Transport decarbonization: CPCS delivers big strategy with international scope
A large international institution needing strategy services partnered with CPCS advisors, specialists in green transport and sustainable infrastructure.
Key services: Market analysis, strategy development
The big picture: Reducing greenhouse gas (GHG) emissions from the transportation sector is urgent, critical, and complex. And to accomplish this, climate finance is needed.
Our client’s goal included greening its business activities and investments in transport decarbonization projects.
- To do so, this required a new strategy to make smart investment choices, informed by the latest proven technologies to reduce emissions and consideration of financing options.
- Our client’s investment priorities include greening fleets, energy efficient buildings, terminals and equipment, as well as digitizing and optimizing infrastructure and systems already in place.
The big task for CPCS:
- Develop a long-term strategy and practical action plan for the institution to increase support to transport decarbonization projects
- Consider how to align transport sector investments with the Paris Agreement
- Recommend investment opportunities where private sector participation is most feasible
- Analyze the enabling landscape of 40 countries and identify factors that makes these countries more or less ready for transport sector decarbonization investments
Greening strategy priorities
CPCS recommended several climate change mitigation priorities.
Some are:
- Increase investments in sub-sectors that have technologically proven and ready commercial solutions to reduce emissions, while recognizing that such technologies are changing quickly
- Invest in activities that support increased supply of alternative low carbon fuels in sub-sectors where electrification is a less viable solution (such as long-haul aircraft and long-distance marine shipping)
- Increase investments that will encourage a shift away from high to lower emitting modes of transport, in both passenger and freight transportation
- Support investments in digital solutions to improve logistics, supply chain and vehicle efficiency. This includes being more efficient and optimizing use of existing infrastructure and transportation systems
Impact
CPCS illuminates the complex and is actively helping investment banks determine what transport decarbonization projects to invest in. This is important because the green projects that are funded will encourage the industry to continue innovating effective decarbonized transport solutions.
Since the transportation sector is a big carbon emitter, investing more in decarbonized modes of transport and low carbon energy sources where decarbonization isn’t possible will have a significant impact on mitigating climate change.
Background
The goal: Let’s limit global warming below 2 degrees Celsius, says the Paris Agreement. To succeed, decarbonizing the world’s transportation sector needs to accelerate.
But will reducing the sector’s GHG be difficult? Very much so.
Here’s why: Demand for transport services is expected to double by 2050. And to complicate things, the transportation sector relies more than other sectors on fossil fuels.
- In 2019, direct GHG from the transport sector accounted for 23% of global energy-related CO2 emissions, according to the United Nations’s Intergovernmental Panel on Climate Change.
- The sector’s GHG must fall by about 3% a year by 2030 if we aspire to reach the net zero emissions scenario by 2050.
- Solutions will include rapid electrification of road vehicles, new business models, scaling-up production of alternative lower-carbon fuels where electrification is not feasible (especially aviation), and efficiency improvements. Investments and policies will also shift freight and people onto less carbon-intensive modes of transport or reduce transport demand altogether.
