Review of Financing Mechanisms to Promote Decarbonization Alternatives in Rail and Inland Waterway Transport

Abstract

The financial market has a strong influence on supporting the transition to a zero-emission transport system, as this sector requires large investments to implement low-emission technologies and infrastructure and to promote intermodality. This article presents the results obtained from a literature review on the financing mechanisms that have been used in different countries to finance alternatives to decarbonization in rail and inland waterway modes. For this purpose, databases such as Google Scholar, Scopus, MDPI, websites of governments and other related organizations were reviewed. Over 240 sources of information from articles and documents focusing on green finance in rail and inland waterway modes were reviewed. Our study identified many gaps in the literature on green transport financing. We also identified that in the databases consulted, it was possible to obtain more academic sources related to rail transport than inland waterway transport. Finally, an analysis is made of how implementation projects in the rail and inland waterway modes have been financed in Colombia.

1. Introduction

The implementation of climate change mitigation and adaptation actions to meet the commitments agreed by the countries in the Paris Agreement requires access to financial resources. However, access to these resources is limited, especially for the transport sector [1], where the current investment needs for the transition to zero emissions are much greater compared to the resources available through traditional financing sources. This issue currently corresponds to one of the main topics of discussion for the members of the United Nations Framework Convention on Climate Change, because even for many developing countries this issue is a big question, given that there are still no clear and decisive guidelines that respond to how sustainable transport can be financed in the medium and long term [2]. Some countries have conditional commitments on international financing, so they will need international support and the mobilization of private financial resources to meet their most ambitious commitments, but these resources are limited for developing countries, since they only monopolized 25% of global private investment in contrast to developed countries [3,4].

In regards to the transport sector the situation is also uncertain, especially for rail and inland transport modes. Despite their potential to mitigate the environmental impact, they receive less investment compared to other modes of transport. Governments are recognizing and prioritizing projects to reactivate and modernize rail and inland waterway modes to strengthen and integrate them into intermodal and multimodal supply chains. In this regard, local, regional, and national governments and organizations interested in implementing such projects face many challenges. Many large-scale projects for the construction and maintenance of rail and inland waterway transport infrastructure require financing of different routes beyond what public funds can finance. In addition, the nature of these traditional financing funds becomes unsustainable to meet the needs and financing requirements for long-term operation and maintenance [5]. For this reason, when executing infrastructure projects, it is often necessary to resort to other alternatives and financing mechanisms. This reality implies the urgent need to prioritize and promote other alternatives that allow the financing of realistic, well-structured projects with clear objectives to achieve the transition to zero emissions in these two modes [6].

In Colombia, rail and inland waterways modes present problems in large segments of their length due to lack of maintenance, rehabilitation and improvement. In rail transport, the abandonment of a large part of the infrastructure and the lack of resources allocated to its control have generated delays in the development and efficiency of the railway system. Alternatively, higher costs in operations within the country may be implied [7].

On the other hand, inland waterway transport in Colombia also presents great challenges. According to the Inland Waterway Master Plan, more than forty percent of the infrastructure is in poor condition, and most of the ships are old compared to those used in other countries [8]. Rehabilitating inland waterway transport will require the implementation of dredging works, maintenance of canals and improving the state of the docks, in such a way that the right conditions are given so that the mode is more competitive, efficient, sustainable and safe. To carry out these improvements, it is of course necessary to invest heavily and mobilize financial resources.

The issues mentioned above allows us to point out the need to design or bet on the introduction of new financing mechanisms. It is especially urgent to have mechanisms that promote green and sustainable financing options that positively impact society and the environment, and in turn that generate economic benefits for the parties involved [9]. In this context, we define a financing mechanism as the way in which an organization, entity or company receives financing for the implementation, maintenance and/or operation of a project or program [10]. These mechanisms can come from public, private or governmental sources and this paper discusses some of them.

Previous studies on sustainable finance have focused on the impact of green finance at a general level on emissions mitigation. Li, Q. et al. [11] study the role and impact of green technologies, financial market efficiency, and access to sustainable finance in reducing emissions in G10 countries. The authors determine that in the long term, the implementation of green technologies and access to sustainable financing such as green bonds reduce greenhouse gas emissions. Additionally, Wang, Y. and Zhi, Q. [12] state that green finance promotes environmental protection and sustainable resource mobilization. In addition, they consider that it is necessary to implement financial mechanisms that allow the coordination of environmental and economic aspects to contribute to the protection of the environment. The authors also mention some green financial products that can contribute to emission reductions such as environmental and investment funds. Most of the products they mention are aimed at the field of renewable energies, but some of them can also be used in projects related to the transport sector.

