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Building trouble: how global road projects threaten climate targets
key takeaways.
Road transport is a significant emitter: accounting for 12% of global greenhouse gas emissions in 2024, with expansion projects potentially increasing these levels even further
Trillions at stake: more than USD 2.7 trillion in new road projects are underway globally, threatening to lock in high-carbon infrastructure
The net-zero gap is widening: UNEP warns that current pledges are insufficient, risking 3.1°C of warming without stronger policies and implementation
Transport is a critical lever: large-scale electrification, fuel switching, and efficiency upgrades remain among the most impactful climate strategies
EVs are necessary but not enough: even by 2035, over 40% of the new cars worldwide will still be powered by fossil fuels, underscoring the need for broader systemic change
Shifts are emerging: some governments are cancelling or rethinking highway projects, redirecting investment into low-carbon transport
Innovation is key: recycled plastics in asphalt, greener machinery, and climate-linked financial instruments are proving to be scalable solutions
Balance is possible: reconciling mobility and climate requires embedding sustainability in road design, prioritising public transport, and mobilising finance at pace.
Road transport is one of the world’s largest climate offenders, responsible for approximately 12% of global greenhouse gas emissions in 2024,1 underscoring the need for more sustainable practices as infrastructure expands. Yet, governments are pressing ahead with road construction at an unprecedented scale. More than USD 2.7 trillion in new road projects are currently in the pipeline globally – expansions that will almost certainly increase traffic volumes, particularly private car use2 – with profound environmental consequences. Given the sector’s substantial share of energy-related emissions, such rapid growth risks undermining hard-won carbon reduction gains. The paradox is clear: the infrastructure that powers economic growth can also lock in high emissions, even as nations pledge to reach net-zero goals.
UN report: transport among critical levers
A 2024 report by the United Nations underscores the stark reality. Despite the continued spread of net-zero pledges, global action remains largely insufficient. The annual UNEP Emissions Gap Report3warns that the world faces as much as 3.1°C of warming if governments do not take more significant action. Emissions reached a record 57.1 gigatonnes of carbon dioxide equivalent in 2023, up 1.3% from 2022. Critical sectors, including energy, transportation, and the agricultural industry, are the most significant contributors to greenhouse gas emissions.
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The report states that crunch time is here: “Nations must accelerate action now, show a massive increase in ambition in the new pledges, and then deliver urgently with policies and implementation. If they do not, the Paris Agreement target of holding global warming to 1.5°C will be dead within a few years, and 2°C will take its place in the intensive care unit.”4
The report highlights that the transportation sector, alongside forests, renewable energy, and efficiency measures, holds significant untapped potential to close the gap to net zero. While action on forests could deliver around 20% of the necessary emissions reduction, it goes on to say that measures in transport – such as large-scale electrification, fuel switching, and efficiency upgrades – are amongst the most impactful and feasible pathways. Implementing these strategies within a whole-of-government framework could deliver substantial socio-economic and environmental benefits while minimising trade-offs.5
Nations must accelerate action now, show a massive increase in ambition in the new pledges, and then deliver urgently with policies and implementation. If they do not, the Paris Agreement target of holding global warming to 1.5°C will be dead within a few years
The environmental conundrum
Many parts of the world still lack the public transport infrastructure that could provide a viable alternative to private vehicles. For developing countries, particularly those in Africa and Asia, expanded road networks are seen as essential to improving connectivity and driving economic growth. Yet, wealthier nations continue to build. In Europe, for instance, highway length grew by 60% between 1995 and 2020, while rail networks decreased by 6.5%. Proponents of highway expansion argue that it reduces emissions by shortening journey times, but studies consistently show that these benefits are short-lived. Increased capacity often triggers higher demand, ultimately leading to more vehicle use over time.
