Engagement in EIB Climate Bank Roadmap 2021-2025

Dramatically scaled up action on transport greenhouse gas emissions is essential for achieving Paris Agreement objectives. To decarbonise transport, use Avoid, Shift, and Improve strategies for all carbon intensive modes of passenger and freight transport:

• Avoid unnecessary trips (e.g., promote dense and mixed urban development, teleworking, in-home/local services, reduced packaging, 3D printing, etc.);
• Shift trips toward less emission intensive modes (e.g., improved public transport, intermodal freight transport, active mobility, etc.);
• Improve existing transport technologies, operations, and fuels.

Realising the Avoid, Shift, and Improve strategies can be achieved in the context of EIB operations through the following:

• • Focus on Shift financing and advisory activities to catalyse mode shift. For example, fund public transport improvements, such as bus lanes, rail improvements, passenger and freight fleet upgrading (connected to e-mobility), bus rapid transit (BRT), trams, and improved walking and cycling commuter catchments. These improvements can create connected networks for public transport in cities, thus promoting industrial and warehouse investment adjacent to rail and waterway networks, while supporting telematics systems for integrated road and rail freight operations.
  • Focus on Avoid financing and advisory services to reduce travel demand. For example, promote local supply of goods and services, mixed urban development, transport oriented development (ToD), and teleworking, as well as shorter supply chains, reduce packaging, and link user fees to carbon intensity (e.g., aviation carbon tax and road user charges).
  • Integrate sustainable transport plans with urban planning and economic development planning to reduce transport demand (local shops and services), reduce parking needs, increase safe walking and cycling, and promote sustainable business models for public transport operators and logistics companies. 

• Use framework loans to finance essential supporting measures, such as cycling and pedestrian infrastructure and services. 

• • Complement investments with demand-side measures, such as on street prioritisation, congestion charging, and parking policies to deliver desired mode shift as part of integrated packages of interventions.
  • Invest in rail to support freight and passenger transport (infrastructures, rolling stock, multimodal terminals, workshops). Projects aimed at increasing infrastructure capacity, the electrification of rail systems, and increasing railway integration are a priority to achieve the modal shift to rail.

• Promote electric mobility ONLY if it is coupled with a credible plan to decarbonise the electricity grid and do not fund urban express roads or aviation/airport expansion. 

• Move from a transport infrastructure focus to a low carbon transport system/service focus (infrastructure, vehicles, operations, and regulation, as well as awareness and capacity building, and resilience planning).

• Support the development and implementation of new IT applications which facilitate modal transfer, thereby making it easier for the travelling public to choose low carbon means for their journeys from origin to destination.

Capacity building and sustained advisory activities are essential to achieving climate-resilient development in the transport sector. In addition: 

• Implement a ‘Risk Analysis and Climate Change Impact Assessment Methodology’ for projects (infrastructure and services) and improve climate incidents monitoring. An example includes planning reduced services in emergencies and detecting critical railway sections where improvements should be made.
• Support feasibility and design studies of transport projects and operations (new construction, upgrades, and maintenance steps all provide opportunities) to improve resilience. 
• Foster investments aimed at minimising the risks derived from climate change. These risks should be identified using recognised tools, such as the Task Force on Climate-related Financial Disclosures (TCFD) recommendations.
• Facilitate the formalisation of working groups or committees mandated to supervise, review, and further support climate-resilient development in the long run.
• Allow advisory services to fund emergency transport response planning. 
• Support walking and cycling networks in cities to allow movement and delivery in times of crisis. 
• Provide concessional financing to fund the additional cost of the investment necessary to ensure the resilience of a system (reduced insurance premiums can help fund investments).

The EIB should accompany clients in all stages of their transitions to sustainable, low carbon development. For the transport sector, this can be achieved through the following actions:

• • Focus on moving people and goods efficiently. This includes, for example, increasing load factors in public transport and appropriate freight vehicles, as well as increasing walking and cycling in cities, with an emphasis on sustainable development and benefits for health and social equity.
  • Prioritise climate investments for projects that also tackle local priorities, such as air pollution, road safety, congestion, and access for all to jobs, services, and education.
  • Engage with clients to require time bound, science-based low carbon transition plans, with EIB financing conditional upon satisfactory plans. This can apply to clients in all sectors, including transport.

• Apply GHG assessment at different levels, especially in the design and implementation of projects, as well as by setting country strategies.

