CityLab Daily: Why Paris Wants to Tax Amazon Deliveries

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What We’re Following

Boxed in: It’s officially the holiday shopping season and that means more delivery trucks on city streets brought on by e-commerce. In the United States, millions of daily packages have not only brought about a delivery truck boom; they have inverted the dynamics for collecting the sales and property taxes that fund state and local governments. Globally, the convenience of the one-click e-commerce model has helped Amazon weave itself into the life of cities. And now, Paris wants to fight back.

Writing in an open letter in Le Monde, Paris mayor Anne Hidalgo called Amazon a “creator of precarity, congestion and pollution” and “an ecological disaster.” To rein in the negative effects of urban shipping, she proposed a plan that would charge a fee to e-commerce vendors, and limit delivery times and volumes in certain neighborhoods. While Paris’s share of the global Amazon market is limited, the proposal could become a model for other jurisdictions. The question is: Would city leaders be able to handle it if companies decided to pass such taxes on to their customers? CityLab’s Feargus O’Sullivan takes a look: Why Paris Wants to Tax Amazon Deliveries

Andrew Small


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What We’re Reading

Watch four decades of inequality drive American cities apart (New York Times)

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Why Paris Wants to Tax Amazon Deliveries

The French don’t celebrate American-style Thanksgiving. (Or the Canadian one, for that matter.) But that doesn’t mean they entirely miss out on the magic and hysteria of Black Friday sales: There is a huge spike in reduced-price deliveries at the end of the this month throughout France.

Which makes this a very good time for Paris Mayor Anne Hidalgo to open a new front in her ongoing campaign to mitigate the damaging effects of 21st century capitalism. In an open letter published in Le Monde, Hidalgo announcing proposals intended to make sure that e-commerce firms such as Amazon pay for the ills they are unleashing. Amazon, she wrote, was a “creator of precarity, congestion and pollution” and “an ecological disaster”; along with other services such as UberEats, the company should be charged a fee for its urban deliveries to offset the problems it causes.

Action was essential, the letter said, to avoid the kind of problems that New York City faces: Manhattan has “become a huge delivery area where anarchic shutdowns block all traffic,” and if nothing was done, then a situation like New York’s, where 1.5 million packages are delivered daily, would become “the nightmare that awaits us.”

The language used here is certainly strong, but Paris City Hall, which would likely re-propose the suggestions in more concrete form if Hidalgo and her administration are reinstated at March 2020’s municipal elections, is indeed picking up on a problem that’s rolling out globally. American cities are scrabbling to manage the sharp rise in retail freight that e-commerce has brought to its streets. In London, which since 2003 has employed a pioneering congestion pricing regime in the city center to control traffic, has seen its streets become even more congested than in the days before the charge, because private cars have been replaced by commercial vehicles, including delivery vans.

On average, Amazon now delivers around 250,000 packages a day in Paris, a number that rises tenfold in the days around Black Friday. Hidalgo’s proposal would limit deliveries to inner Paris neighborhoods to specific times, with a maximum number of deliveries capped for each area. Each of these deliveries would come with a surcharge payable by the company who sold the item delivered. If Amazon and other companies decide to pass this burden on to their customers—and it would be hard to prevent them from doing so—city leaders could be blamed for making shopping less affordable in what is already one of the worlds’ costliest cities.

The Paris City Hall proposals came out the day after the campaign group Attac, which lobbies for more stringent tax controls on multinational companies, released a report on the downsides of Amazon’s French operations. The report, supported by environmental campaigners Friends of the Earth and trade union Solidaire, details a litany of undesirable economic and environmental impacts associated with the company. The group claims, for example, that Amazon has made 57 percent of its French gross revenue untaxable, for example. Its overall global operations create more greenhouse gas emissions than the entire nation of Portugal, the report says, and the company’s ability to suppress competing businesses means that its American operations destroy two jobs for every one they create. The French report joins several new stories about Amazon’s labor practices and worker safety record in the U.S. that also focus on the price that we really pay for the convenience of online shopping.

