Arthur D. Little and POLIS examine the future of mobility funding in new report
As cities strive to deliver more sustainable, resilient, and inclusive transport systems, public transport authorities (PTAs) are facing growing financial pressure to fund the green transition. A new report by Arthur D. Little (ADL), in collaboration with POLIS, explores the scale of future investment needs and identifies the key strategies required to bridge the mobility funding gap.
Building on insights from their previous 'Future of Mobility' research, the report highlights the significant financial challenges facing PTAs across Europe. Drawing on interviews with senior transport leaders and policymakers across Europe, in-depth literature reviews, and real world data from Paris, London, Amsterdam, Berlin, New York, it sets out how large the gap is. Demand for sustainable mobility is increasing and shows no sign of slowing down, as cities continue to seek ways to reduce car dependency, expand public transport networks, decarbonise fleets, and strengthen resilience to climate change. However, traditional funding mechanisms are struggling to keep pace with these ambitious goals.
Policymakers in urban areas are also urging a rapid shift away from private cars toward public, shared, and active modes to meet climate targets and reduce congestion. Yet progress has been slow: despite steady gains in sustainable mobility, private cars still account for approximately 70% of urban passenger-kilometres worldwide. At the same time, transport remains one of the largest contributors to greenhouse gas emissions, so funding public and shared mobility has never been more urgent.
Read the full "Funding Storm Ahead: Why public transport funding is tightening—and where PTAs & PTOs can find new action levers" report here.
The price of the transition
The report estimates that public transport systems across Europe's public transport sector, which currently accounts for €130 billion in annual expenditure, will need a 36% increase in overall annual spending by 2035 to meet climate, resilience, and mobility objectives. This is made up of a 13% rise in operating expenditure (OPEX) and a 56% increase in capital expenditure (CAPEX). According to ADL's analysis, this increase is driven by the need to address infrastructure renewal, climate adaptation, fleet decarbonisation, and service expansion.
The study identifies four key areas requiring the most investment:
- Hidden debt—the first step is fixing the basics and addressing decades of underinvestment in ageing infrastructure
- Climate resilience—protecting transport networks against flooding, heatwaves, extreme weather, and other climate-related risks
- Fleet electrification—transitioning buses, trains, and supporting infrastructure to zero-emission technologies
- Accelerating the modal shift—increasing the capacity, quality, and coverage of public transport to reduce reliance on private cars
The report further notes that while electrification often dominates policy discussion, network expansion and resilience investments will need to account for a much larger share of future funding requirements. Last summer's extreme weather events across Europe show that these investments are more necessary than ever.
Investing in sustainable mobility
According to the report, achieving a meaningful modal shift requires not only cleaner vehicles but also better public transport services. Expanding metro and suburban rail networks, increasing service frequencies, improving intermodal connectivity, and enhancing passenger experience will all be essential to attracting more people to sustainable modes of transport.
The findings build on previous ADL and POLIS research, which suggests that the share of sustainable mobility could double over the next decade through coordinated action across multiple mobility solutions. Real-world investments in larger metropolitan regions such as Paris and London demonstrate how strategic expansion of public transport infrastructure can support both ridership growth and wider sustainability goals.
Closing the funding gap
The report argues that no single funding mechanism will be enough to meet future investment needs. Instead, PTAs should pursue a combination of measures, including:
- Reviewing fare structures, while keeping services accessible and fair
- Expanding subscription-based travel schemes and integrated ticketing offers
- Introducing or strengthening transport-linked taxes and road pricing measures
- Exploring visitor and tourism contributions to local transport funding
- Increasing non-fare revenue through advertising, retail, and real-estate development
- Improving operational efficiency, asset utilisation, and network performance
Looking ahead
The report concludes that funding for sustainable mobility must increasingly reflect the wider benefits public transport brings—less congestion, cleaner air, lower emissions, better accessibility, and improved public health. These all create real value that goes far beyond what passenger fares alone can capture.
The report is clear that bold choices must be made. To succeed in the long term, the report recommends factoring environmental and social outcomes into funding decisions, encouraging closer cooperation between transport stakeholders, and taking a joint approach that links mobility, urban planning, energy climate policy, and public finance together.
By combining innovative funding models with smart investment and effective governance, cities can build resilient transport systems ready for the mobility challenges of the coming decades.
About Arthur D. Little
Arthur D. Little has been at the forefront of innovation since 1886. We are an acknowledged thought leader in linking strategy, innovation and transformation in technology-intensive and converging industries. We navigate our clients through changing business ecosystems to uncover new growth opportunities. We enable our clients to build innovation capabilities and transform their organisations.
Our consultants have strong practical industry experience combined with excellent knowledge of key trends and dynamics. ADL is present in the most important business centres around the world. We are proud to serve most of the Fortune 1000 companies, in addition to other leading firms and public sector organisations.
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