Turning the Right Corner to Low-Carbon Transport

Developing countries need to transition to a low-carbon transport sector now to avoid locking themselves into an unsustainable and costly future, a new report by the World Bank warns.

According to Turning the Right Corner: Ensuring Development Through a Low-Carbon Transport Sector, technical progress will take too long to fix the problem of transport emissions, with fuel cell cars, for instance, only expected to become a mass technology by the end of the 21st century.

Countries need to start shifting now to more sustainable mobility patterns and, to make this affordable, broad sector reforms will be needed that cover all external costs of transport, not just greenhouse gas (GHG) emissions.

“Transport is a driver of social and economic development, enabling citizens to access health care, education, and jobs, and unlocking growth potential for cities and countries,” says World Bank Vice President for Sustainable Development Rachel Kyte. “Developing countries can make choices now to reduce transport GHG emissions, so as to lower fossil fuel use and transport costs in the long run, while safeguarding transport’s contribution to inclusive green growth.”

If countries do not contain fossil fuel use, transport will become the biggest emitter of GHGs by the middle of the 21st century, and rising oil prices and agreements on carbon pricing will lead to higher transport prices.

European countries, which are well endowed with public transport, are better placed to respond to future changes in energy and emission prices than countries such as the United States which have emphasized road infrastructure.

Shifting to low-emission transport modes

Turning the Right Corner analyzes what countries need to do to transition to a low-carbon transport sector and how they can pay for it. The transition will involve shifting transport systems toward low-emission modes, such as higher shares of mass transit in urban transport, and changing settlement and mobility patterns, away from energy-intensive patterns such as suburbanization in North America.

“Transport infrastructure is very costly to build and decisions taken are often irreversible,” explains Marc Juhel, World Bank sector manager for transport. “Directing infrastructure investment toward low-emission modes now will help avoid lock-in of transport systems to a fossil fuel-intense and high-cost future. Developing countries have an opportunity to build a more sustainable future.”

Financing the transition

The most cost-effective way to finance the transition to a low-emission sector, according to the study, is the adoption of broad sector reforms that combine policies to reduce GHG emissions with policies to reduce local air pollution, road safety risks, and congestion.

This is because, at the local level, the costs of GHG emissions are lower than the other external costs of transport. Thus, to impact fuel prices sufficiently to change citizens’ mobility patterns, carbon prices need to be combined with broader fiscal incentives.

“For rapidly growing cities in developing countries, finding alternatives to road transport will be a challenge. Governments need to ensure high-quality services in low-emission modes, or people will continue to prefer individual cars,” says Andreas Kopp, lead transport economist at the World Bank and lead author of the report.

Countries in Asia lead the way

Asia provides several examples of fast-growing countries that have successfully developed low-carbon transport sectors, such as Hong Kong SAR (China), Japan, Korea, and Singapore.

Thirty years ago in Hong Kong, for instance, car ownership doubled in a decade and time lost to congestion exploded. The integration of road building, a massive expansion of mass transit, and demand management halved vehicle ownership by 1985—by then 10 percent of the passenger cars were taxis—drastically reducing travel times without making the city less attractive for business.

Hong Kong now ranks second on the infrastructure index of both the 2012 Logistics Performance Index and the World Bank-IFC Doing Business Report.