Happy New Year! I hope you had a lovely and refreshing break and found some time to relax and unwind.
I spent part of my break travelling around Europe. On my return, I thought I’d share some thoughts I had while on the continent.
Urban planning and the tyranny of distance
Australia’s geographical expanse is both a marvel and a curse.
As famed Australian Historian Geoffrey Blainey wrote in The Tyranny of Distance, our country’s history owes a lot to its geography:
‘Distance is as characteristic of Australia as mountains are of Switzerland … In understanding Australia’s history, the idea of distance may be as revealing as say Frederick Jackson Turner’s “frontier theory” is in probing the history of the United States. Distance — or its enemy, efficient transport — is not simply an explanation for much that happened in Australia’s history. Once the problem of distance is understood, it also becomes difficult to accept many of the prevailing interpretations of other events in Australia’s history.’
Australia is defined by its isolation and the effort to tame it — to ‘tame distance’.
I find Blainey’s description of distance as the enemy of efficient transport insightful, too. Efficient transport brings the world closer by shrinking it.
But transport isn’t the only way to do that.
As Economist John McMillan wrote in Reinventing the Bazaar: A Natural History of Markets:
‘While the internet has linked people more closely than ever before, this is not the first or even the biggest such transformation. Earlier advances in communications technology had a similar effect in broadening markets. “The telegraph and the printing-press,” observed the magazine Contemporary Review in 1886, “have converted Great Britain into a vast agora, or assembly of the whole community.” The postal service, the railroads, the telephone, and radio and television all in their own way transformed communications. In his 1847 Principles of Communism Friedrich Engels remarked of the industrial revolution, “big industry has brought all the people of the earth into contact with each other, has merged all local markets into one world market.”’
But visiting Europe shows that Australia has a way to go yet to tame distance fully.
In the major European cities, the action is never more than 30 minutes away by bus, tram, train, bike, or e-scooter.
The car often seems like the least attractive option. I have a friend who’s lived in London for three years without owning a car.
In Australia, however, going without a car is often like beaching yourself in your own suburb.
In a 2019 audit on Australia’s transportation system, Infrastructure Australia found that private motor vehicles remained the preferred choice for the majority of trips in the largest cities.
It may be that the duo of urban planning and public transport is more important than electric vehicles in the green energy transition.
To shuttle across Europe on our trip, we took high-speed trains. One of these — run by Germany’s Deutsche Bahn (DB) — has run on 100% renewable power since 2018.
According to DB, it is the largest user of renewable power in Germany today and wants to go 100% renewable by 2038 across all its services:
‘The share of renewable energy in DB´s traction current mix already comes to around 62%. We aim to make our traction power 80% green by 2030 and 100% green by 2038.’
A McKinsey report in October 2021 found that trains continue to be one of the most sustainable modes of transport, especially in Europe…
‘Rail is already one of the most sustainable modes of transport, with more than 90 percent of passenger kilometers in many European countries being provided on electrified tracks. That said, there is further room for improvement through hydrogen or catenary electrification for diesel lines, as only 54 percent of the rail tracks in Europe had been electrified by 2016. More importantly, companies are switching to green energy. For example, in 2017 the Dutch railway network, NS, became the first in the world to run trains completely on wind energy. Hydrogen rail projects have been gaining traction, and many European countries are piloting hydrogen projects or plan to do so. For example, Alstom and Snam have teamed up to develop hydrogen trains in Italy.’
Density, sprawl, and city living
It feels like Europe has tamed the tyranny of distance more so than Australia by having denser cities.
Favouring apartment dwellings more so than detached housing, European cities pack more people — and the infrastructure catering to their needs and wants — into less space.
A preference for detached houses, along with a historically strong real estate market, has pushed Australian homeowners to the peripheries of our cities.
