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    By Stephane Petti and Birgitte Keulen

    Transport is an essential part of our everyday life. Every day, reliable transit affects our ability to obtain or keep a job, meet close relatives and friends, or access crucial public services. Transport is also the backbone of the modern economy, allowing for the movement of goods, services, capital, and workers across countries. The freedom of movement of people and goods is impossible without transport infrastructure.

    But transport is the largest contributor to greenhouse gas emissions in the European Union. It accounts for around 31% of total emissions in the EU and 24% worldwide in 2019. It is also the only economic sector in which emissions have continued to rise up until the pandemic. With the number of people and goods demanding transport is expected to grow after the recovery, governments and businesses are trying to change this. That means innovating and delivering new mobility solutions that will be not only affordable, but also, safe, accessible, efficient, and green.

    Globally, transport infrastructure will require $50 trillion of investment by 2040, and the investment gap is estimated at $10 trillion, according to Global Infrastructure Outlook. It’s an intimidating number, but, in fact, it creates a window of opportunity to support research and development of cutting-edge technologies, such as alternative fuel and green batteries, and new infrastructure solutions like electrical charging and hydrogen networks.

    As a big transport lender, the European Investment Bank is trying to mobilise investments in green and innovative transport. By financing a vast array of projects and initiatives all over the world, the Bank shows we can strike a balance between greater demand of mobility and sustainability. Here is how financing innovation and energy transition could help transform the transport sector in a truly sustainable way.

    Financing smarter and sustainable innovation

    Investments in innovation will help make transport smarter (more digital), cleaner (through cleaner modes like public transport and electric vehicles), and safer (automated transport and support systems like traffic monitoring systems can make travel safer). However, funding has remained highly uneven, with climate tech start-ups and smaller companies often facing huge financing difficulties to enter the market. These constraints are high competition from larger companies, high upfront capital costs, and weak momentum for climate mitigation investment in the sector.

    That is why European Investment Bank financing has broadened in recent years beyond larger infrastructure projects to smaller one

    © Shutterstock

    Through the EU bank’s new financing vehicles, such as intermediated loans, guarantees, and venture debt, the companies can access affordable financing, achieve competitive pricing, and attract more investors. For example, in 2018, the European Investment Bank signed a €30 million loan to support a French company developing and producing autonomous electric shuttles and taxis.

    The Bank enables entrepreneurs to bring their ideas to market and compete on the global stage through initiatives such as Future Mobility, InnovFin, and InvestEU that are supported by the European Commission. For instance, in 2018, the European Investment Bank signed a $350 million loan agreement with Northvolt supporting the construction of Europe’s first giga-factory of lithium batteries. The loan was part of the InnovFin Energy Demonstration Program and a crucial step for the advancement of electric vehicles in Europe. In late 2021, Northvolt’s first production line went into operation. In 2020, the EIB supported a shared mobility platform with a €15 million loan under Future Mobility.

    The Bank also offers technical assistance and advisory to help smaller transport companies in securing and accessing crucial financing. Last year, the Bank signed an agreement with Hydrogen Europe that will provide financing advisory support for hydrogen projects and help spur more funding for green hydrogen across Europe.

    Down the road

    Transport is connected to the most critical issues of our time. It contributes to people’s well-being. It allows access to goods and services necessary for a better quality of life. At the same time, the negative externalities of transport, notably CO2 emissions, are a growing concern. 

    Levelling up mobility and achieving climate ambitions are not exclusive. Investing in greener transport meets growing transport demand and development goals. It also means financing new innovative mobility solutions and technologies that will make transport smarter, greener, safer, and more efficient. It’s time to clean up and modernise our transport!