In view of the above, this article aims to review the financing mechanisms applied in different countries for the deployment and development of projects related to the decarbonization of transport in rail and inland waterway transport modes. For this purpose, a review was made of articles, government documents, case studies and business documents, which were taken from databases such as Scopus, Google Scholar and MDPI, as well as government websites and those of organizations related to the transport sector. Then, the information goes through a filtering process to obtain only the documents directly related to the subject. The data obtained were then analyzed.

The importance of this article lies in its contribution to reviewing and discussing the literature on the decarbonization of rail and inland waterway transport in different parts of the world, bearing in mind that there are still many gaps in knowledge and a scarcity of studies about financing low carbon transport [13].

To do so, we will try to answer the following research questions:

• What are the main financing mechanisms to promote decarbonization alternatives in rail and inland waterway transport worldwide?
• What financing mechanisms have been used in Colombia to promote decarbonization alternatives in rail and inland waterway transport?

The rest of the article is organized as follows: Section 2 provides an overview of the challenges and investment needs for rail and inland waterway transport in the context of reducing emissions. Other research that has addressed the subject discussed in this paper are also mentioned. Section 3 presents the methodology used in the research, the keywords used, the criteria for inclusion and exclusion of data, and the methods used to analyze the information. Section 4 shows the different financing mechanisms used in projects related to the decarbonization of the rail and inland waterways sector, focusing on some relevant case studies and the specific case of Colombia. Section 5 presents the strengths and limitations of this study and, finally, Section 6 discusses the main findings and future work.

2. Methodology

This research has an exploratory descriptive methodology, and employs the technique of literature review (scientific articles, reports, books, official websites of governments and related entities were reviewed) in order to gather relevant information on the financing mechanisms that are being applied or have been applied to finance the implementation of decarbonization alternatives in rail and inland waterway transport. The methodological scheme of this article is based on the scheme used in [13]. Data were collected between June and November 2022 from the following Data Sources: Scopus, MDPI, Google Scholar and the websites of governments and related organizations available online. The search included three groups of keywords, which are shown in Figure 1. Group 1 contains the terms related to inland waterway transport, group 2 includes terms related to rail transport, and finally, group 3 includes the keywords related to financing mechanisms. These keywords were selected according to the consistency of the terms with the research questions. The terms of groups 1 and 2 were combined with the terms of group 3 using logical operators to include as much related information as possible. It should be mentioned that only those documents that met the following criteria were included:

(1)

Open access documents to enable other researchers in the field to have quick and direct access to the results of this research.

(2)

Documents written in English or Spanish.

(3)

Documents published between 2015 and 2022.

(4)

Documents directly related to the subject, and documents with repeated information were excluded.

The protocol first included a cursory reading to rule out sources that did not include relevant information. Then, a detailed reading of the sources that passed the filter was done to rule out those that did not answer the research questions, and to find the main ideas of those that did provide relevant information. The information was organized using Excel spreadsheets. Content sheets were used where the following data were recorded (title, authors, citation, abstract, main conclusions). This allowed us to accumulate and collect the most important data from the included sources. The arguments, positions and main points of each source of information were organized in a summary table. This protocol allowed us to compare, trace similarities and differences between the main themes of each resource collected to be able to categorize the information. Figure 1 shows the entire methodological process carried out in the research.

In this article, a small case study was also made for 4 countries that could provide an international perspective on the experience of these countries in terms of the implementation of financing mechanisms. These countries were taken into account according to the fulfillment of these two criteria: (1) leading countries in electric mobility and (2) countries with commitments to mitigate and adapt to climate change.

3. Results

In this section, the results of the literature review process were submitted. We divided the results into two groups: (1) literature review for rail transport and (2) literature review for inland waterway transport.

3.1. Literature Review for Rail Transport

The results for this group included 23 sources that include information on financing mechanisms applied to decarbonization alternatives in rail transport.

Table 1. Literature summary table for railways transport.