As the Financial Times reported in 2019:
‘Besides the question of affordability, growing demand for housing in Australia’s leading cities raises the likelihood of urban sprawl. All the country’s state capital cities have urban growth boundaries written into their planning controls to constrain their expansion, says Kate Raynor at the faculty of architecture, building and planning of the University of Melbourne. In practice, she says, the boundaries are regularly stretched. “A large proportion of new-build housing is occurring in growth areas on city peripheries, where communities wait decades for infrastructure, employment opportunities and services to catch up with them.”’
Will Australia embrace denser city living or will the pull of a detached home with a garage and backyard prove too strong?
One benefit of denser city living is less reliance on transport like cars. As the aforementioned Infrastructure Australia report found (emphasis added):
‘Walking is naturally the most common way for people to move. Most journeys at least start or end with a walking component, whether people are walking to their local railway station or from a car park to their office. For shorter trips, particularly in high-density centres, walking is often the most popular form of transport. For example, in Melbourne’s CBD about 86% of all trips are on foot.’
Are transportation trends in Melbourne’s CBD hints of the future…or exceptional anomalies?
Architectural asides
As an aside, I also noticed the architectural depth of cities like London and Vienna.
Walking along Vienna’s districts, for example, is a feast for the eyes.
You encounter apartment buildings in the Jugendstil style, palatial dwellings with imposing facades and grandeur, kaffeehauses with 19th-century décor and intellectual heritage…
So it is all the more jarring to encounter run-of-the-mill slabs of glass and concrete ubiquitous everywhere in the world now.
Venture away from the inner districts, and you’ll see larger apartment blocks, hotel complexes, and shopping centres characterised by their bland design that have proliferated like a virus.
French novelist Michel Houellebecq described modern architecture thus:
‘Reaching its own optimum by creating places so functional that they become invisible, contemporary architecture is a transparent architecture.
‘Since it has to allow for rapid movement of people and goods, it tends to reduce space to its purely geometric dimension. As it’s meant to be crossed by an uninterrupted succession of textual, visual and iconic messages, it must ensure maximum readability for them (only a perfectly transparent place is likely to ensure a total conductivity of information). Subject to the harsh law of consensus, the only permanent messages this architecture can allow itself will be confined to objective information.’
Tesla isn’t the only EV in town
Walking the streets of cities like London, Vienna, and Amsterdam, I noticed a few things to do with electric vehicles.
First, public charging stations are common. Inner-city streets are peppered with electric vehicles tethered to chargers on kerbside parking.
Second, Teslas are not the dominant EV brand.
In Australia, you’d assume the only electric vehicle on the market is a Tesla. Europe’s EV market seems more competitive and diverse.
I was as likely to see a Kia, Volkswagen, BMW, or Skoda EV as a Tesla.
If the future of driving is electric, you want to see such diversity.
A competitive EV market marked by plentiful consumer choice is one well on its way to displacing the internal combustion engine.
In the UK, for instance, sales of new electric cars overtook diesel cars for the first time last year.
EV sales in the UK rose by more than 25% in 2022, comprising 16.6% of all car sales, while sales of diesel models fell to less than 10%.
Society of Motor Manufacturers and Traders’ Mike Hawes told the Financial Times that battery electric ‘is now the second most popular power-train among UK new car buyers, supplanting diesel for the very first time’.
Tech stocks and technological lag
In London, just before I left, I also bought a copy of the Financial Times and came across some interesting research buried in a column on tech stocks.
‘Too many moonshots are still sputtering on the launch pad. It is not yet clear that innovations such as social media, cryptocurrencies or the metaverse yet represent any net positive for humanity. As sceptical economists never tire of pointing out, the digital revolution has so far had little quantifiable effect in lifting productivity.
‘But it might be that fashionable despair over technological progress is spreading just at the moment when it is about to have a real impact in addressing significant challenges, such as healthcare and climate change. As the economic historian Carlota Perez has written, there is often a decades-long time lag between the development of powerful new technologies and their widespread deployment. So it was with the steam, railway, electricity and mass production revolutions in the preceding three centuries.’
This lag is very interesting and something I want to explore further.
But that’s for next week!
Until then,
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Kiryll Prakapenka,
For Money Morning