Amazon has challenged the Attac report, saying that it is “contains many factual errors and [much] unfounded speculation.” Their own figures show that the company will have created 9,300 jobs in France by the end of 2019. While the company didn’t directly refute the report’s criticism of their emissions record, it nonetheless highlights its Climate Pledge, which aims for carbon neutral deliveries by 2030 and carbon neutral operations by 2040. Amazon also says that its current global order of 100,000 of electric delivery vehicles is the largest yet made by any company.

Such progress still lags behind that of some more-proactive companies currently working in France. The French postal service, for example, is already in the process of switching to electric and natural gas vehicles and bikes for the final mile of its deliveries, and by 2024, La Poste promises that its deliveries within Greater Paris will be entirely carbon neutral.

How important will political pressure from the city of Paris be when it comes to influencing the business practices of a retail goliath like Amazon? The company accounts for 17.3 percent of France’s e-commerce market and earned €6.6 billion ($7.3 billion) in revenue in the country in 2018. That falls short of the market dominance the company enjoys in the somewhat less populous U.K., when its income for the same year reached £10.9 billion, or in larger Germany, where it earned €16.9 billion. When compared to the enormity of of Amazon’s global operations, Paris’ proposed taxes would be like a gnat bothering an elephant, especially when you consider that Mayor Hidalgo’s policies only cover the 2.2-million-person historic nucleus of greater Paris.

What makes Hidalgo’s proposal of greater potential concern for online retailers is the possibility that it serves as a model for other jurisdictions. Based on media coverage so far, that could happen. One can easily imagine a similar call to tax e-commerce deliveries in the U.S. sparking a flurry of objections; in France, however, the Paris pushback was generally reported with subtle but implicit favorability. The right-leaning newspaper Le Figaro for example, had its own report this week on the higher prevalence of accidents in Amazon’s U.S. warehouses. If the company has influential cheerleaders in France, they’re currently keeping pretty quiet.

Given Amazon’s global market share, Paris’ plans hardly pose an existential threat. But in a climate where the environmental and economic effects of e-commerce are coming under increasing scrutiny from both legislators and the public, the city could be a trailblazer in the movement to rein it in.

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Berlin Wants to Freeze Rents for 5 Years. Can It Really Do That?

Berlin’s planned five-year rent freeze might be popular among locals, but the city may have trouble navigating a legal minefield to protect the law when it takes effect in January.

That much was confirmed Saturday when newspaper Berliner Morgenpost dropped a bombshell by publishing emails from Germany’s interior ministry to the Berlin head of Angela Merkel’s CDU party. In those emails, German Interior Minister Horst Seehofer expressed his belief that the rent freeze is illegal, as it would “distort” national laws.

In a relatively inexpensive city whose housing sector is dominated by rental units— 80 percent of residents rent their homes—the plan has found broad support. The law, approved in October, caps rent increases at 1.3 percent per year (to account for inflation) for all homes built before 2013, while owners of newer homes, including those recently built and buildings planned for the future, are able to raise rents as they see fit.

The minister’s objections paint the issue as a turf war between national and regional powers. The rent freeze won’t fly, Seehofer says, because it would mean the State of Berlin overstepping its jurisdiction under Germany’s constitution. Federal legislators make Germany’s real estate laws on a national level, and a decision confined to only the State of Berlin could risk distorting that national legislation.

The rent freeze, Seehofer’s October 31 email says, would unfairly ban landlords from factoring rising maintenance costs into the rates they charge tenants. What’s more, while rents for new contracts have been galloping higher in the city, not every Berlin landlord has raised their rents to the maximum level. This group would now be prevented from raising rents even though their tenants are now paying substantially below-market rates.

