CEO, Global Infrastructure Investor Association (GIIA)
Three principles should be followed to put net zero infrastructure at the heart of smart cities.
With transport activity (much of it concentrated in urban settings) currently accounting for around a fifth of greenhouse gas emissions across the EU, decarbonisation of our land, air and sea networks mark a pressing priority for any city looking to be truly smart.
Closing the gap by 2050
The European Commission, recognising the vital role of private investors, estimates that €1.5 trillion in investment will be needed to facilitate a net zero, sustainable EU-wide transport network by 2050. Time is of the essence, and the global competition to attract inward investment is growing, so the question facing EU policymakers today is: how can we close that investment gap in good time?
Policies that support delivery
First, answer the ever-present investor call for fair, constructive regulatory frameworks that pave the way for project delivery. Unfortunately, there are too many examples of where this approach is absent, one being the trajectory of the EU wind turbine market over this year.
While policymakers keep investors on tenterhooks as they work through proposals for energy price caps and the decoupling of gas from electricity prices, sales of turbines plummeted by 36% in Q3 2022 (compared to the same period last year) against a backdrop of surging inflation and borrowing rates.
From a transport perspective, that translates into a massive loss in renewable energy capacity to facilitate the green hydrogen, manufacture of clean vehicles and electric power networks that will be fundamental to achieving FitFor55 targets.
Lessons should be learnt from where a mix of public and private funding is making progress possible.
Second, streamline EU funding instruments to make them accessible for all relevant projects. Between the Connecting Europe (CEF), Structural and Investment (ESIF), Regional Development (ERDF), Cohesion (CF) and InvestEU funds, it can be hard for investors to know which way is up when seeking support for decarbonisation initiatives.
Lessons should be learnt from where a mix of public and private funding is making progress possible (especially in areas where market viability may not exist yet) such as the €5.2 billion EU hydrogen IPCEI initiative.
Third, facilitate a strong project pipeline. The money is there — dry powder held by global investors is estimated to have quadrupled to just shy of $300 billion in the ten years to 2021 — what investors need is a clear, cross-party, long-term map for delivery.
By following these three principles, we can make decarbonised transport and decarbonisation in the round a reality for smart cities across the EU and beyond.