Cash-strapped governments will need private sector investment to meet sustainable transport objectives, OECD says

Wednesday, May 22, 2013

OECD published a new report on transport:


Cash-strapped governments will need private sector investment to meet sustainable transport objectives, OECD says


Boosting private sector investment in sustainable transport infrastructure will be essential as governments seek to meet long-term economic and environmental objectives at a time of constrained public finances, according to a new OECD report.

Mobilising Private Investment in Sustainable Transport: The Case of Land-Based Passenger Transport Infrastructure points out that investment in transport systems is a powerful driver of long-term growth. It also notes, however, that the transport sector is the second largest contributor to greenhouse gas (GHG) emissions globally, contributing 23% of carbon dioxide (CO2) emissions from fossil-fuel combustion, as well as a significant source of pollutants which pose serious risks to human health. 


Transport emissions could double by 2050 if governments fail to address unsustainable patterns in existing models, the OECD said.  The new report encourages policymakers and private sector actors to shift investments away from emissions-intensive transport infrastructure that is not resilient to climate change towards more sustainable transport modes, such as metros, passenger rail, bus rapid transit or electric vehicle charging stations.   


"It is urgent that investment in transportation moves towards building right, not just building more. The private sector has a key role to play in this shift, which will help governments to meet the pressing economic, social and environmental challenges they will face over coming decades." OECD Secretary-General Angel GurrĂ­a said during the launch of the report at the International Transport Forum's annual summit in Leipzig, Germany. "Governments on their part must play a central role in mobilising private sector investment for sustainable transport infrastructure."


The new OECD working paper provides governments with a comprehensive toolkit of key policy instruments to mobilise private investment in sustainable transport infrastructure. It builds on the OECD's Green Investment Policy Framework, and emphasises the need for integrated, domestic policy frameworks to address investment barriers.

The OECD Green Investment Policy Framework


Source: Adapted from Corfee-Morlot et al., 2012.

Key policy recommendations include:


·         Adopt a "co-benefits" approach.  While sustainable transport projects are often driven by a range of policy objectives, including reduced traffic congestion and local air pollution, when properly implemented they can also help achieve climate change goals. The Bus Rapid Transit system in Mexico City reduced travel time for users by 40%, significantly reduced exposure to particulate matter, and in addition achieved annual GHG emissions savings of 110.000 tons.


·         Use pricing instruments such as carbon prices, fuel and vehicle taxes, reform of fossil-fuel subsidies and congestion charges to shift incentives away from fossil-fuel based road transport. Successful congestion charges operate in London, Stockholm and Singapore.


·         Implement regulations and standards that complement pricing instruments, such as zoning policies and land use planning, standards and public procurement programs.


·         Use innovative financial tools and risk-sharing mechanisms to mobilise new sources of financing. Land value capture tools, for example, aim to harness revenues from the increase in property value generated by new or renovated transport infrastructure. They can be used as part of the capital financing mix to improve projects' profitability, as in the case of the Hong Kong transit railway Setting suitable financing vehicles is particularly critical to attract institutional investors such as pension funds.


·         Build capacity and implement soft policy tools to change business and consumer behaviour, such as public awareness campaigns.

The working paper is available here, and is summarized here. More information on OECD's work on climate finance and investment is provided at

For further information, journalists can contact Geraldine Ang or Virginie Marchal of the OECD Environment Directorate or the OECD Media Office (tel.: +33 1 45 24 97 00).

See German version here.

About the OECD: The OECD is the global economic policy forum. It provides analysis and advice to its 34 member governments and other countries worldwide, promoting better policies for better lives.




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