These objections are a problem for the State of Berlin. They aren’t necessarily a nail in the law’s coffin, however, because the national government doesn’t itself decide the law’s legality—and as a body dominated by the right-wing CDU, it tends by default to look askance at policies forged by Berlin’s ruling center-left coalition. Furthermore, as CityLab previously reported, these issues were not entirely unforeseen. Any ruling would be up to the courts if (or, more likely, when) landlords legally challenge the law.

Seehofer’s emails are, nonetheless, a warning sign that courts might rule in landlords’ favor, and will certainly heat up a debate over the law, against which the backlash is particularly fierce. This month, a developer withdrew from a project to build 900 new apartments on the edge of the city, citing the rent freeze. These apartments would not have been subject to the freeze, but the developer claims that rent freezes at its other properties would reduce the amount of cash it had for further investments, and thus make the development unviable. Sections of the media have also gone on the attack. A representative of the center-right party FDP, writing in the business publication Handelsblatt, recently damned the law as an example of “German envy culture,” motivated more by a vindictive attitude toward wealth than a desire to improve market conditions. Others have accused the city of trying to “rebuild the wall.”

That view is not going unchallenged. As an article in left-leaning newspaper Tageszeitung points out, the abuses the law seeks to remedy are real enough. It cites as an example the Swedish landlord company Akelius, which has relied on the legal loophole of  “modernization” as a justification for hiking rents on its 14,000 Berlin apartments. These rent increases can happen even if the actual quality of the supposed modernizations is poor and does nothing to improve living conditions. Meanwhile, other sections of the business media are asking if, rather than being an example of Berlin radicalism, the city’s new laws might become a template for action across Germany.

The debate isn’t over, and it may just be heating up. For now, Berliners are left in a curious position. They can’t be certain that the rent freeze will genuinely make the city more livable. They also can’t be certain, at this point, that it will come into force at all.

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Oslo Wants to Build the World’s First Zero-Emissions Port

The edge of Oslo’s Ekeberg Hill gives quiet, unobstructed views of the Nordic city’s islands and bustling port. At the Sjursøya container terminal, cranes swing around, stacking multicolor containers in neat rows and columns. On the other side of the port, ferries load and unload passengers. A massive cruise ship idles while its inhabitants wander around the city.

The Port of Oslo receives between 50 and 70 calls a week and 12,500 containers a month, and the ships and shore equipment help produce 55,000 metric tons of greenhouse-gas emissions a year. That last figure is what Oslo is trying to change. By 2030, the port aims to make an 85 percent reduction in its emissions of carbon dioxide, sulphur oxide, nitrogen oxide, and particulate matter, with the goal of becoming the world’s first zero-emissions port.

“It’s very ambitious, but at the same time it’s what is necessary if we are going to reach the Paris Agreement,” says Heidi Neilson, head of environment for the Port of Oslo. The port’s 17-point climate action plan includes refitting ferry boats, implementing a low-carbon contracting process, and installing shore power, which would allow boats to cut their engines and plug into the grid when docked.  

The effort is part of the city’s mandate to cut overall emissions by 95 percent by 2030—a decree that spares no person nor industry. The city’s climate budget and strategy is an all-hands atonement for the oil industry that made Norway into a very rich country.

The Sjursøya container terminal, and beyond it, cruise ships docked near the city center. (Port of Oslo)

“To reach the targets, all sectors have to reduce their emissions. Hence, the port and the maritime industry in Oslo must decarbonize at the same speed as the other sectors (i.e. energy supply, heating, construction, waste and combustion, road traffic),” writes Oslo Climate Agency Director Heidi Sørensen in an email to CityLab.

In August, the port signed a contract with Norwegian NGO the Bellona Foundation to move full speed ahead on cutting emissions—whether its users like it or not.

Freight’s big decarbonization challenge

According to the UN’s International Maritime Organization, between 80 and 90 percent of the world’s trade by volume is transported by sea on high-sulphur fuel oil—the dirtiest fuel there is. That’s about 94,000 vessels carrying 10 billion tons of crude, chemicals, corn, and cargo, to the tune of $4 trillion a year and nearly 4 percent of global GHG emissions.