Authors	Countries/ Regions	Year	Tittle	References
Simionescu et al.	Romania	2016	Assessing sustainability of railway modernization projects; A case study from Romania	[14]
Ittmann, H.	South Africa	2017	Private–public partnerships: A mechanism for freight transport infrastructure delivery?	[15]
Gilbert et al.	China	2017	The knowns and unknowns of China’s green finance	[16]
Leigland, J.	Various	2018	Public–Private Partnerships in Developing Countries: The Emerging Evidence-based Critique	[17]
Mahat et al.	Nepal	2019	Climate finance and green growth: reconsidering climate-related institutions, investments, and priorities in Nepal	[18]
Agliardi et al.	General Level	2019	Financing environmentally sustainable projects with green bonds	[19]
Kim et al.	Korea	2019	Financing for a sustainable PPP development, Valuation of the contractual rights under exercise conditions for an urban railway PPP Project in Korea	[20]
Finger et al.	UE	2019	Green finance and sustainability: which role for railways?	[21]
Yen et al.	Korea	2020	Equity in financing public transport infrastructure: Evaluating funding options	[22]
ASCE’s 2021 Infrastructure Report Card	USA	2020	Rail 2021	[23]
Oleśków-Szłapka et al.	Norway and Poland	2020	Sustainable Urban Mobility in Poznan and Oslo-Actual State and Development Perspectives	[24]
Ducón et al.	Colombia	2021	Financing of passenger rail transport infrastructure. Sources and remuneration	[25]
Association Of American Railroads	USA	2021	Freight Rail’s Investments Generate Huge Returns for America	[26]
Sinha, M.	India	2021	Harnessing land value capture Perspectives from India’s urban rail corridors	[27]
Tsoi et al.	Various	2021	“Mind the (Policy-Implementation) Gap”: Transport decarbonization policies and performances of leading global economies (1990–2018)	[28]
Yang et al.	China	2021	Research on the Impact of Urban Rail Transit on the Financing Constraints of Enterprises from the Perspective of Sustainability	[29]
Økland et al.	Norway	2021	Sustainability in Railway Investments, a Study of Early-Phase Analyses and Perceptions	[30]
Lukin et al.	Republic of Croatia	2021	The importance of cohesion policy for the development of the railway system of the Republic of Croatia	[31]
Gupta, D. and Dhar, S.	India	2022	Exploring the freight transportation transitions for mitigation and development pathways of India	[32]
Sunio et al.	Philippines	2022	Financing low-carbon transport transition in the Philippines Mapping financing sources, gaps and directionality of innovation	[6]
Li et al.	Various	2022	Procuring urban rail transit infrastructure by integrating land value capture and public-private partnerships: Learning from the cities of Delhi and Hong Kong.	[33]
de Deus et al.	Brazil and China	2022	The green transition in emerging economies: green bond issuance in Brazil and China	[34]
Emodi et al.	Various	2022	Transport sector decarbonization in the Global South: A systematic literature review	[35]

Source: own elaboration.

shows the studies identified and the funding mechanisms mentioned.

We collect some international experiences:

• United States:

In the United States, many transportation services, especially passenger transportation, do not generate the revenue needed to cover the total costs of operating and maintaining infrastructure. Moreover, many of the companies that operate these services require contributions from public funds. In the United States, passenger rail operations have a financial deficit. This means that the need for financing is greater than the income generated, so they cannot cover the costs by themselves. In this sense, most of the projects and rail services for passenger transport, including those involving the improvement of railway lines, acquisition of new technology and trains, also require the contribution of public funds to be financially viable.

Financing large-scale infrastructure projects by rail often involves partnerships of regional and national public entities. However, projects that use public funds face different financial challenges, since these funds are mostly temporary and depend heavily on taxes, so they often need a sustainable means of financing in the long term in order to sustain themselves and generate profits. An example of this is Amtrak, the national rail operator that offers intercity passenger rail services. According to a report by the National Cooperative Rail Research Program (NCRRP) entitled “Alternative Funds and Financing Mechanisms for Freight and Passenger Rail Projects”, it was evident that, since its foundation, this service has never covered its operating costs. Financial statistics show that there are annual operating losses of USD 1.3 billion [23,36]. Amtrak’s 30% revenue streams for 2012 are supported by the federal government. This railway company depends for its support on cash flows from operating activities, and on government credits to cover operating costs and infrastructure maintenance. Therefore, to a large extent the government provides them with financing under the railway rehabilitation and improvement loan programme. Likewise, in order to overcome the financial losses generated by COVID-19, the company received around USD 3700 million federal subsidies for 2020 and 2021 [37]. This report also notes that in the United States, none of the publicly owned suburban rail systems can afford their operating expenses from passenger revenues alone [36].

