Financing sustainable transport
On the occasion of the Third International Conference on Financing for Development, the Secretary-General’s High-Level Advisory Group on Sustainable Transport issued a Position Paper on Financing Sustainable Transport.
The paper highlights that transport plays “an essential role in countries´ economic growth, competitiveness, balanced and livable spatial development, access to water and energy, and food security”, and that it is also critical for social inclusion and improved quality of life. Ensuring adequate and better targeted funding and innovative financing for sustainable transport will be critical to deliver on this potential.
The High-level Advisory Group welcomes the Addis Ababa outcome and its call for enhanced action in the least developed countries, land-locked developing countries, small island developing States, and countries in conflict and post-conflict countries, as well as on the specific challenges facing middle-income countries.
The advisory group recognizes that mobility solutions to support sustainable development exist in both developed and developing countries, and that they “require a shift towards a mobility paradigm focused on people, environment and climate rather than individual vehicle use”. Fossil fuel consumption and dependency in transport systems should be reduced and subsidies eventually eliminated, the paper advises. This is seen as a prerequisite to reducing greenhouse gas emissions at the scale required to meet the 2°C scenario. Sustainable transport systems would also enable us to meet adaptation and pollution targets.
The group points out that while global transport investments are estimated at 1-2 trillion US dollars per year, less than 40 percent is invested in developing countries, “where both connectivity needs and opportunities to avoid locking into an unsustainable development path are the greatest”. Investments in sustainable transport will need to be fostered by the public sector. Investments in improving the energy efficiency of urban transportation could ultimately lead to a savings of up to 70 trillion US dollars.
Private financing is crucial as well. There is substantial capital and liquidity and yet the world is facing a growing mismatch between financing needs—particularly for long-term infrastructure—and available financing, a gap particularly acute in lower-income countries. The paper suggests transparent enabling frameworks, incentives and adequate risk-sharing mechanisms to tap into available global liquidity.
The ongoing efforts of the world’s eight largest Multilateral Development Banks to fund more safe and sustainable transport is commended, as are the pledges made to the Green Climate Fund (GCF), and the GCF’s efforts to begin financing projects as soon as possible, though transport financing from climate funds has thus far been extremely limited.
Other dedicated financing mechanisms will be needed to ensure rapid action at scale on road safety. More than 1.5 million people lose their lives every year due to traffic accidents and transport-induced air pollution, of which 92 percent are in developing countries. Road safety has emerged as a global public cause.
For more information: Secretary-General’s High-level Advisory Group on Sustainable Transport