At this time of the year in Oslo it is the custom to give unsolicited presents and as an Anglo-Dane on holiday in Oslo it is my pleasure to extend to the people of Tehran my compliments of the season and to present some unsolicited advice on one of my favourite subjects – transport.

Transport or mobility is not generally considered as energy, but in fact it is an example, like heat or cooling, light and power an example of energy delivered as a service.  Oil, gas and even electricity are examples of energy which may be bought and sold as a commodity before being converted through generators to energy as a service, or through petrochemicals to materials. 

Norway's energy strategy

On the discovery of major North Sea oil & gas reserves in the 1970s, the same principles which underpinned an industrial base powered by hydro electricity were applied by Norway to oil & gas development. 

Despite exporting the vast majority of between 2 and 3 million barrels of oil production and immense quantities of natural gas, Norway's domestic fuel prices are among the most expensive in the world, and taxation of conventionally fuelled road transport is brutally high. Meanwhile, Norway has maintained ownership of a majority of oil and gas production, and has maintained a firm, fair and mutually profitable relationship with international oil companies developing Norwegian fields.  The outcome is that this country of 5.3m people now has a sovereign wealth fund of $1 trillion.

It is extremely significant that this fund is now considering selling its holdings in international oil and gas companies. Add to this change in investment strategy the World Bank's recent announcement that it is ceasing oil & gas development finance, and the sale by Russia and Saudi Arabia of ownership of sovereign oil resources, and it becomes clear that the long term outlook for oil prices is not positive.

Oslo's transport strategy

Where Norway gets a lot right with its energy policy Oslo, with a population of 1.7 million in a very extensive metropolitan area, gets a lot right with an efficient public transport system of suburban trains, efficient metros and buses and world leadership in electric car use. However, inadequate public investment, extortionate privately financed road tolling systems and poorly planned & managed ticketing systems, are signs that Norway is not immune from the curse of oil.

Resource resilience

But 2017 is not 1977; Iran is not Norway and Tehran is not Oslo: government institutions, monetary and fiscal systems are very different, and Norway was not excluded by physical and financial sanctions from global markets. So what policies can Iran and Tehran possibly apply at this stage in oil and gas development which will make a difference?

Firstly, Iran has long needed a strategic organising principle for energy policy and my advice to Iran is to apply the same principle applied by Norway for over 100 years and by Denmark since 1973 when the Oil Shock saw prices increase almost overnight by 400% from $3 to $12 per barrel. This is the organising principle of resource resilience, which mandates for any given use of energy as a service (heat/cooling, power, transport/mobility) that use of fossil oil & gas shall be minimised.

There are two reasons why this is now a very smart move for Iran: firstly, the more expensive oil and gas become in dollar terms, the more dollar profit there is in saving them, and secondly, to be a producer, processor or trader of oil and oil products requires immense $ finance capital. But a 'smart' service provider essentially replaces finance capital with intellectual capital: knowledge, know how, and know who.

Secondly, the resource resilience principle must be applied across Iran's entire energy production and use, including upgrade and rejuvenation of Iran's energy generation, transmission and use of energy as a service. But where will the international technology and vehicles come from if Iran cannot access financial markets? What additional or complementary financing and funding is possible? 

Tehran's increasingly lethal air quality problems, which are estimated to be 80% due to carbon fuelled transport, provides an opportunity for rapid testing of new financing concepts, because unlike power stations, road transport infrastructure and vehicles represent relatively small scale investment with short time-scales.

Getting there from here

My advice to the Mayor of Tehran and his colleagues in national government is as follows.

Firstly, introduce a substantial additional Pollution Tax on all sales of road transport fuel, thereby creating a Transport Fund investment fund in Riyals.

Secondly, distribute a dividend to all Tehranis of Transport Credits, on smartphones or otherwise, which may be spent instead of Riyals on public and private transport.

Thirdly, invest the Transport Fund in accordance with the resource resilience principle in the domestic element of a new and efficient fleet of Tehran transport and energy infrastructure.

The question is how can Tehran possibly procure the necessary vehicles and upgrade supporting energy infrastructure if starved of the necessary international finance?  The answer to this question may be found 240 years ago in South West UK.

Smart swaps

Tin mines in Cornwall have historically found flooding to be a severe problem, and were among the first to use crude steam engines to pump out water. The great Scottish inventor, James Watt, invented a much more efficient steam engine, but his smart business partner refused to sell this new engine to mine-owners: instead he supplied the use of the engine in exchange for a third of the coal which was saved.

So James Watt's supply of pumping as a service from 1778 was the first example of a Smart Swap of intellectual value (Fifth Fuel) for carbon fuel savings.

My recommendation to Tehran and Iran, is to begin by procuring supply of fleets of CNG fuelled taxis, buses and commercial vehicles on the basis of transport as a service, with maintenance by suitably qualified Tehrani engineers and gas supplied by NIOC both in exchange for a share of transport revenues. 

Transport revenues in Riyals may be drastically increased by raising prices to levels reflecting the true value of gas as a fuel. But this will increase the value of the transport dividend which will compensate those unable to afford private vehicles.

New CNG compressors powered where possible by renewable energy would also be procured, and vehicle and technology suppliers would receive energy credits from NIOC returnable in payment for Iran's oil and gas exports.

On the one hand, Germany's diesel engine vehicle manufacturers now have massive spare capacity after their cheating in respect of diesel fuel emissions was discovered. On the other hand, Tehran and other Iranian cities has an urgent need to replace existing CNG fuelled diesel powered vehicles, and possibly introduce innovative shared transport services such as Istanbul's Dolmas.

The key to bringing together supply and demand via a Smart Swap is the simple, direct, funding mechanism of a Tehran Pollution Levy, Pool and Transport Dividend.