Effective transportation is the backbone of our increasingly interconnected world. As the automobile enters its second century of adoption, it confronts global markets eager for transportation alternatives and technologies to enable a variety of propulsion alternatives.
In this context, we see opportunity in both the personal and mass transportation sectors that encompasses drive trains, energy storage (batteries, fuel cells) and conversion systems, and alternative fuels (biodiesel, bio-ethanol). In addition to vehicles, we see opportunity in services, infrastructure and business models that capitalize on the changing dynamics of transportation scalable for the 21st century.
A 21st century marked by climate change and other sustainability challenges must quickly pave a path for more fuel efficient vehicles, cleaner fuels and better infrastructure for every mode of travel. Yet the transportation sector remains largely tied to decades-old technologies, high carbon fuel sources, and a transportation infrastructure that spawns more pollution and congestion. A new energy economy is emerging, and with it new solutions and opportunities for the sector to move forward sustainably.
Transportation is the second largest carbon emitter in the U.S., and the sector accounts for more GHG emissions than any other nation’s entire economy, with the exception of China and India. For U.S. businesses, more fuel efficient vehicles make both environmental and economic sense. In addition, the availability of clean fuels both insulates businesses from oil price volatility and reduces GHG emissions.
Given the predominantly cyclical and energy-intensive nature of the transportation sector, our base-case outlook for the transportation industry primarily reflects those indicators that have the strongest correlations with general economic activity and energy prices.