While there are some front runners in the race to decarbonize transportation, the NZRI shows that the majority of governments have not yet set clear dates to ban the sale of vehicles with internal combustion engines, or are struggling with the political and economic implications of such actions. The research also finds a low share of domestic travel taking place by rail and insufficient adoption of electric vehicles, the latter resulting from a lack of government incentives and poor availability of electric charging infrastructure.

Norway is leading the charge on decarbonizing transport. The country, which has set a date to ban the sale of combustion engines, is also prioritizing incentives for adopting electric vehicles while making significant investments in public transport. But although it has a good-sized charging infrastructure market it is struggling to meet the demand for charging stations, highlighting the importance of the availability of supporting infrastructure in decarbonization efforts.

Top five countries in transport decarbonization readiness


Top five countries in transport nzri

Public transport and trip-sharing

China, which ranks fourth in the transport sector, is the only country where rail makes up the clear majority of domestic travel measured by distance, suggesting a need for many countries to invest more heavily in public transport. In addition to developing its availability governments will need to take further steps to subsidize public transport fares to encourage use. The connectivity of rural areas plays another important role in this aspect, being the major area still reliant on individual mobility rather than public transport.

Steffen Wagner, Global Head of Transport & Logistics, KPMG in Germany, says a decisive change would be to persuade car users to share trips and vehicles. “The public sector needs to provide the platform, as no one else is likely to do this, as well as incentives,” he says. China, which scores the highest for shared vehicle use in the Index, implemented incentive mechanisms for car sharing back in 2017, and has developed large-scale domestic ride sharing companies. More recently, the German cities of Hanover and Hamburg have worked to set up such services, including a program with MOIA, a subsidiary of Volkswagen Group, which uses electric vehicles and targets a specific niche in public transport between shared taxi and bus rides.1

Electric vehicles

Countries will need to stop, or at least limit, the use of internal combustion engines in cars, but 18 of the 32 countries in the Index have not yet set dates to end sales of such vehicles. Wagner says there are also challenges involved in scaling up and standardizing the charging infrastructure needed for electric vehicles.

Except in Norway, national adoption rates for electric vehicles are very low, although China has the largest electric vehicle fleet by size and is investing heavily in both vehicle and battery production. Globally, slow adoption can in part be put down to a lack of sufficient charging infrastructure and too few incentive mechanisms. There are lessons to be learned from Norway which has used tax, parking and toll fee exemptions to encourage adoption, as well being early to fund municipal electric vehicle charging infrastructure. Other road vehicles, trains and ferries also need to be decarbonized, with some requiring alternative technologies to electrical batteries such as green hydrogen.

As well as decarbonizing vehicles, freight providers need to adopt greater transparency. At present, a consignment may be handled by a number of different operators, making it difficult to assess total emissions. Some companies are pioneering decarbonized deliveries, including Deutsche Post DHL's development of its own electric StreetScooter vehicles2 and Holland Shipyards Group retrofitting hydrogen fuel cells in a vessel used to transport containers between Rotterdam and Antwerp.3 Governments have a role to play, and in June 2021 Switzerland's Council of States approved the development of Cargo sous terrain, a new national delivery system for smaller items that will use tunnels and electric vehicles to connect distribution centers to cities.4

Active mobility

Governments also need to encourage people to walk and cycle more, particularly in compact and well-planned towns and cities. Wagner says that urban planning is a key tool in achieving this, pointing to the Danish capital Copenhagen's comprehensive network of cycle paths that are physically separated from roads and have redesigned intersections to make these safer for cycling. As a result of these and other measures, in 2018, 28 percent of all journeys in the city were made by bicycle, rising to 49 percent of commuter trips for work or study.5 This development is not only limited to end-consumer traffic. It also holds considerable potential for urban last mile freight services using electrically assisted cargo bikes and makes use of a more localized micro-hub infrastructure for their distribution networks.

But many cities face challenges in this area, including long journey distances resulting from low density development, lack of existing sidewalks for pedestrians and residents who are used to driving rather than using public transport. Local opposition to reallocating road space from cars to bicycles can also make it hard to build such infrastructure, meaning governments will need to work to convince people of the potential benefits. The intelligent use of road space as a public space will play a crucial role in combined traffic of the future, with the goal to reduce carbon emissions. This goal can only be attained, if an integrated approach is chosen and if governments take deliberate action to turn visions into reality.

The success of introducing electric vehicles into the Norwegian market and their popularity is in many ways driven by using carrots rather than sticks, by making electric vehicles more attractive through lower taxes and fees. In upcoming years, the change from fossil fuels to electricity in the transport sector will require large investments in energy infrastructure throughout the country.

Johanne Solum Ness
Senior Associate
KPMG in Norway


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1 `MOIA soon back on Hanover's roads', MOIA, 28 May  2021. https://www.moia.io/en/press/moia-soon-back-on-Hanovers-roads
2 `Electro mobility, Deutsche Post DGL Group, accessed July 2021. https://www.dpdhl.com/en/media-relations/specials/electro-mobility.html
3 `Holland Shipyards Group will retrofit future proof shipping's Maas to sail on H2 Power', Holland Shipyards Group, 4 March 2021. https://www.hollandshipyardsgroup.com/news/holland-shipyards-group-will-retrofit-future-proof-shippings-maas-to-sail-on-h2-power
4 Cargo sous terrain, accessed July 2021. https://www.cst.ch/en/
5 `The bicycle account 2018: Copenhagen city of cyclists', City of Copenhagen, 2018. https://urbandevelopmentcph.kk.dk/artikel/city-cyclists