FASI: Funding Aid Strategies Investments

The World Bank is working on an investment platform to simplify the financing for green transportation networks

European Commission Transport is a critical enabler of global trade and sustainable development. International transport networks and nodes provide physical infrastructure on which our globalizing trading system depends. Following the path through a just transition, the European Union aims at modernizing the transport infrastructure to meet global climate targets. But the main problem is that many of the investments made in this sector tend to be fragmented and small scale, and consequently they do not attract big industrial investors. 

Binyam Reja, global Practice Manager of Transport at the World Bank, proposed a solution during one of the side-events that were organized along the COP-27 in Sharm-El-Sheikh. Bringing a global perspective, Reja talked about the need to find innovative financing instruments and approaches that can promote connectivity, especially in low and middle income countries, which experience the worst effects of climate change. In order to solve the issue of the lack of financing interest that causes the investments in the green transportation sector to be small and fragmented, the World Bank announced that it is working on an investment platform that will be able to aggregate the demand across different countries.

To support the investment in the railway sector and other improvement systems, there will be a financial mechanism that will be able to promote projects that the private sector could invest in. African countries, most of all West African countries, are testing sub-regional investment platforms that can aggregate the needs and then raise funding as a group rather than as individuals because World Bank’s experts think this could perhaps unlock larger investments for transportation.

Cutting transport emissions and adapting to climate change with infrastructure will be fundamental for meeting the EU's ambitions agreed in the European Green Deal. It is in this framework that the World Bank and the European Commission decided to work together to study on the expansion of the Trans-European Transport Network (TEN-T) also to the eastern partnership to envision a reduction of greenhouse emissions, air quality improvement and a better efficiency of the network.

To take maximum advantage of this network, the energy, the transport and the digital sectors should work together, coordinating and planning action simultaneously. Transport is already one of the biggest energy users and transitioning to a more sustainable network practically will imply the installment of more electrical stations along this network, which will also mean  that there will be the need for clean energy for electricity.

Trans-European Transport Network (TEN-T)  

The Trans-European Transport Network (TEN-T) is a Europe-wide network of railway lines, roads, inland waterways, airports, maritime shipping routes and railroad terminals. The main objective of this infrastructure network is to strengthen economic, social and territorial cohesion in the EU and support the application of innovation, new technologies and digital solutions to all modes of transport. The main public investments come from the Recovery and Resilience Facility, the European Cohesion Fund and the support of Financial Institutions.

This network of strategic transport infrastructure has innovation and digital solutions built in to improve infrastructure use and reduce environmental and climate impacts. TEN-T has been developed on two different “layers”: a core network including the most important connections and nodes and a comprehensive network that covers all European regions. 

Experts agree on saying that it is fundamental to adapt the European transportation network to prevent future difficulties that will be caused by the effects of climate change. Critical infrastructure assets are considerable and are a growing risk of climate change impact include the rise of extreme seas levels (coastal flooding) and extreme weather phenomena which can result in significant damage but also cause delay in the supply chain with implications on global trade.

In fact, over 80% of trade globally is based on maritime transport, with the supply chain that goes from port to port and around 60% of the goods are loaded and unloaded in developing countries. Therefore we, on a global level, must reduce our vulnerability and in order to do that we should “think regionally and plan globally”, said Matej Zakonjsek, director of the Transport Community Permanent Secretariat: the transport network cannot be planned just nationally because we will not have the same efficiency or the same savings economically and environmentally.