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2012 | OriginalPaper | Chapter

I Want to Ride My Bicycle! Financing Sustainable Transport

Author : Julie Hudson

Published in: Energy, Transport, & the Environment

Publisher: Springer London

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Abstract

A sustainable economy ‘meets the needs of the present without compromising the ability of future generations to meet their own needs’ [3] and a sustainable transport system should support this overall goal. The definition of sustainable finance applied in this chapter thus goes beyond the basic idea that financial institutions need to be robust enough to survive turbulent economic conditions. It also goes beyond the idea that government and private sector entities (represented in financial markets by instruments such as government bonds, corporate bonds and equities) must be sound enough to survive volatile markets. Sustainable finance is a broader concept, denoting financial institutions and structures in which being financially sound is necessary but ancillary to their broader goal of facilitating and supporting a sustainable economy, and within that, a sustainable transport system.

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previous chapter Does Britain Need High Speed Rail?
next chapter Economics and the Future of Transport
Footnotes
1
Environmental pollution, congestion, noise, impacts on human health, to name a few.
 
2
With thanks to Paul Donovan for this suggestion.
 
3
‘If Cunard wanted to build big, the White Star would build bigger…’ p. 10
 
4
The dominance of the fossil-fuel driven combustion engine in twentieth century transport can be seen as an accident of timing at the point of inception: among other things there was little information on the environmental impact of fossil fuels when widely used and therefore no real opportunity to embed this then future externality in the relevant markets.
 
5
This figure is generic. Similar figures can be found in Gastineau et al. [9].
 
6
UBS defines ‘enterprise value’ as the sum of the market value of claims on the business: equity, debt, off balance sheet liabilities and any other relevant claims on the business. The so-called residual claims approach to the valuation of cash flows to the firm is also described in Damodaran [6, p. 107].
 
7
‘Tail risk’ is an insurance term, and usually refers to the tails under the statistical bell-curve in a normal distribution. Used in the vernacular it refers to so-called ‘one hundred year’ events—extreme accidents that should appear only rarely. Sustainable economics can be about reducing economic, environmental, social or financial tail risk for future generations.
 
8
The Eddington Report [8] suggested the time costs of congestion (UK) would amount to £22 billion by 2025.
 
9
See Barclays Cycle Hire/costs, at www.​tfl.​gov.​uk/​roadusers/​cycling/​14811.​aspx. Website accessed in March 2011.
 
10
This chapter is too short to permit a foray into so-called ‘real options’, conceptually a useful idea when considering investments that are not the most financially attractive in the short run but may open up very significant opportunities in the medium term.
 
11
Travel opens a window on the world (translated from Xhosa). Source: on the paper cups on South African Airways.
 
12
This idea is analogous to the so-called Social Impact Bonds in which social outcomes (such as a reduction in hospital admissions are a result of preventative measures, or a reduction in criminal reoffending) determine the return on the bonds. In this way funds are raised for a social purpose and the cost savings generated by a successful social outcome accrues to the bond holders (suppliers of capital). See ‘Towards a new social economy’ (March 2010), Social Finance Limited. www.​socialfinance.​org.​uk
 
13
For this to work optimally the government might need to make the returns on such green investments tax exempt, or, alternatively, to equalize taxes on income and capital gains.
 
14
With thanks to Paul Donovan for this suggestion.
 
16
Dieter Helm, Cameron Hepburn and Richard Mash, 7 July 2005, ‘Credible Carbon Policy’, in Climate Change Policy, by Dieter Helm (Oxford University Press USA, via Kindle).
 
17
See the UBS Q-Series® Global Aviation report written by Jarrod Castle which cites financial costs to the airlines industry of €300 mn in 2012, €600 mn by 2014 and more than €1 bn by 2014, depending on the CO2 price prevailing at the time. (See pp. 1–4).
 
18
Information Note, 4 February 2011, ‘The Renewables Obligation Buy-Out Price and Mutualisation Ceiling 2010–2011’, Ofgem
 
20
Bob Wigley et al., Unlocking Investment to Deliver Britain’s Low Carbon Future. Green Investment Bank Commission, June [26].
 
21
Attributed to H. G.Wells
 
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Metadata
Title
I Want to Ride My Bicycle! Financing Sustainable Transport
Author
Julie Hudson
Copyright Year
2012
Publisher
Springer London
Book
Energy, Transport, & the Environment

Print ISBN: 978-1-4471-2716-1

Electronic ISBN: 978-1-4471-2717-8

Copyright Year: 2012

DOI
https://doi.org/10.1007/978-1-4471-2717-8_33