Sustainable finance

Europe needs sustainable finance policies – to make the right investments and send the right price signals – to decarbonise its transport sector.

What's happening?

The new multiannual financial framework that determines EU spending will be drafted at EU level between 2017 and 2020. This new post-2020 EU budget provides an opportunity to better streamline spending on decarbonising transport, as well as creating better safeguards to ensure that the money is sustainable finance – that it’s not going towards projects that lock in the future use of fossil fuels.

A proposal to improve the rules on road pricing was published in May 2017. This proposal will be discussed in Parliament and Council as part of the Low Emission Mobility Package. The Commission proposed that CO2 be accounted for in the tolling of all road vehicles and that time-based systems be phased out across Europe. The Proposal also extends the scope of the existing directive to include both passenger cars and vans; defining certain features of a charge that member states will need to apply if they wish to introduce road charging. National Ministers have been discussing a proposal on fuel taxation for several years, but have failed to agree on a way forward to tax fuels on the basis of energy and carbon content. Today’s tax rules don’t reflect the climate or air pollution impacts of burning different fuels – particularly diesel, and allow some countries to act as fuel tax havens.

The rail sector will benefit from more sustainable finance due to the new EU spending rules, but both freight and passenger rail shares continue to decline in Europe as a whole. Some countries are the exceptions and show promising growth. However, there is a serious problem with cross-border passenger rail in particular, where connections are being closed and services cancelled, despite passenger demand. The focus on expensive high-speed rail infrastructure and services, which receive beneficial treatment from EU funds, may be feeding this harmful trend.

The rail sector will benefit from more sustainable finance