate needs for charging infrastructure as mobility service fleets electrify. Over the long-term, shifts towards SAEV fleets could improve the economics of charging infrastructure by increasing utilisation, promoting faster returns on investments and reducing reliance on subsidies and indirect revenue streams through grid services. Utilities could also explore rate structures that maximise grid benefits. Volumetric energy rates based on hourly wholesale pricing, for instance, may be a promising means of reducing peak loading and promoting charging at times when variable renewables are at their peak.

Policies and strategies to electrify a shared and/or automated future

National, regional, and municipal governments around the world are implementing a range of policies to encourage EV adoption and use. Country (and city)-specific objectives, constraints, and contexts will continue to shape the design of appropriate policy mixes for each jurisdiction.

Purchase incentives have generally been effective in encouraging the purchase of EVs, in turn helping to stimulate investment and bring down costs of battery and EV production. Mandates that car manufacturers produce minimum volumes of EVs (i.e. ZEV mandates) have complemented these by providing supply-side certainty.

But with growing adoption of shared (and potentially autonomous) mobility, the importance of policies designed to more directly incentivise the use of EVs over conventional vehicle travel will grow. These policies could include fuel taxes, zero-emission zones, road pricing, HOV and transit lane access, incentives for electric mobility services, or even restrictions on the use of conventional vehicles. Supporting the build-out of charging infrastructure will continue to be crucial to further EV adoption and use, including fast-charging infrastructure in densely populated metropolises and a robust charging network to support a transition to all-electric fleets. Cities where taxi and bus fleets are already making the transition to electric drive may be able to leverage fast-charging stations built for these fleets to spur a transition to electric shared mobility.

Researchers and policymakers are exploring alternative policy frameworks that could be effective in promoting electrification of shared and, eventually, autonomous fleets. California’s SB-1014 “California Clean Miles Standard and Incentive Program: zero-emission vehicles” approved in September 2018 aims to establish annual emission reduction targets for TNCs per passenger-mile. London’s Ultra Low Emissions Zone encourages for all road users, including fleets, to switch to EVs.

Given the uncertainty in how emerging trends could reshape mobility, policymakers might look to more flexible and forward-looking policies and strategies to get ready for different futures.

There may already be useful lessons learned on EV policy and infrastructure planning from cities with high rates of electrified taxis and buses such as Shenzhen, Amsterdam and Santiago. Electric bus depots or other centralised charging hubs could also serve mobility service fleets of the future, supplementing or even servicing the majority of charging needs. Such hubs could be located outside of cities, where property values (not to mention constraints on high voltage installations) are lower. But there may be systems-level repercussions to relying on such a strategy: it could lead to more traffic congestion and lower operational service efficiency from increased “deadheading”.

Dynamics are likely to differ between cities and geographies, driven by differences in power generation mixes and in mobility patterns. Simulations and case studies can begin to illustrate the levers behind such differences, and to anticipate the potential transformations that might occur if, and when, cars and buses become fully autonomous.

To help inform the design of flexible and forward-looking policies, research needs to continue to improve our understanding of a few key questions:

How do the charging needs of fleets differ from those of privately owned cars and in different geographic contexts? How can public charging infrastructure work to support the electrification of fleets and promote driving on electricity?

How might automated fleets change investment decisions around charging infrastructure, including the economics of wireless charging or battery swapping? What business models, data sharing, or policy is needed to balance charging infrastructure needs to support mobility service fleet operations and grid operations?

What are the energy and emissions implications of various market and regulatory designs of power markets? How can they facilitate the transition to renewable and low-carbon energy generation?

Electrifying vehicles can reduce some of the environmental impacts of mobility, notably local air pollution and greenhouse gas emissions. But other adverse effects on society could be exacerbated by emerging mobility technologies and trends, including congestion, inequality, and mobility access issues. Policy makers will need to implement comprehensive policy packages that guard against these challenges. We will explore these and other critical issues in upcoming commentaries.

*Jacob Teter, Transport Analyst

IEA

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