Analyses of finance trends for transport infrastructure in LICs and LMICs against future climate targets

Whilst low-income countries (LICs) and lower middle-income countries (LMICs) require accelerated economic development to meet Sustainable Development Goals, studies show that under existing paradigms a 1% increase in economic growth can lead to a 0.4% growth in carbon emissions. Decoupling growth from emissions in LICs and LMICs is a matter of global significance. Given the link between transport, development and emissions, decoupling necessitates investment in sustainable transport. If the transport sector in LICs and LMICs emitted the same amount of C02 per capita as high-income countries, an additional 8.5 billion tonnes of C02 would be generated annually. Monetising this using the most recent estimates of Social Costs of Carbon equates avoiding these emissions with the monetary equivalent of over USD 1.5 trillion each year. This study delves into the historical lending databases from 5 development banks to assess trends in transport financing. It contextualises transport financing for LICs and LMICs within each bank’s project portfolio, explores how transport financing is allocated across different transport subsectors and how (whether) investment has changed in response to sustainability commitments such as the Paris Agreement. As arguably one of the most sustainable transport modes, particular focus is given to trends in railway financing.