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On the (rail)road to sustainable mobility

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CEO of Alstom, Henri Poupart-Lafarge shares his vision on the cities of the future and the upcoming solutions that will shape them – on the (rail)road to sustainable mobility. He also sheds light on the strategy carried out by Alstom to grasp the full potential of these (urban) transformations.

Using the metric developed by Sycomore AM, Alstom comes out with the highest NEC of +100%[1]. This rating corresponds to an eco-solution in passenger and goods transportation that is as “green” as cycling and car-sharing. Does this surprise you?

Intrinsically, rail transportation emits less carbon dioxide and particles than any other means of transport, such as cars for instance, in terms of passenger. kilometre or ton.kilometre. Therefore, it comes as no great surprise to me that Alstom has emerged as an eco-solution; but I would like to add two further
comments.

On the one hand, the number of diesel trains currently in circulation remains high in many countries; this is a problem when trains operate on long non-electrified sections, which is the case for instance in Germany. Considering the high cost of electrification, the hydrogen train is an attractive alternative to diesel. Alstom is one of the pioneers in the development of green hydrogen trains, with the Coradia iLint[2] solution, now operational and offering an autonomy of 600 kilometres.

Coradia

On the other hand, the physical footprint of transport infrastructure is an important parameter in environmental assessments. As an example, in Paris today, cars account for 7% of travel and 77% of public space[3], while the subway operates underground. It is easy to imagine that recovering this space would allow for the development of more green areas in cities. This represents a great challenge when considering the city of the future. Underground railways or tramways, such as the integrated Attractis[4] system, are much more economical in their use of urban spaces. Finally, beyond gas emissions and the use of physical space generated by our solutions, we work continuously on further minimising the energy used for train manufacturing purposes.

First of all, as mentioned previously, we are looking for solutions that will help to mitigate climate change. But today, the question is also about adapting to this change. In this respect, the World Bank has paved the way and is encouraging others to follow suit: we now have to determine, systematically and in full detail, the resilience of our systems to scenarios of rising ocean levels, for all projects funded by the organisation and for a growing number of multilateral financial institutions. On this matter, I was struck by the practical response suggested by the New York municipal authorities for the city’s subway, which was devastated by hurricane Sandy in 2012, with some stations only recently reopened. To avoid a repetition of incidents on such as scale, the situation was carefully analysed. The conclusion was that in the event of another flood, as it is impossible to make a subway totally waterproof, the electric installations would have to be moved. Consequently, the first floors of neighbouring buildings have been taken over for the installation of the electric cabinets required for operating the subway. If hurricanes become increasingly frequent, the damage they cause should however be less severe than when Sandy tore through the city.

Alstom, and the broad rail transportation industry, seem to be well-aligned with the objectives of energy and environmental transition, which contributes to the resilience of your outlook. What other modes of transport or solutions could become rivals in the foreseeable future (hyperloop, etc.)?

Unlike the energy sector, which has seen a series of different production methods using incredibly varied technology, the evolution of the transportation industry has been much more limited. Since it was invented, no better alternative has been found to wheel transport, steel on steel. Consequently, I do not believe that another
form of transport could supersede rail travel. In my opinion, the real limits to rail travel are “non-mobility” or immobility – and here, our next competitors become telecom operators.

In my opinion, the real limits to rail travel are “non-mobility” or immobility – and here, our next competitors become telecom operators

And if mobility continues to grow, and does not suffer from political headwinds, as did energy, this growth will naturally reach a peak at some time in the future.

Does the energy and environmental transition offer Alstom other opportunities?

At a time when the issues around mobility have become global, cities have no option but to think about these challenges, through the prism of environmental protection but also of physical congestion. As part of our strategy, Alstom has chosen to be a global player and is looking to anchor its presence throughout the
world. Hence our merger with Siemens. Second, rail systems have not evolved that much, whereas other forms of transport are changing fast, particularly the car industry, with the development of hybrid and electric vehicles. Mobility challenges are fundamental and we can no longer afford to optimise each form of transport individually. It is important now to apprehend the issue as a “global system”, which points towards global turnkey solutions for cities. For example, we have recently showcased our multimodal control centre in Montreal, able to manage underground and bus traffic, but also the presence of police forces, ambulance routes, etc.

Alstom control center

Historically, rail transportation has developed on a rather isolated basis. However it needs to step out of this isolation to be in a position to offer nimble and multimodal mobility solutions.. This is an incredible opportunity for our business, and one of the main strategies behind our merger with Siemens. The underlying idea is to have a stronger strike force on the technological and operational fronts. We will be in a position to build powerful partnerships with city authorities, as well as solutions such as Waze, that can help manage mobility flows in a smarter and more fluid way for the benefit of all, including at the end of a football match!

Tramway

A growing number of investors say they are interested in the environmental impact of their investments, particularly in France, under the influence of article 173 of the law governing Energy and Environmental Transition for Green Growth, and of the COP 21 summit. Is this a feeling you share, from your perspective as an issuer?

If a behavioural change on environmental issues is to be noted, it originates principally from our clients. Today, we have a team specifically in charge of environment-related matters in our tender process, and it is growing continually. On the investor side, the change is not yet all that apparent, though we have observed marks of interest, notably from thematic fund managers. We are taking part in a growing number of conferences and targeted interviews on these issues. Over the past two years, Alstom has refocused its activity on transport. De facto, our positioning as a player in sustainable mobility is generating more interest from ESG and responsible investment players.

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Henri Poupart-Lafarge is the CEO of Alstom. He also served as CEO of Alstom Transport and Executive Vice-President of Alstom from 2011, until Alstom refocused on transport as its core business.

In 2010, Henri Poupart-Lafarge was appointed Executive Vice-President and CEO of Alstom Grid. From October 2004 to June 2010, he served as Alstom’s CFO and was a member of the executive committee. From 2002 to 2004, he was Senior Vice-President of Finance for the Transmission and Distribution business. He joined Alstom in 1998.

Henri Poupart-Lafarge began his career in 1992 at the World Bank in Washington, D.C. before joining the French Ministry for the Economy and Finance in 1994.

Henri Poupart-Lafarge is a graduate of Ecole Polytechnique, of the École nationale des Ponts et Chaussées and from the Massachussetts Institute of Technology (MIT).

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This publication is not intended to be an offer or solicitation for the purchase or sale of any financial instrument whatsoever. References to specific securities and issuers are for the purpose of illustration only and should not be construed as a recommendation to buy or sell these values. Communication promotional in nature. This communication has not been prepared in accordance with regulations to promote the independence of financial analysis. SYCOMORE Asset Management or management companies involved with the preparation of this document are not subject to the ban on conducting transactions on the instruments mentioned by the publication of this communication.

[1] Based on greenhouse gas emissions and air pollution per passenger.kilometre and ton.kilometre.

[2] http://www.alstom.com/fr/presscentre-francais/2016/9/alstomdevoile-son-train-zero-emissionle-coradia-ilint-au-saloninnotrans/

[3] Source: Paris municipal authority. http://immobilier.lefigaro.fr/article/sept-placesemblematiques-de-parisvont-etre-reamenagees_e8989cb6-e38d-11e5-9c99-0daa01a1e3b6/?pagination=10

[4] http://www.alstom.com/fr/products-services/productcatalogue/systemesferroviaires/systemes/produits/attractis-solution-de-tramwayintegree/

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