Financing the future of Road Tech

Rolling out new road technologies is key to creating sustainable mobility for the future – but it will require new approaches to financing, especially between public and private partners.

More people are on the move globally. Efficient transport systems are crucial to well-functioning economies. At the same time, societies around the world are concerned about some of the challenges associated with this traffic growth – including lost productivity from gridlock, road safety, climate change, and air quality.

New road technologies are key to overcoming those issues. Significant changes are already underway – from intelligent infrastructure that will facilitate the introduction and uptake of autonomous vehicles, enable more proactive traffic and infrastructure management, and transform the way people think about mobility, to surface technologies where smart engineering is helping to turn passive infrastructure into dynamic assets such as inductive charging and “solar roads”.

However, new approaches to financing, both public and private, will be needed to implement these technologies as they develop. At a time of strained budgets and austerity measures, the future financing of infrastructure is one of today’s critical challenges. McKinsey calculates that $57 trillion is required to meet global infrastructure needs through to 2030.

Governments around the world are developing novel ways to upgrade transport systems. “We have opportunities to implement the technology in steps,” says Joe Waggoner, chief executive officer and executive director of the Tampa- Hillsborough Expressway Authority. “If you can plug in new components as part of your replacement and renewal cycle of pre-existing systems, you can spread the cost out over time.” This approach is causing a shift to shorter investment horizons for future road infrastructure, as Tim Gammons, global smart mobility leader at Arup, explains: “Don’t try and build a technology system that you think is going to last you 30 years. You can’t future-proof it for everything else that comes along, because you’ll never get it right.”

Public-private partnerships are an important piece of that puzzle. Boston Consulting Group, which estimates an annual shortfall of US$1trn-1.5trn between demand and investment in infrastructure, predict that PPPs will play an increasingly important role in bridging the gap. A vital component of private financing is ensuring a model for revenue generation. Robert Frey, planning director at Tampa-Hillsborough Expressway Authority, explains: “You need some sort of revenue source that can attract the private sector so that the city government can deal more with performance measures as opposed to managing equipment.”

Francisco Reynés, Vice Chairman and CEO of Abertis, is also clear that “public-private partnerships provide capital and reduce debt, increasing returns for governments.” New approaches are vital as the world strives for a smarter, cleaner and safer mobility future. According to Mr. Reynés, that means working together across sectors at the intersection of advances in technology and infrastructure, because “it is through partnership and collaboration with governments and innovators – large and small – that we will accelerate the emergence of cutting-edge road technologies and realise their potential.”

Read more on the latest developments in Road Tech.