Decades-Old Aid Rules Hide Billions in Transport Funding From Climate Goals

Low- and Middle-Income Countries across the Global South face mounting mobility challenges, yet international aid targeting their transport systems relies on a tracking framework established in the 1960s. Between 2010 and 2024, the transport sector received an average of $12.1 billion annually in Official Development Assistance, representing about 5.8 percent of global development aid. However, an analysis shows that this multibillion-dollar funding stream is governed by categories that predate modern climate agreements and sustainable development goals.

The research was published in Re-Generation in Transport (DOI: 10.1007/978-3-032-37192-8_79). Henrik Gudmundsson, the author of the study, examined how transport-related development aid is defined, measured, and reported within the international system managed by the Organisation for Economic Co-operation and Development Development Assistance Committee.

Why Decades-Old Bookkeeping Hides Green Investments

The core issue lies in the Creditor Reporting System, which uses purpose codes rooted in the United Nations System of National Accounts from the 1940s and 1968. While international accounting standards for other sectors have evolved significantly, the transport classification has remained nearly frozen. For instance, the energy sector successfully overhauled its reporting categories to track renewable energy and climate-friendly supply systems. In contrast, transport aid is still dominated by basic infrastructure categories such as general road construction.

Data from the study reveals that road transport captured roughly half of all global transport aid during the 2010 to 2024 period. Rail followed at 30 percent, and transport policy accounted for about 10 percent. Japan emerged as the largest unilateral donor, providing 51 percent of total transport aid, followed by the European Union at 23 percent and France at 9 percent. India and the Philippines together absorbed around 50 percent of all transport aid, largely driven by Japanese lending for rail projects.

How the Proposed Overhaul Tracks Climate and Equity Goals

Because the current coding system offers low granularity, international observers cannot easily track how much money actually supports sustainable urban mobility, active transport like walking and cycling, or climate resilience. To bridge this gap, the study proposes a modernized code set that embeds contemporary environmental and social priorities directly into every subsector. The recommendations include specific categories for active transport, public transport, climate adaptation, and decarbonization.

The suggested framework also creates a new cross-sector code for integrated intermodal facilities and elevates the distinction between construction and maintenance. By making maintenance a permanent fixture rather than a voluntary subcode, the system acknowledges that preserving existing roads and railways can deliver as much development value as building new ones. A detailed version of these reformed codes was submitted to the OECD development finance statistics working party for consideration.

What Obstacles Face the Modernization of Global Aid?

While the United Nations adoption of the Decade of Sustainable Transport for 2026 to 2035 provides strong political momentum, the path forward remains uncertain. Several major donor countries have recently implemented budget cuts affecting their overall development assistance commitments. Aligning international financial tracking with global climate targets will require consensus among member states, proving that even bureaucratic bookkeeping changes can carry significant geopolitical weight.

The research was published in Re-Generation in Transport on January 1, 2027.