As transport emissions continue to rise, it is becoming increasingly important to identify and implement solutions to reduce emissions and ultimately decarbonize transportation. One opportunity to do this is by replacing internal combustion engines (ICE) vehicles with zero emission vehicles (ZEVs). While the Bank has increased its knowledge on transport decarbonization, the Bank continues to finance ICE vehicles and ICE infrastructure. This finding was reinforced by an Independent Evaluation Group (IEG) Evaluation Insight Note on Transport Decarbonization that found “decarbonization opportunities are being missed.”
To better understand how the Bank’s climate finance portfolio supports transport decarbonization, BIC analyzed transport projects with mitigation co-benefits covering Fiscal Years 2018 to 2021, 33 projects in total. Our research found that the Bank is not scaling up support for transport decarbonization within its climate finance portfolio.
The Bank should emphasize transport decarbonization and help clients transition from ICE vehicles to ZEVs. Based on our research, we recommend that the Bank:
- Prioritize Transport Decarbonization. Bank investments should support the modal shift away from private vehicles. The Bank should prioritize ZEVs, particularly in its climate finance portfolio, including by publicly committing to end all support for ICE vehicles and infrastructure required only for ICE vehicles.
- Revise the Sustainable Transport Indicator. One opportunity for the Bank to demonstrate its commitment to transport decarbonization would come from revising the current Corporate Scorecard indicator on sustainable transport. The current indicator does not refer to transport decarbonization, and it should be revised to include a sub-indicator that measures and reports on the direct impacts on transport decarbonization.
- Increase Transparency on Mitigation Accounting. The Bank should disclose how climate co-benefits are measured for each project or investment, including an analysis on scope 1, 2, and 3 GHG emissions. As part of the process of calculating climate co-benefits, there is an assessment determining the percentage and amount of finance for each component, sub-component, prior action, and disbursement-linked indicator. The Bank should disclose these documents as a way to hold the Bank accountable and avoid double counting or overestimating decarbonization claims.
- Align with Current and Future Work. Transportation projects should be developed in partnership with local communities, and they should be aligned with countries’ Nationally Determined Contributions, Long-Term Strategies, and the Bank’s own commitments and diagnostics (e.g. Country Climate and Development Reports, Climate Change Action Plan).
- Revise the Paris Alignment Transport Sector Note. The Bank should revise its Paris Alignment Transport Sector Note. The Note has a flawed understanding of carbon lock-in, stating that “the risk of carbon lock-in is generally low for ICE vehicles (e.g., diesel buses) given the limited lifetime of the asset.” However, this fails to acknowledge that the lifetime of buses in developing countries is around 20 years.
We shared our report with the Bank for input, clarification, or questions, and the Bank cited the Dakar Bus Rapid Transit Pilot Project as an example of a project that supports ZEVs. This project fell outside the scope of our research, but given the Bank’s view of this project as scalable and replicable, we hope to see more projects utilizing ZEVs and ZEV infrastructure, such as in the case of the Kumasi Urban Mobility and Accessibility Project.
Read the full report here.