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Finance Changes Needed for Low-Carbon Transport in Developing Countries

Changes in transport financing are needed to drive more sustainable and affordable transportation in developing countries, according to a report from the Transport Research Laboratory (TRL).

The report, ” A Paradigm Shift Towards Sustainable Low Carbon Transport: Financing the Vision ASAP” (PDF), released by ITDP and the Partnership for Sustainable Low Carbon Transport, reveals that that more than $1.5 trillion is spent annually on transport globally. However, TRL researchers say the investment is spent mostly in ways that worsen rather than solve the problems associated with traffic growth, including congestion, health-harming air pollution, accidents, energy insecurity, and climate change.

The report notes that transport accounts for more than half of global liquid fossil fuel consumption and nearly a quarter of the world’s energy related carbon dioxide (CO2) emissions, according to a 2009 report from the International Energy Agency (IEA). If current trends continue, transport-related CO2 emissions are expected to increase by 57 percent worldwide between 2005 and 2030, primarily driven by rapid motorization in developing countries, according to the report.

The report finds that developing countries can benefit from “leapfrogging” to a new sustainable and low-carbon paradigm, which can deliver various economic, social and environmental benefits during the next half century and beyond.

The report also suggests that reform is needed at all levels of the policy-making process including needs assessment, formulation, implementation, monitoring as well as evaluation and feedback. And at each stage, key questions need to asked including:

–What type of investments are needed to move towards a sustainable transport system?

–How can sustainable transport be designed to meet the specific situation of the country/region?

–How can sustainable transport be integrated into long-term country/regional development plans?

–How can budgetary resources be set aside for sustainable transport?

–How can pricing and subsidy schemes be combined to support sustainable transport?

–Which individual programs/projects need to be financed?

–How can carbon emissions be included in program/project appraisal?

–How are the programs/projects scoring in terms of sustainability?

–What are the key indicators one could use to track sustainability outcomes?

–To what extent did the programs/projects meet the overall objective of sustainable low-carbon transport?

–What could be improved next time?

The report recommends several steps for financing transport reform. These including analyzing the impacts of financing decisions taken by relevant stakeholders on sustainability, shifting existing resources towards a sustainable direction, adding or increasing funding for those areas where resources are lacking, and paying for the full costs of transport including environmental depreciation.

Top transportation and environment leaders from two dozen governments across Asia, at the Fifth Regional EST Forum in Asia, which is focused on adopting sustainable transport goals for the upcoming decade, said changes in how transport is financed are essential if cities and nations are to deal with the rapid growth in motor vehicle traffic and related environmental and health problems, including climate change.

Although a recent study by the International Transport Forum finds that the current economic crisis has caused GHG emissions by the transportation industry to decline on a global scale, GHG emissions are expected to climb another 40 percent from 2007 to 2030 unless changes are made. The transportation industry accounts for 15 percent of total global GHG emissions, according to the report.

In addition, a study from the Carbon Disclosure Project indicates that the global transportation sector is behind other industries in terms of setting goals to reduce carbon emissions and energy consumption. They are also struggling to identify and report on climate-related risks and complete carbon emissions.

CDP says this is relevant since the transport industry accounts for 13 percent of global emissions and 60 percent of oil consumption in high-income countries. Road transportation accounts for 80 percent of the sector’s total CO2 contribution, followed by air at 13 percent and sea transportation at 7 percent.

Chart: Strategies to achieve low carbon mobility (DALKMANN AND BRANNIGAN, 2007)

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