• • Develop results and policy based lending to rapidly scale up the impact of EIB lending.
  • Promote the concept of urban access regulations (vehicle types, charging schemes, low speed,  etc.) to accelerate the transition to low carbon transport.

• End investment in airport expansion: Since 2016, the bank has provided more than €4 billion in loans for the expansion of airports. In 2019 alone, the EIB financed airport expansions in Greece, Finland, Germany, the Netherlands, Italy, Ireland, and Denmark. Aviation investment should instead be in R&I for zero-emission technologies. 

The EIB should support coherent, integrated, national, state/provincial, and local transport policies, working with clients to end harmful fossil fuel subsidies, promote price signals aligned with climate objectives, and prioritise efficient, low carbon policy and investments. In addition, the EIB should assist clients to:

• • Address barriers to coordination across ministries and provide greater support to clients to better align transport and planning officials with climate policy actors, such as those preparing Paris Agreement mandated Nationally Determined Contributions (NDCs) and Long-Term Strategies (LTSs). The work on climate action cannot just come from the ministry working in the UNFCCC process. 
  • Achieve vertical cooperation between national and subnational governments, support national plans (such as National Urban Mobility Plans, or NUMPs), and ensure proper coordination with local and regional actors, including non-state stakeholders. 
  • Support regional and metropolitan authorities in aligning their strategies across policy areas and territorial boundaries, promote integrated planning approaches like Sustainable Urban Mobility Plan (SUMPs), and facilitate exchange of joint learning and good practices.

• Support the development of cross sectoral strategies and realistic sectoral action plans for low carbon development, and support the establishment of appropriate governance to make sure that these plans are actually implemented. Examples of sectors that are extremely relevant include transport and renewable energy, transport and urban development, transport and health, etc. 

• • Manage the transport demand impacts of EIB investments in other sectors, e.g. spatial distribution of industry, location of commercial and housing developments, etc.  

• Work with sector intermediaries to reach the fragmented freight and logistics sector (for example, through eco-driving programmes for van and truck operators, shared consolidation facilities for operators, and fleet management training in low carbon logistics).

In the context of the Global South, overall, the goals around transport remain more or less the same as those of the Global North: scale up sustainable, low carbon transport services and infrastructure so as to empower lives and livelihoods and achieve sustainable development. The differences arise in terms of capacity building and support, as well as promoting the leapfrogging of many of the development phases through which Global North cities, which have high private car ownership, have already passed. In addition, the EIB should: 

• • Support development of integrated national and urban sustainable transport policies. It is critical to favour projects that are part of a coherent comprehensive approach. 
  • Promote rail corridor development/interoperability and coordinate investments into railway infrastructure (especially across borders), including the establishment of common technical solutions (rolling stock, control command, telecom, etc.), as well as border crossings installations.

• Promote and provide for walking and cycling as serious and viable modes as this has benefits for transport systems as well as major environmental and social benefits for all, but especially those most often left behind.

• • Focus on informal transport. It has strong employment connections in many developing countries and is often the sole means of moving people from place to place.
  • Ensure the resilience of the existing transport systems in countries where funds are limited.

• Reinforce the message that leapfrogging to efficient, low carbon solutions increases accessibility, reduces transport costs, and, in many cases, reduces external energy dependence.

• • Support procurement strategy development for low-emission fleets and buses.

• Fund only on the basis of a clear mobility plan, that is based on a factual analysis of the mobility challenges in the urban area, a joint development vision of stakeholders, integrated sets of policy measures, and clear impact indicators, e.g, a SUMP.

• Promote joint reflection among stakeholders on the barriers and successes of implementing policies in order to facilitate learning and long-term change (‘process evaluation’).

Sustainable, low carbon transport projects, if correctly designed, have significant social, economic, and environmental benefits. Examples include:

• Urban transport projects: present great value in increasing access and addressing air quality. 
• Compact urban development: facilitates sustainable transport.  
• Greenways and other green spaces: act as transport corridors and help with stormwater management, biodiversity, and air pollution.
• Walking and cycling and active mobility projects: provide benefits for all, including reduced emissions and access for those most often left behind, as well as help improve overall health of the population. 
• Shorter, more efficient low-carbon supply chains: reduce costs and increase resilience. 

In addition, the EIB should: 

• Support bold, integrated projects that are multi-purpose, touching upon key elements of sustainable development.
• Use the EU taxonomy, which links climate and environmental objectives, as a key tool to assess these synergies and trade-offs.
• Beware of issues related to the lobbying power and influence of established industries, such as the fossil fuel industry and automobile manufacturers. 

