Uber: Climate Change Hero, or Villain?

Uber claims to be helping the environment by reducing the number of cars on the road – but what if it is actually making the problem worse?

In the space of 7 years, Uber has established itself as the innovative company that revolutionized personal transportation and helped give rise to the ever-growing “gig economy.” It is the savior of car-less customers around the world looking for an alternative to the inconvenience of taxis and public transportation. While Uber regularly makes the news as it continues to grapple with regulations around rider safety, less focus has been placed on the impact that climate change regulations could have on its business in the future.

Uber claims that by reducing the need for car ownership, it contributes to a reduction in the overall number of cars on the road, thus reducing carbon emissions. [1] Yet this claim has yet to be substantiated with strong evidence, prompting a UC Berkeley study on the environmental impact of Uber and a primary competitor, Lyft. [2] Thus it remains an open question whether Uber’s net impact on the environment is positive. The answer to this question is important for Uber to understand, so that it can account for the extent to which it will need to adapt its operations to comply with environmental regulations that may very well be inevitable, as well as to adapt to consumer preferences that may be shifting towards sustainable transportation options.

Uber has thus far avoided the fuel efficiency regulations to which taxis are subject in some cities such as San Francisco. [3] As a result, Uber places no fuel efficiency requirements on the vehicles that its drivers in such cities can use to transport customers. [4] To the extent that Uber rides are used as a replacement for taxi rides, the absence of vehicle requirements suggests that Uber may actually be causing an overall increase in carbon emissions, and is more vulnerable to climate change regulation than its leadership is willing to admit. While this will present operational challenges for Uber, potentially forcing it to introduce stricter standards for eligible vehicles, it also presents an opportunity. As the general public becomes increasingly interested in engaging with and patronizing businesses that help to mitigate climate change, Uber can capitalize on these customer priorities by positioning itself as part of a sustainable solution instead of part of the problem. The company has already started to do this by introducing its UberPool option, which allows users to share rides (and therefore prices) with other passengers who may be travelling to similar destinations, and thus potentially reduces the cars required for a given set of trips. They’ve also taken real steps to build sustainability into their business practices more broadly, hiring for roles such as a Public Policy Associate in Sustainability and Environmental Impact. [5]

Going forward, Uber can do much more to capture the opportunity presented by the urgency of climate change mitigation, as well as to get out in front of regulations that will likely impact its business in the coming years. A clear first step would be to institute its own fuel efficiency requirements for the vehicles used by its drivers. As a complementary measure, Uber should consider piloting a “green car” option, in addition to its UberX, UberPool, and Black Car options, to offer the environmentally conscious segment of its customers a feature that fits with their values. Finally, Uber would do well to begin making longer term investments in the sustainability of the cars it puts on the road, by building its own fleet of hybrid and electric cars to be used by its drivers. It has already made investments in self-driving cars in partnership with automakers, and similar deals could be struck to bring environmentally friendly vehicles to Uber’s customers on a large scale. [6]

Ultimately, the enactment of future regulations and, to some extent, the findings of the Berkeley study will influence the extent to which Uber is forced to prioritize sustainability in its operations. However, as an organization that regularly touts the positive impact that it is making on the lives of its drivers and customers, as well as on the environment, it has a responsibility to fully live up to these claims, and to not wait for external pressure to make sustainability a priority in its business model.

 

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[1] Sarah Emerson, “Uber Wants Us to Think It’s Environmentally Friendly, But Is It?” motherboard.vice.com, May 23, 2016, http://motherboard.vice.com/read/is-uber-good-or-bad-for-the-environment, accessed November 2016.

[2] Anne Brice, “Uber and Lyft to get environmental scrutiny,” news.berkeley.edu, November 20, 2015, http://news.berkeley.edu/2015/11/20/environmental-impacts-uber-lyft/, accessed November 2016.

[3] Robyn Purchia, Uber, Lyft focus on green bills, not green cars,” sfexaminer.com, December 23, 2015, “http://www.sfexaminer.com/uber-lyft-focus-on-green-bills-not-green-cars/, accessed November 2016.

[4] Uber, “Vehicle Requirements: San Francisco Bay Area,” https://www.uber.com/drive/san-francisco/vehicle-requirements/, accessed November 2016.

[5] Uber, “Open Roles: Senior Public Policy Associate, Sustainability and Environmental Impact,” https://www.uber.com/careers/list/22511/, accessed November 2016.

