Decarbonising Transport: A Global Challenge

Reducing transport-related emissions is emerging as one of the greatest climate challenges of our time. Faced with growing demand for mobility, governments are seeking to reconcile economic efficiency with environmental transition, especially in a context of widespread geopolitical instability and energy market disturbances caused by the war in Iran. Decarbonising transport networks has never been so crucial.

According to the International Energy Agency (IEA) and other open source data providers, the transport sector accounts for roughly 24% of global energy-related CO₂ emissions, with road transport responsible for nearly three-quarters of that total. In a context of rising mobility demand, particularly in emerging economies, the challenge has become systemic. The question facing policymakers and investors is how to decarbonise the sector without undermining economic growth or social access to mobility. Many are trying around the world.

A Global Challenge Shaped by Local Realities

Transport emissions are deeply embedded in economic structures and urban development patterns, and local ecosystems play a key role. In Europe, the priority is often the electrification of existing vehicle fleets and the decarbonisation of logistics. In fast-growing cities across Africa or South Asia, the issue is more fundamental: how to build mass transit systems that avoid locking in high-emission pathways for decades, especially in underprivileged areas where critical infrastructure is either archaic or non-existent.

The Intergovernmental Panel on Climate Change (IPCC) has repeatedly emphasised that demand-side measures, urban planning, and modal shifts are as critical as technological innovation in reducing emissions. The potential for emissions reduction is vast, with demand-side strategies (lifestyle changes, consumer choices, and infrastructure use) across food, land transport, and buildings believed to be capable of reducing emissions by 40–70% by 2050 compared to baseline scenarios.

In practice, this means that solutions vary widely. Electrification alone cannot solve congestion, urban sprawl, or inequitable access to transport. Nor can large-scale infrastructure projects succeed if they fail to integrate social and environmental considerations. Such complexity is increasingly reflected in investment strategies. Long-term infrastructure investors are shifting away from isolated projects towards integrated mobility systems that combine environmental performance with social utility.

The Rise of Integrated Mobility Models

One of the clearest trends in transport decarbonisation is the renewed focus on mass transit systems, particularly in urban areas where emissions are concentrated. The UK Government's 2025 budget, for example, included long term commitment to such systems and urban connectivity. Bus Rapid Transit (BRT) systems, metro networks, and rail infrastructure are being prioritised not only for their lower emissions per passenger, but also for their capacity to reshape urban mobility patterns.

The World Bank has been funding green urban mobility projects around the world for years, and has shown that BRT systems are capable of reducing GHG emissions by up to 90% (Rio de Janeiro's Urban Rail System reduced transport-related GHG emissions by 89% between 2009 and 2022). Other examples can be found across continents. In Latin America, Bogotá's TransMilenio system has become a reference point for high-capacity bus networks. In Asia, cities like Jakarta have expanded Transjakarta BRT corridors as part of broader urban transport reforms. In Europe, cities such as Paris are investing heavily in public transport expansion alongside low-emission zones. These projects share a common logic: decarbonisation is achieved not just by changing the energy source, but by changing how people move. Paris is a prominent example; it has managed to reduce air pollution by 55% in two decades by investing in bike lanes and prioritising buses, trams, and the metro network over cars.

The Role of Electrification

In spite of vast investments in solutions like hydrogen energy, Electric vehicles (EVs) remain a cornerstone of decarbonisation strategies, particularly in developed markets. The IEA estimated that global EV sales exceeded 14 million units in 2023, representing a significant acceleration. Yet electrification presents its own challenges. Infrastructure deployment, grid capacity, and supply chain constraints for critical minerals all shape the pace and sustainability of this transition.

Moreover, EV adoption does little to address congestion or land use inefficiencies. In dense urban environments, replacing internal combustion vehicles with electric ones may reduce emissions, but it does not fundamentally improve mobility systems. This is why many governments are combining electrification with broader policies: investment in public transport, cycling infrastructure, and urban redesign.

Infrastructure Investors Adapting to New Constraints

These practical realities are affecting investment strategies and the role of private capital around the world. Infrastructure investors are increasingly expected to deliver not just financial returns, but measurable environmental and social outcomes. One example is Meridiam, which has positioned itself as a long-term investor focused on sustainable infrastructure, particularly in transport and urban mobility.

Its involvement in the Dakar Bus Rapid Transit (BRT) system illustrates this approach. The project aims to serve over 300,000 passengers per day, while significantly reducing congestion and emissions in the Senegalese capital. Meridiam's involvement allowed the project to move away from fossil fuels to 100% electrification, a very first on the African continent. The project is also designed with strong social components: affordability, accessibility, and job creation. This reflects a broader shift in infrastructure development, where projects are evaluated not only on technical performance but on their ability to deliver inclusive mobility.

Meridiam is not alone in this space. Investors such as Brookfield Asset Management and Macquarie Group have also expanded their portfolios to include sustainable transport assets, from rail networks to EV charging infrastructure. What differentiates approaches, however, is the degree of integration. While some investments focus on individual assets, others seek to build coherent mobility ecosystems.

A Shifting Investment Logic

If Europe and North America are accelerating electrification, many of the most instructive mobility transformations are unfolding in emerging markets. Rapid urbanisation in cities such as Lagos, Nairobi, or Dhaka is forcing authorities to design transport systems from the ground up, often bypassing legacy constraints. This creates opportunities to leapfrog directly towards lower-carbon models.

The aforementioned Dakar Bus Rapid Transit system illustrates this approach. Rather than adapting existing networks, it introduces a structured, high-capacity alternative to informal transport. Similar dynamics can be seen in India's expansion of metro systems alongside the promotion of electric two- and three-wheelers, or in China's large-scale deployment of electric buses, now the largest in the world. These examples underline how decarbonisation pathways are context-specific, shaped as much by political choices and investment capacity as by technology.

They also highlight the social dimension of the transition. Transport determines access to jobs, education, and services. Poorly designed policies risk increasing costs or excluding vulnerable populations. This is why institutions such as the European Commission stress the importance of a "just transition" in mobility, ensuring that climate measures remain socially balanced.

For investors, this dual environmental and social requirement is reshaping priorities. Decarbonising transport is now an infrastructure challenge requiring long-term capital, coordination, and new performance metrics. Financial returns are increasingly assessed alongside environmental impact and social utility. In this evolving landscape, integrated mobility systems (rather than isolated assets) are becoming the benchmark for sustainable investment.