Ensure investments in the transition to low emission vehicles for air quality objectives (e.g., EURO VI) and do not delay the move towards more sustainable, low carbon modes of transport, especially public transport, rail, and electric mobility for passengers and freight. 

As has been asserted above, sustainable, low carbon transport projects can have major, beneficial impacts on economic development and populations, especially in terms of achieving key elements of the 2030 Agenda for Sustainable Development and its call to ‘leave no one behind’. Projects should increase access while being gender-responsive, people centred, and planet sensitive. Examples include:

• Safe, attractive walking and cycling infrastructure and connectivity to public transport: help reduce road fatalities, increase physical activity, and increase access to jobs, goods and services for everyone, but especially for poor and vulnerable groups. 
• Railway system adaptation to increase resilience to climate change impacts: helpful to internalise the cost of climate-related externalities.
• Passenger transport services: urban mobility and public transport projects, which prioritise accessibility, both economic and social, paying particular attention to the needs of women and girls, persons with disabilities, young people, older persons, and other vulnerable groups (e.g., providing solutions for the last mile).
• Freight transport: last mile delivery, rail infrastructure, intermodal terminals (rail, road, waterborne), urban and shared consolidation hubs, inland waterways, integrated charging hubs for freight vehicles, etc. 
• Local provision of goods and services: ‘at home’ services benefit vulnerable groups. 

The EIB must take a firm stand as it did in relation to gas and coal-fired power plants in the 2019 Energy Lending Review and do something similar in the transport sector. We call for an end to investments of any kind in unsustainable and carbon-intensive transport projects such as aviation and airport infrastructure and express roads. In addition, the EIB should:  

• Promote internalisation of external costs in transport (e.g., including a price on carbon), create a fund for environmental sustainability projects, and align tax policy with climate objectives.

• Promote transparent financing schemes that are understandable and ‘simple’, so that subnational and local authorities of different sizes can participate. For example, blending is seen as very complex, while portfolio or aggregated projects-style instruments could be welcome. Also, employ funding structures that, once established, can be joined by additional partners once the success of a specific approach becomes clear. 
• Provide financing tools to limit the financial risk related to new technologies that favour low-carbon development (electric mobility for example). This can also be applied to public-private partnerships (PPPs). With PPPs, there are many issues related to risk distribution. There should be a mechanism to improve project preparation and implementation. Development banks have a critical role to play in enhancing the institutional environment and help make PPPs less risky and more beneficial to the public.
• Pay attention to the informal sector in the Global South and consider repackaging existing instruments or tools for its benefit, like lending at the SME level, as well as capacity building, technical assistance, and supporting cooperatives and intermediaries. 

In the transport sector, examples include: 

• GHG emissions per passenger/km or tonne/km (for freight), disaggregated by sector and sub-sector

• Air quality

• Rates of road fatalities and serious injuries

• Rates of walking, cycling, and public transport use

• Inclusivity of transport services, particularly for women and girls, persons with disabilities, young people, older persons, and other vulnerable groups

• • Affordability, e.g., ratio of fares to incomes of those who use public transport as their means of transport

• Percent of population that can access jobs and services, e.g., within 45-60 minutes via public transport, cycling, or walking

• Income and gender distribution of project beneficiaries

• Lowest energy use per passenger/km

• Energy consumed per passenger/km or ton/km (for freight)

• • Projects should undergo:

• Ex ante: Carbon footprint analysis before each investment

• Ex post: Development of Measure, Report, Verify (MRV) systems

The EIB Group should produce common assessment methods, certification, etc. for development projects, as well as work across IFIs to facilitate joint activities and common environmental standards and sustainability priorities in line with the 2030 Agenda, the Paris Agreement, and other global frameworks. In addition, the EIB should: 

• Streamline some of the procedures around measuring impact across IFIs so they can work together more efficiently and allow for parties receiving funding to better handle overall assessment.

• • Review how climate mitigation funds in the transport sector are labeled and appraised at development banks. For example, do not allow a project like a major road or airport expansion to be labeled as climate mitigation activity if there is no carbon footprint assessment demonstrating an effective reduction of GHG emissions.

• Ensure capacity building related to impact assessment as, oftentimes, parties that receive development funding are unable to properly report or measure impacts.