However, freight transport presents a different situation to passenger rail transport. The United States is among the countries with the best railway infrastructures worldwide; in fact, the country has an estimated 550 freight railway companies in current operation. Freight railroads are classified into 3 classes: Class I (which have revenues of over USD 433 million), Class II (which are railroads that operate regionally), and Class III (railroads that operate locally [23].

Class I railroads have the highest percentage of traffic nationwide, and the companies that operate them own their own infrastructure and manage to finance operation and maintenance costs with their income. The financing of these freight rail systems for Class I essentially comes from private investments and the companies’ cash flow. On the other hand, Class II and III railroads operate in local and rural communities and often need local and state funding support for rail line maintenance. In general, however, most freight railroads operating in the United States are sustained with little or no government assistance [23].

• Japan

Japan has an efficient rail transport system with a developed infrastructure conducive to trade. It links the productive sectors with regional, national and international markets, contributes to alleviating congestion on the streets and favors a better use of public space. In addition, rail systems are a greener alternative to road transport since gas emissions are much lower. However, as in other countries, rail systems for passenger transport generally do not cover capital costs or operating costs, so the companies and/or organizations that operate these systems require other financing alternatives to continue providing the service, as well as to maintain and expand the infrastructure required for transport.

In addition to this, Japan is one of the countries that has one of the most modern infrastructures. Most of its railway systems are equipped with state-of-the-art technologies, and its capital Tokyo is considered the city with the largest urban/suburban network in the world. With respect to the country’s railway network, Japan is ranked 62nd worldwide with a length of 0.22 m per inhabitant, with a total of 27,311 km in length. Rail freight transport reached 20,120 million tons and kilometers traveled, and passenger rail transport reached 437.36 billion passenger-kilometers transported in 2017 [38].

Regarding financing mechanisms for railway infrastructure, the case of Tokyo should be highlighted, where most of the railway network in the last 50 years has been built by private companies that had concessions and rights to design, build and operate on the network. These companies have used real estate development as a financing instrument which is linked to the construction of new technologies. This instrument or mechanism is also called surplus value capture, and is based on using the valuation of the price of land produced by urban growth to obtain financing [39]. Through this instrument, railway companies have opened from small retail stores to large shopping centers within or near stations. Buildings and cities around the stations are based on the increase in land value, since these systems improve accessibility. In this way, private companies can generate profits and cover the costs of building new railway lines.

On the other hand, in the city of Toyama a project was carried out in 2006 to convert most of the Toyoma Kosen Line into a light rail service (LRT) and to build a new LRT line on the street. A public-private partnership (PPP) between Toyama Light Rail and the national and local government was used as a funding mechanism to finance the project. The city government contributed approximately half of the costs of the project; these funds were provided by the road and rail improvement programs of the JR Hokuriku Line. The system had a cost of approximately USD 51.4 million dollars that was invested in the construction of the tracks, the acquisition of trams and the installation of electric guided panels [40].

• Norway

Sweden, Denmark, Norway and Finland are committed to improving their rail network. Urban rail transport, high-speed and improvements in signaling are some of the planned investments. Despite Norway’s high level of development, its transport infrastructure network needs to be adapted to a growing population and adverse geographical conditions.

The entire network is owned by the Norwegian National Railway Administration, while all passenger trains on inland routes, except the airport express train, are operated by Norges Statsbaner (NSB). Investment in new infrastructure and maintenance is financed from the state budget, and subsidies are provided for passenger train operations. NSB operates long-distance trains, including night trains, regional services and four commuter rail systems around Oslo, Trondheim, Bergen and Stavanger.

The “Norwegian National Transport Plan 2018–2029” is currently underway. In this program, investments in the railway sector will involve an annual expenditure of 26,578 million crowns (2738 million euros). For this year, Bane NOR foresees several projects of great relevance. In addition, throughout these years, the funds will be allocated to new large-scale projects. New initiatives will be launched, as well as the renovation of existing infrastructure. In addition, a strong impulse will be given to R+D and digitalization in order to prepare for the construction of railway systems that meet the needs of its growing population and reduce congestion and pollution on roads. The main objectives pursued are the reduction of the country’s carbon footprint, as well as making the most of new technologies based on ITS (Intelligent Transport System). As for the means of carrying out the projects, emphasis is placed on the PPP (Public Private Partnership) modality in order to achieve an efficient execution of the development of the work [41].