[6] Max Chafkin, “Uber’s First Self-Driving Fleet Arrives in Pittsburgh This Month,” Bloomberg.com, August 18, 2016, http://www.bloomberg.com/news/features/2016-08-18/uber-s-first-self-driving-fleet-arrives-in-pittsburgh-this-month-is06r7on, accessed November 2016.

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9 thoughts on “Uber: Climate Change Hero, or Villain?

  1. As an Uber customer, I think their business model is an excellent opportunity for reducing carbon emissions because of increased utlization. Specifically for UberPool, as you mentioned, the fact that a car can serve anywhere between 1-4 sets of customers, thereby reducing the number of actual car rides and hence the fuel burnt, can be very effective in curbing climate change. I hope more such business models based on effective utilization can be built in other spaces too.

  2. In the short-run I do not think Uber is doing enough to combat their impact of having an increased number of cars on the road, despite such services as UberPool. This is because in my opinion, it is very likely that people are choosing to Uber instead of walking, running, biking, or even taking public transportation, as the Natural Resources Defense Council state in this article: https://www.nrdc.org/experts/amanda-eaken/nrdc-urban-solutions-lead-first-climate-analysis-uber-and-lyft For instance, if you are on the outskirts of a big city (i.e. Alphabet City in New York) it is extremely difficult to catch a cab and public transportation is a long walk away. Before Uber, most folks would either (1) wait for the bus (2) walk to the subway – which could be decently far away at Astor Place or (3) go on a 30-50 minute walk home. Now with Uber, most people part of the upper-middle class will decide to Uber and/or Uberpool, thus severely increasing the number of people in cars that otherwise would have been sharing rides while not decreasing the number of buses and subways that run at any given time.

    However, in the long-term I do believe the market will sort this out due to programs that we have seen employed in Uber and Lyft’s partnership with Public Transportation as stated in http://gizmodo.com/uber-and-lyft-come-for-public-transportation-1785330916 In a pilot program in Pinellas Park, Florida, two of the least-traveled bus lines were removed due to budget cuts and instead, the city partnered in a pilot program with Uber and Lyft to provide residents a 50% discount (up to $3) per trip. As partnerships like this increase, buses that would otherwise be running on a regular schedule (but empty) can be taken out of commission and people (whether they are lower, middle, or upper class) are incentivized to take part in ride-sharing programs (since $3 only goes so far). Therefore I think Uber and Lyft will help with climate change by reducing the number of unused buses in public transportation and increasing the amount of ride-sharing.

  3. You brought up some really interesting ideas for Uber to increase its sustainability profile. I like the green/EV car option. I think Lindsey is right that the sustainability of Uber will depend on how it changes user behavior. Uber and car sharing are a great solution to the “last-mile” problem in public transportation — i.e. how we get users of public transportation from the train/bus station to their final destination. However, I could see a scenario where Uber changes behavior such that users forego public transportation altogether and take Uber for the full journey. Maybe there are some incentives that can be put in place to encourage the joint use of Uber and public transportation.

  4. Laure, I definitely agree that if a company makes environmental claims about their business, we should hold them accountable to those claims and responsible for fulfilling them. It sounds as though neither they nor outside sources have been able to substantiate the claims they’ve made around reducing car ownership and carbon emissions, which should (but, to your point, has not always publicly) undermine that very premise.

    I also agree with Sid that utilization is a key component to achieving the level of scale needed for any of Uber’s environmental claims to ever hold true. I personally have made the decision several times to take an UberPool instead of walking because the super low $2-3 rate was so low, only to find that I was the only person in the Pool. As such, the low price had induced me into driving rather than walking so I contributed to increased emissions, but those emissions were not shared across any other passengers headed in a similar direction. Unless or until Pool reaches a scale where it can truly efficiently match up passengers to reduce emission levels per passenger, it may counteract the very purpose for which it was intended.

  5. Laure, I really enjoyed your post as this is something I think about often when I am debating whether to take an Uber or Lyft somewhere. My friend in Chicago told me about a new platform called G-Ride that only uses eco-friendly vehicles (hybrid or electric) and plants trees for every ride[1], so it would be interesting to see how much traction a company like that could gain against the big players in the market.

    What are your thoughts on how Uber should implement its “green car” option? Should they only be deployed as a true ride-sharing option, where you travel with other passengers as you would with Uber Pool or Lyft Line? Should they charge a premium over UberX or UberBLACK? Should there be multiple pricing tiers? Should they start rolling out green cars in areas where there are already eco-friendly taxis or those where there are not? Even though I often take Ubers instead of taxis, when I traveled to Amsterdam and saw that they had so many Teslas as taxis at the airport[2], it made me far more inclined to take a taxi. But perhaps that would change if Uber also had a solid eco-friendly offering.