The global transition to electric vehicles (EVs) is expected to play a pivotal role in cutting transport-related emissions in the future. Yet, BloombergNEF research shows that even by 2035, over 40% of all new cars sold worldwide will still be run on fossil fuels, underscoring the scale of the challenge ahead.6 At COP28, wealthy nations set out how they would boost support for EVs in developing economies, through the ZEV Transition Roadmap, and pledged to make EVs “the most affordable, accessible, and attractive option” everywhere by 2030. However, COP29 offered limited support for the EV transition. Analysts forecast that USD 2.7 trillion will be needed in clean transport investments by 2050, approximately seven times the current funding levels.7
For developing countries, particularly those in Africa and Asia, expanded road networks are seen as essential to improving connectivity and driving economic growth. Yet, wealthier nations continue to build
All eyes are now on COP308 in Brazil later this year, where transport decarbonisation is expected to feature prominently, as outlined by the International Transport Forum’s commitment to share the latest sector data and by developing economies pushing for stronger EV and clean mobility pledges.
Unabated highway growth isn’t happening everywhere as climate concerns prompt a rethink. Some governments are already pivoting, underscoring a move towards investments that deliver environmental and social returns alongside mobility.
The Welsh government has scrapped numerous road construction projects, citing sustainability objectives.
Colorado’s Department of Transportation cancelled two major highway expansion plans and redirected the funds into eco-friendly transit projects, such as faster buses and better cycling lanes.
Several countries are exploring more sustainable innovations and deploying less heavy machinery to reduce energy use and habitat disturbance.
Los Angeles is piloting roads using asphalt mixed with recycled PET plastic. Similar plastic-asphalt technologies are being deployed in the Netherlands and Scotland, delivering greater strength, durability, and measurable environmental benefits.
However, even with the implementation of strategies like these, balancing road growth with environmental targets will continue to be a challenging conundrum. For transport authorities to strike a meaningful balance to reconcile road building with net-zero goals, several levers must align:
1. Prioritising multi-modular systems
Investing in public transportation where feasible can help reduce overall car dependency. Research shows buses and trains emit up to two-thirds less greenhouse gases (GHG) per passenger-kilometre compared to private vehicles.9
2. Embedding sustainability in road design
Utilising sustainable materials and construction methods, and employing route planning that considers lower emissions and minimal habitat impact.
3. Leveraging green finance
Sustainable bonds and climate-linked funding can help tilt the economics towards low-carbon transport.
Turning ambition into action
Infrastructure growth and the path to net zero are not mutually exclusive; however, achieving a balance requires deliberate and coordinated action. Transport authorities confront a genuine trade-off: the drive to expand road networks for economic and social connectivity versus the imperative to achieve net-zero emissions. With trillions of dollars’ worth of projects on the table globally, the stakes are both unprecedented in scale and in terms of climate impact. To help navigate this complex terrain and achieve alignment with net-zero goals, it is essential to embed sustainability at every stage of road planning, prioritise low-carbon transport modes, and adopt innovative emission-reducing construction methods. Road design alone will not deliver the transformation needed. Only by combining these measures can infrastructure serve as a platform for growth that is fully compatible with a zero-carbon future, in addition to accelerating the shift to electric vehicles, expanding public transport, and managing demand for private car use.
To succeed, it will require a level of global mobilisation on a scale and pace never seen before. Governments, policymakers, business leaders, and investors must collectively commit to reducing annual GHG emissions in the sectors that cause the most harm. However, commitment alone is not enough; it must be matched by swift, decisive action and systemic change to close the gap between ambition and reality. At Lombard Odier, we call this investing in Global System Changes, a framework that transforms the foundation of our economy to align growth with sustainability and ensure long-term prosperity.
This is a marketing communication issued by Bank Lombard Odier & Co Ltd (hereinafter “Lombard Odier”).
It is not intended for distribution, publication, or use in any jurisdiction where such distribution, publication, or use would be unlawful, nor is it aimed at any person or entity to whom it would be unlawful to address such a marketing communication.
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