The Rail Development Plan specifies a few priority initiatives for the coming years, including major investments for the InterCity network in the Eastern Valleys, the electrification of the Trønder and Meråker lines, new tracks between Bergen and Voss, as well as a Ringerike line which will also shorten the connection with Bergen, among others. In addition to the budgets allocated in the Transport Plan, a new infrastructure fund of NOK 100 billion (EUR 10 326 million) has been established in order to promote the long-term financing of these projects [41].

3.2. Literature Review for Inland Waterway Transport

Results for this group comprised 15 sources.

Table 2. Literature summary table for inland waterway transport.

Authors	Countries/ Regions	Year	Title	References
Rousek, P.	Czech Republic	2016	Brief Report on Public Spending on Inland and Maritime Waterways in Particular Countries in Certain Periods of Time	[42]
Ionescu, R.	Romania	2016	Inland Waterways’ Importance for the European Economy. Case Study: Romanian Inland Waterways Transport	[43]
Beyer, A.	Various	2016	Inland waterways, transport corridors and urban waterfronts	[44]
Jaimurzina, A. and	South America	2016	Inland navigation and a more sustainable use of natural resources: Networks, challenges and opportunities for South America	[45]
Lardé, J.	South America	2016	Situación y desafíos de las inversiones en infraestructura en América Latina	[46]
Chen et al.	USA	2017	Infrastructure financing: A guide for local government managers	[47]
Voskresenskaya et al.	Russia	2018	Application of public–private partnership mechanisms for competitive growth of inland water transport in Russia	[48]
Miloslavskaya et al.	Various	2018	Current situation and optimization of inland waterway infrastructure financing	[49]
Gherghina et al.	UE-28	2018	Empirical Evidence from EU-28 Countries on Resilient Transport Infrastructure Systems and Sustainable Economic Growth	[50]
ASCE’s 2021 Infra-structure Report Card	USA	2020	Inland Waterways 2021	[51]
Sys et al.	European countries	2020	Pathways for a sustainable future inland water transport: A case study for the European inland navigation sector	[52]
Mako et al.		2021	Sustainable Transport in the Danube Region	[53]
Plotnikova et al.	Lithuania	2022	Development of Inland Waterway Transport as a Key to Ensure Sustainability: A Case Study of Lithuania	[54]
Oztanriseven et al.	USA	2022	Economic Impact of Investment Scenarios in the McClellan-Kerr Arkansas River Navigation System	[55]
de Barros et al.	General Level	2022	Inland waterway transport and the 2030 agenda: Taxonomy of sustainability issues	[56]

Source: own elaboration.

shows the studies identified and the funding mechanisms mentioned for this mode.

We collected some international experiences:

• United States

Coastal ports and inland ports play a very important role in the U.S. economy. They have a fundamental contribution to the generation of jobs and in the transportation of cargo and passengers in the country. Among the plans of ports and charter companies for 2021 and 2025 are the improvements to the infrastructure and efficiency of the ports, since the increase in tonnage and the increase in the size of ships require a sustainable and efficient infrastructure. While there has been a significant increase in federal funding mechanisms in recent years, ports face many challenges in maintaining their infrastructure, especially small inland ports that find it difficult to compete for federal government grants [51].

Sources to fund port infrastructure in the United States can come from private, federal, state, and local institutions. The financing of infrastructure in inland ports, specifically dredging operations, are financed through the federal Port Maintenance Trust Fund, and the funds come from the collection of user fees on the value of container cargo [51]. The financing of projects for these modes can also be done through programs such as the Nationally Significant Multimodal Freight & Highway Projects and INFRA, which provides grants for transport projects. Although this program was designed mainly to finance large projects in the freight and passenger road modes, part of the budget is also intended to finance multimodal projects, where port terminals are included [57].

Waterways in the United States have a great importance in the transport of multimodal cargo; in fact, more than 800 million tons of cargo move through this mode annually. Agricultural products, raw materials, and coal, among other products, are transported through the waterways. The infrastructure for the river mode is composed of locks, dams and navigation channels; the latter need to be dredged regularly so that the canals promote transport optimally. These operations, together with minor repairs of locks, are financed through allocations from the General Fund. However, the budget to carry out this operation is not enough to keep all of the channels constantly open. On the other hand, projects aimed at rehabilitation or construction are financed by the United States General Fund and the Waterways Trust Fund [51].

