The EIB’s support to road transport at odds with the Paris Agreement

The European Investment Bank (EIB) is currently reviewing its transport policy, and the public consultation the bank organised closes at the end of the week. The reviewed policy will complement the recently adopted Climate Bank Roadmap, and will be intended to align with the European Commission’s new Sustainable and Smart Mobility Strategy.

Despite its climate commitments, the EIB’s transport operations have a long way to go before we can consider them ‘aligned’ with the objectives of the Paris Agreement. The bank’s approach to transport needs to undergo radical changes for it to be equipped to play a transformative role in the transition towards a low carbon future.

One area where more ambitious action is needed - but where the EIB has been unwilling to move – is in the support it provides to the road sector, especially highways and motorways. A striking example that highlights the problematic track record of the bank’s support to the road sector, which we will get into later is its recent loan to the A49 motorway in Germany. More information can be found in our recently published briefing on the EIB’s transport investments.

From 2016 to 2020, the EIB massively supported roads, highways and motorways spending €12,62 billion in the span of five years.

Road transportation is a major contributor to CO2 emissions. In 2017, road transport was responsible for almost 72% of total GHG emissions from transport in the European Union. Investments in motorways and highways do not contribute to improving local mobility and directly compete with less carbon-intensive transport modes like trains. We also must consider that the EU already has an extremely dense network of motorways and highways. Many of these create severe problems such as ecosystem fragmentation and they even cause disruptions to environmentally protected areas - the Natura 2000 areas.

Still, the EIB refuses to end its support for motorways and highways capacity expansions, despite pressure from civil society organizations to end these investments. Instead, the bank only proposes a new carbon pricing and an ‘adapted economic test’ (including via new demands forecasts). By doing this it expects that some of the most polluting highways would be ruled out.

However, the concrete impact of this technical approach is complicated to anticipate: if the EIB assumes a rapid uptake of electric vehicles, it could simply mean the bank would build more roads. Carbon pricing is also far from sufficient, because it does not take the impact on biodiversity into account. Additionally, the choice of a technical tool to screen out carbon-intensive projects will make the monitoring and scrutiny of its implementation particularly complicated for external stakeholders. This leaves a large discretion for EIB staff to properly use this tool. Past experiences in the energy sector are far from reassuring. Many detrimental gas projects were historically presented by the EIB as if they have a positive climate impact, despite going through its greenhouse gas emissions calculation tool.

The case of the A49 motorway in Germany is a blatant example of damaging motorway projects financed by the EIB, that the new adapted economic test is unlikely to rule out.

The EIB is behind the expansion of the controversial A49 motorway in Germany, which provoked strong resistance from environmental activists. The construction of the motorway will result in the destruction of 27 hectares of the Dannenröder forest. The Dannenröder forest is located in a protected area and its trees are over 200 years-old. It is home to many endangered species, including bats, newts and fire salamanders. Moreover, the forest is part of a protected reservoir that supplies around 500,000 people in the area with drinking water.

The EIB says that the A49 project would lead to an emissions saving of 11,000 tons of CO2 per year. This means that the EIB invests €264 million in a motorway project that represents less than 4% in emissions reduction compared to the current situation. Besides, even the opposite is possible. Traffic might increase beyond the ‘project boundaries’ and this might lead to a greater impact on climate. Research shows that making driving easier leads to an increase in traffic, instead of the decrease we should aim for. Building and expanding roads generates more traffic, exhaust fumes and noise, generating the so-called “induced travel demand” phenomenon.

This project has been resisted by civil society for decades. In 2020, environmental activists moved to the Dannenröder forest to prevent the construction of the motorway and the destruction of the forest, with over 70 tree houses being built. The camp has become a symbol of one of the most important climate justice struggles taking place in Germany.

Clearing out healthy forests in order to build new, polluting transport infrastructures is irresponsible. Especially during a time where all of our efforts must be focused on tackling the climate emergency. This project and the resistance against it are not only relevant for the Dannenröder forest area specifically. It plays a much larger role in the conversation of what we should consider to be the future of transport as a whole. We simply cannot keep expanding highways during an acute time of climate breakdown and rapid extinction of species.

Along with other environmental NGOs such as Greenpeace and WWF, we call on the EIB to end its support for motorways and highways expansion. It is crucial for the EIB to recognize that the endless growth of road and maritime transport is unsustainable and that it may lead to supporting projects that will inevitably become stranded assets. This is in spite of the fact that the bank has previously been able to admit to this when it comes to the aviation sector by choosing not to finance airports’ expansions any further.

Considering the huge efforts that are needed to decarbonize European mobility, public finance should aim at scaling up support for sustainable transport modes and infrastructures like electric urban public transport, bike lanes and rail electrification. It should also fund research to develop means to reduce traffic, for example through better urban and spatial planning.

The focus should be on reducing the demand of carbon-intensive transport including a drastic reduction in air travel, less cars and freight transport by promoting public transportation, shared vehicles and modal shift. All this needs to be clearly spelled out in the future EIB transport policy.

If the EIB’s investments were in reality re-directed towards climate-proof and transformative projects, the bank could truly make a considerable difference in helping the EU decarbonize its transport sector and play a transformative role in achieving the objectives of the Paris Agreement and its very own Green Deal.