    [1] G-Ride Website, http://www.gogride.com/, accessed November 2016.

    [2] Christopher DeMorro, “Amsterdam Airport Enlists 167 Tesla Taxis”, CleanTechnica, https://cleantechnica.com/2014/10/21/amsterdam-airport-enlists-167-tesla-taxis, accessed November 2016.

  6. Thank you for teeing up this great question around Uber. While Lindsey brings up a great point about how uber could be supplanting public transport – I wonder if the data supports that point. This 2016 study[1] by the American Public Transportation Association has some interesting findings – “The more people use shared modes, the more likely they are to use public transit”and “Shared modes complement public transit, enhancing urban mobility”. So it seems that even in the short run ride sharing services like Uber could reduce the number of cars on the road and encourage the use of public transport. This of course pre-supposes that Public transportation is run efficiently and has less impact on the environment compared with private transport arrangements.

    [1]http://www.apta.com/resources/reportsandpublications/Documents/APTA-Shared-Mobility.pdf

  7. In the US, 23 percent of emissions are from cars, trucks and buses [1]. If every brand new car purchased was the most fuel efficient option within its class and price range, emissions from new cars could be reduced by 24 percent [2]. Alternative fuels that reduce emissions in vehicles tend to be costly [3].

    I’m interested in Uber’s business model in emerging markets. My buddy is the Operations Manager for Uber in Lagos (Nigeria), my hometown. His team had to downgrade the vehicle age requirement by two years (year of manufacture of 2008 to 2006) earlier this summer [4]. Majority of the cars in Nigeria, like in most developing countries, are used cars. Uber quickly found that asking its drivers for cars younger than eight years old was onerous. For emerging markets, Uber may offer extra margins to its drivers for newer and more environmentally-friendly cars.

    Additionally, services such as uberPOOL are not available in Lagos. I wonder whether Uber will consider offering POOL as it gets more popular in the city. I suspect that there may be cultural barriers. I don’t think Nigerians will be welcoming to the idea of picking strangers up via POOL considering the security issues in the city. At this time, I’ll say that we Lagosians use Uber as an alternative to driving our cars or using taxis.

    I agree with Lindsey: Uber customers, even in the US, may use Uber as a substitute for walking or using public transportation. I’m guilty of this. Whenever I’m lazy, I use Uber to get around Cambridge.

    Sources:
    [1] Center For Global Development, 2014. How Can Nigeria Cut CO2 Emissions by 63%. [Online] Available at: http://www.cgdev.org/blog/how-can-nigeria-cut-co2-emissions-63-build-more-power-plants.
    [2] DfT, 2008. Carbon pricing, London: UK Department for Transportation.
    [3] Pew Center, 2003. Reducing Greenhouse Gas Emissions from US Transportation, Arlington, VA: Pew Center on Global Climate Change.
    [4] http://www.ubernigeria.com/accepted-vehicles/

  8. Laure – thanks for this great post on Uber! I think many people assume Uber is having a positive impact on climate change because it claims to reduce the number of people driving personal cars, and incentivizes a lot more sharing (i.e. uberpool), but you highlighted some important tensions. Even if Uber is complementing public transportation, I wonder what the net effect on emissions is when comparing the number of people sharing rides to the number of people replacing more sustainable options. To become more sustainable, Uber will have to think carefully about how to incentivize changes in sustainable behavior, both among its customers and drivers. I really like your idea of Uber building its own fleet of hybrid and electric cars as one way to accomplish this. A partnership that allows Uber drivers to access sustainable cars at a more affordable price could have even wider ranging impacts, since drivers use their cars outside of business too. One of my concerns, however, is that Uber will use its Public Policy Associate to fight sustainability regulations that might negatively impacts its operations – as they have done with pending regulations that relate to rider safety – rather than embracing these sustainability challenges and turning them into opportunities for the company.

  9. I agree that Uber’s model provides financial incentives for increased vehicle utilization and therefor an increased carbon output on a per vehicle basis but expanding network of ride sharing reduces demand for vehicles and those effects propegate up the production chain. Less vehicles are needed in a sharing economy, manufacturing operations can be scaled back in assembly plants, stamping plants, and mining operations which can be notorious polluters. I believe that utilizing current resources will almost always reduce environmental impact when compared the the life cycle carbon impact of new vehicle production if everyone needs a car. There is also a financial incentive for the most fuel efficient vehicles to be used as ubers, as the margins are better for drivers if revenue is constant and fuel consumption is reduced. I believe uber’s impact on GHG emissions is beneficial on an overall scale.

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