• Norway

Norway has two systems of waterways that were developed in the nineteenth century to facilitate the transport of wood, iron and copper until the mid-twentieth century. At present, inland waterways are used only for tourism and recreation activities. These are the Telemark Channel and Halden Waterway. The Telemark Canal is divided into two channels: The Norsjø-Skien Canal, whose last modernization was carried out in 1980, and the Bandak-Norsjø Canal, which has not received modifications or modernization projects have been implemented since its establishment. In fact, the channel is technically designated cultural heritage since 2017. The Telemark Canal is no longer used as a freight route but instead for pleasure craft traffic [58]. However, it should be mentioned that in 2021 a project began to be implemented for the start-up and operation of an all-electric fleet by the company Canal Boats in order to reduce greenhouse gas emissions in this mode. For the loading of the vessels, a network of ten fast charging stations has been arranged along the Canal. The installation of the stations was financed by a subsidiary of the Ministry of Climate Protection and Environment after the local community made a request for their installation [59].

• Brazil

In Brazil, although the use of inland waterways along with their support infrastructure is high, there is not enough investment in their development, mainly due to issues related to dredging, signaling, and operation, among others. Currently, the financing of the river mode in Brazil is divided between the private sector and the public sector, where the former is the largest investor.

One of the mechanisms for the development of inland waterway transport in Brazil is financing from entities such as the World Bank. For example, one of the projects presented to this organization is the integration of the river mode to the country’s public transport in the city of Manaus to clean up the traffic problem and the evolution of sustainable mobility [60].

As mentioned above, funding has now been divided between the private sector that is responsible for financing the equipment, recovery and maintenance of port facilities, and the public sector that is responsible for the construction and maintenance of port infrastructure. For this reason, government investment is important, as it helps overcome existing failures in river transport development [61]. Although projects in Brazil related to the development of electric river vessels have been proposed, the mechanisms used to finance these initiatives have not yet been defined.

3.3. Colombian Case

Infrastructure financing in Colombia comes from both public and private sources. Three basic structures can be identified for the financing of infrastructure projects: public works projects, concessions and public–private partnerships (PPPs).

In a public works project, the state is responsible for the project, and costs it as it progresses [62]. In a public works concession, the resources may be generated from commercial exploitation or from the payment of tolls by road users, whereby the concessionaire assumes the financing of the work in exchange for exploitation and the return on investment and profit [62]. In the case of the Public–Private Partnership, there are agreements in which the state and the private sector work together to provide public infrastructure [63]. Projects may come from public or private initiatives, and roles and responsibilities change accordingly [63]. There are different types of PPP contracts that change according to the assets, the roles of each party and the payment mechanisms for the private party [64,65].

Colombia has been very consistent to prioritize the development of projects related to road transport over the rail and inland waterway modes, since this mobilizes 81% of the country’s freight and is the mode most used for passenger transport in cities. This has created a significant gap in the rail and inland waterway modes. However, faced with the urgent need to reduce emissions from different sectors and focus on more sustainable modes of transport, Colombia is currently in the process of diversifying financing mechanisms and instruments to increase and finance investment in low-emission infrastructure and technology. Among the mechanisms and instruments for financing projects in Colombia related to infrastructure in the transport sector,

Table 3. Mechanisms and instruments to finance projects in Colombia.

Financing Mechanism	Description	Sources
Public–private partnership	It is regulated by Law 1508 of 2012, Decree 1467 of 2012, Decree 1082 of 2015 and Law 1882 of 2018. Colombia has experience in using PPPs in concessions for road, port and airport infrastructure projects. This experience has enabled it to create tools for the development and evolution of this mechanism, such as the implementation of guides and regulations.	[66,67,68,69]
2. Public works	It is regulated by Act 80 of 1993, Act 1150 of 2007, Act 1474 of 2011 and Act 1682 of 2013. These are contracts carried out by state entities to execute infrastructure projects, especially those aimed at implementing, operating and maintaining transport infrastructure.	[70,71,72,73,74]
3. Debt	Through this facility, commercial banks provide loans for transport infrastructure projects.	[75]
4. Land Value Capture	It is regulated by Law 388, Law 1955 of 2019 and CONPES 3991 of 2020. It is a financing mechanism that makes it possible to capture the value of the land by granting a real and temporary right to a third party to use and exploit it, take advantage of the urban potential, and provide a return that can be used for improvements to transport infrastructure, etc.	[76,77]
5. Green bonds	It is regulated by Law 1753 of 2015, Law 1819 of 2016, Decree DUR 1625 of 2016, Decree 926 of 2017 and Resolution 1447. Green bonds are bonds that are specifically aimed at financing green projects and that comply with the 4 Principles of Green Bonds of the International Capital Market Association (ICMA)	[78,79,80,81,82,83]

