Europe will need to invest €39bn in public funds each year to maintain its competitiveness in green transport technology, according to a recent report by the environmental group Transport & Environment (T&E).
The study highlights the necessity of shifting public investment away from traditional transport infrastructure towards energy grids, charging stations and other green transport support. This pivot is critical, T&E argues, to ensure Europe can decarbonise its road transport sector while staying competitive in the green technology market.
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T&E’s report estimates that strategic public funding in areas such as electric vehicle (EV) social leasing, battery manufacturing, green fuels, and charging infrastructure could mobilise up to €271 billion annually in private investment by 2030. By 2040, total public and private investments in green transport technology could reach €507 billion per year.
Private investors, including manufacturers and banks, are expected to provide 87% of this funding, yet public support will still be needed to cover high-capital requirements in specific sectors. T&E suggests a €39 billion annual investment until 2030 for manufacturing, a figure less than the current €42 billion in subsidies European governments allocate to petrol and diesel company cars each year.
To support European battery manufacturing amid rising competition from China, T&E calls for a €25 billion EU battery fund. This fund would aim to scale up battery production, secure access to key materials, and reduce investment risks in essential components like cathodes.
Additionally, the report points out that e-fuels for aviation and shipping, though essential to decarbonising these sectors, remain costly and in early development stages. T&E suggests that EU governments provide a third of the €86 billion needed by 2030 for clean fuel production through guarantees and loans to mitigate investment risks for private companies.
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By GlobalDataBeyond manufacturing, T&E emphasises the need for substantial public investment in energy infrastructure, especially to strengthen grid capacity. The report calls for governments to double current grid investments, reaching €67 billion annually by 2050 to accommodate the rising energy demand from electric vehicles. This investment could be offset, T&E suggests, by reducing the €61 billion European governments currently spend on road building by half, redirecting funds to meet grid infrastructure needs.
“Greening Europe’s most polluting sector will need significant investment,” said Xavier Sol, sustainable finance director at T&E. “Failing to do so will not only cost Europe its net-zero goal, but also the competitiveness of its leading industries like carmaking, battery production, ship and plane building. Public funds are needed to kickstart nascent industries and bring the continent’s grid and charging infrastructure up to speed.”
With hearings for the new EU Transport Commissioner scheduled for today, T&E has urged the future Commissioner to deliver a comprehensive Sustainable Transport Investment Plan.
