The European Union’s decision to expand its carbon pricing system marks a turning point in how transport investments are structured and financed. From 2027, the EU Emissions Trading System will extend to cover emissions from road transport and buildings, placing a direct cost on carbon in sectors that have, until now, largely operated outside the core carbon market.
Revenues from this new phase of the ETS will feed into the EU’s Social Climate Fund, which has earmarked €12 billion for sustainable transport. Unlike short-term subsidies, this funding is part of a longer-term framework tied to carbon revenues. The significance lies in the predictability of the funding source, driven by market mechanisms rather than annual budget cycles.
At the same time, the European Commission has set out a Strategic Investment Outlook designed to guide how capital is deployed across transport. Electrification, hydrogen, and sustainable fuels are key focus areas, but the plan also emphasises systems thinking, supporting modal shift, integration across transport modes, and greater resilience through better infrastructure planning.
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