In Oslo, container ships aren’t the only problem. Ferries running to Denmark and Germany are responsible for nearly 40 percent of port emissions, while local ferries account for 12 percent, and onshore handling and transport equipment accounts for 14 percent. To address local ferry emissions, the port awarded a contract to Norled, which is currently tasked with electrifying three of 10 existing passenger ships. When all three of these heavily used ferries are outfitted with batteries, Norled estimates the transit authority’s port emissions will decline by 70 percent. Norled delivered the first electric refit in September—a job that took 150 workers a combined total of 25,000 hours. MS Kongen now has the equivalent of 20 Tesla batteries on board.

Progress is slower when it comes to bigger ships. Cruise and cargo ships still can’t cross an ocean on battery power alone because of the cumbersome size and weight of the required batteries. Hydrogen is gaining traction as an environmentally friendly option compatible with long-haul shipping. The fuel emits water and can be produced with renewable electricity. Unfortunately, it’s also prohibitively expensive at this early stage in its maritime-sector development.

“Hydrogen is, I think, the only energy carrier that is completely CO2 free and able to power ships on longer sailings. If you need to get the ship to sail from Rotterdam to New York, you cannot do it with batteries. You can only do it with hydrogen,” says Alex Ruijs, a senior consultant with Royal HaskoningDHV who works on electrical power and energy in the maritime and aviation sectors. However, he adds, the fuel is still 10 to 15 years away from being commercially competitive. Technologies to reliably produce other synthetic fuels are also not yet economically viable.

The Bellona Foundation’s maritime senior advisor Christina Ianssen says shore power is a key element to maritime decarbonization that can be implemented right now. It would enable refitted ships to keep their lights, cooling systems, and other systems and equipment on by plugging in to the hydroelectric grid rather than running the engine. It would also power equipment like cranes, which normally run on diesel. “Even though [shore power] doesn’t solve all our problems, it helps push for a shift that is technically feasible today,” says Ianssen.

As with hydrogen, shore-power compatibility hasn’t reached the critical mass required to become economically attractive. So, getting shipowners on board may take both the carrot and the stick: Lower port fees and electricity costs to reward compliant ships, and revise contracting processes to command terminal builders and shipping companies to obey low-emission rules. “It sort of forces the shipowners to start investing in technologies they haven’t thought about before,” says Ianssen.

The green port movement gains steam

A handful of other ports around the world—in, for instance, Los Angeles and Long Beach, Auckland, the Spanish city of Valencia, Ecuador’s Guayaquil, and Baku in Azerbaijan—also have carbon-neutral and zero-emission dreams. In October 2019, the Port of Los Angeles unveiled two new battery-electric top loaders. Rotterdam, which is Europe’s biggest port, is using zero-emission port equipment.

But cutting maritime emissions is not only a local measure. The problem with solitary ports taking a firm environmental stance is that ships can simply head up- or downstream to a competitor port and unload their wares there. Then, the containers get driven around on land instead, defeating the purpose of a zero-emission policy. To counter this effect, Sørensen from Oslo’s climate agency and Neilson from the port say other Norwegian ports have to come on board.

Finding that common ground with local and international partners—and sometimes competitors—is essential to the green port movement. Neilson points to the collaboration between the ports of Los Angeles and Long Beach, which are technically competitors. “In Los Angeles, they have fierce competition in regard to the different terminals … but at the same time they say, ‘We don’t compete on security and we don’t compete on environment.’”

If ports in the Oslofjord and across the region can band together to do the same, Neilson is confident Oslo won’t lose business. But, if becoming zero-emission does mean losing customers in the short term, that’s a price the city is willing to pay. “I think it’s a powerful message that this is possible here, and it’s not just [possible] because we have a lot of funding,” says Neilson. “It’s the right thing to do, and it’s the right development we need in many port cities around the world.”

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