25 April 2017
Doing More With Less: Smart Regulation For The Future

By Herbert Reul, MEP
Winter 2015

The European Union is good in doing many things. What it is often lacking however is an understanding that overburdening regulation is harmful and less efficient than setting incentives. Regulation in the field of digitalisation is in its infancy, with many things just starting to be regulated now or where the previous regulation is decades old – from the pre- Smartphone age. There is hence an opportunity for a fresh start in many fields and this opportunity should be used wisely.

Digitalisation holds an enormous potential for many sectors. It is an opportunity for Europe to retain its wealth in the future. But the often untapped potential needs to be fully used. Regulation therefore must not prevent innovation and new business models from unfolding. The challenge for the European Institutions is to set the right framework for established companies and start-ups to grow and adapt to digitalisation, as well as to create futureproof laws that will last in this rapidly changing environment. Furthermore, consumer trust in new applications is crucial: users need to trust new applications, services or hardware in order to make use of them.

Digitalisation and all that comes with it can also be a new solution to old problems. In the transport sector it can help to reduce emissions, relieve problems of urbanisation and demographic change, and create more space on the roads to avoid traffic jams. Mobility is one of the basic needs of people living in modern societies. However, in the past years people have become increasingly mobile and want to go greater distances in shorter periods of time for less money.

Possible solutions to the above-mentioned problems through digitalisation can be summarised under the term smart mobility. Smart mobility is about connecting various modes of transport (cars, trains, busses, taxis, bikes) and integrating them into one system. A system, which enables the user to use his smartphone to check the quickest or cheapest way to his destination, to find the closest parking place, to book the tickets or pay the service in one place and to use it as a bike- or car-key. It is also about new ways and means of transport, such as connected cars. But smart mobility is also about choosing "smartly" when to move. Increasing flexibility of employees that can more and more often choose when to work (flexi-time) and from where (home office) enables people to get on the road when there is less traffic.

The key to make these concepts work is acceptance and effectiveness: it must be easy, quick, cheap and safe for the user to use an app to find a parking space, to use an electric car, an autonomously driving car, or to drive to work later as usual.

If smart mobility is a made success, its potential is huge: Preventing traffic jams, reducing the time it takes to find a parking space, and the use of electric cars in cities would help reduce emissions. Car- and bike-sharing would create more space on the roads. Autonomously driving cars would make the roads safer, prevent accidents, as well as give people more time to actually get things done while driving somewhere. Integrated multimodal door-to-door transport possibilities would also help elderly people that cannot drive themselves any more to be more independent.

From the regulatory side, these developments need to be accompanied wisely. I am convinced that strict emission targets in the transport sector in Europe are not the smartest way to reduce emissions.

Strict emission regulations are very costly for automobile manufacturers. Funds that could be used to develop new ideas and services in the context of smart mobility are currently used to bring down the emissions of their fleet. I believe digitalisation of the transport sector will solve many problems, including reducing emissions from road transport. Therefore, it is crucial to develop solutions for smart mobility and to encourage research and development in this field. To enable scale effects, it is also important to create a system, where transport offers of different providers and manufacturers can be used interchangeably and are interoperable. A certain degree of standards must be set, that at the same time allows for innovations. In the transport sector, Europe could play a leading role in developing good innovative business models and best practices. Strict and painful regulation is harder to export than beneficial business models that spur the local economy.

Europe should tread very carefully when regulating in the digital sphere and that means doing more with less. Overregulating will hamper innovation. Innovation, such as in the field of smart mobility, in turn has a huge potential for solving existing problems. This holds true not only for the transport sector, but many others as well