Source: own elaboration based on the information in [75].

highlights the following:

Even though Colombia has rules and regulations that regulate financing mechanisms for the development of railway and inland waterway projects, the first steps are just being taken in the implementation of sustainable financing mechanisms in transport projects, especially for rail and inland waterway modes. Among the challenges facing Colombia for the transition to electric mobility and zero-emission mobility is the adoption of green technologies and the non-dependence on fossil fuels in freight and passenger transport [84]. In the case of rail and inland waterway modes, the challenge is greater because much of the infrastructure requires large investments to be reactivated and modernized, so the effort to diversify and encourage the use of new financing mechanisms that adapt to current requirements is a priority, especially for these modes that have great potential. The government of Colombia recognizes the importance of the implementation of financial instruments that enable the transition to sustainable mobility, and this is evidenced in the creation of strategies that determine the steps and measures to be carried out in both modes such as the National Electric Mobility Strategy, the Inland Waterway Master Plan, the Railway Master Plan and the Intermodal Transport Master Plan (PMTI) 2015–2035.

Table 4. Challenges and possible proposals on financing for Colombia.

Financing Mechanism	Description	Sources
National Electric Mobility Strategy	It is necessary to generate policies, regulations and norms that regulate economic and market instruments, so that measures that lead to a zero-emission mobility in the transport sector can materialize.	[85]
2. Inland Waterway Master Plan	It highlights the low participation of private investment in construction and maintenance projects, as well as the low public investment compared to those allocated to other modes of transport. In this regard, it is proposed to promote and study public–private partnerships as a mechanism to finance river transport projects. Other ways to obtain resources include the collection of services and tolls, public investment, etc. In addition, the importance of creating programs that allow the fleet to be modernized and greened is mentioned.	[8]
3. Railway Master Plan	It recognizes the potential to reactivate rail transport in the country, and identifies the financing needs due to the low public investment in rail transport infrastructure. It considers the need to prioritize public investment, especially in the recovery phase. In the key actions, it proposes to study other financing alternatives different from the current ones that allow channeling resources and igniting the participation of the private sector.	[7]
4. Intermodal Transport Master Plan (PMTI) 2015–2035	With regard to financing in the railway and river modes, it states that it is necessary to define a public investment policy. It also states that the state must prioritize these modes and contribute to the financing of infrastructure. It mentions the importance of proposing and applying other financing alternatives in addition to PPPs.	[86]

Source: own elaboration.

shows the activities and proposals of each instrument in relation to the financing of infrastructure projects.

4. Discussion

A recurring issue in the literature reviewed for rail transport is the need to establish adequate legislation and regulatory frameworks for the implementation of green financing mechanisms, especially in countries that need to reactivate and modernize a large part of their railway systems that are old and obsolete. They therefore need to promote the financing of their railway projects and in turn reduce investment risk [17]. The development of rail transport and its transition to low-emission mobility is highly dependent on available financial resources, and governments face major challenges due to lack of resources and the need to provide a sustainable, efficient transport system that meets growing mobility needs [20,22]. The authors in [20] state that in cities and metropolitan areas where mobility is a fundamental factor for economic and social development, the introduction of efficient but also sustainable transport systems is required, so policies to finance transport systems must take into account the needs of the city and climate change resilience strategies. This makes sense, given that policies can accelerate investment, especially those that provide clear guidelines for play roles.

In China, for example, reforms have been implemented to promote investments that include sustainable infrastructure projects. These reforms have improved lines and access to different financing mechanisms such as green bonds, funds and credits [16]. These reforms were carried out to support the objectives that the government has set itself in terms of reducing emissions in the transport sector, such as accelerating electric rail transport to connect cities and towns [16]. In this regard, China’s experience proposes a goal for the development of rail transport accompanied by a policy framework that encourages investment, as there is a range of green projects available and regulations for investments in the market becomes more competitive.

Policies and regulations are important to promote the diversification of financing mechanisms as some mechanisms are not always appropriate for certain projects, especially when it comes to rail projects that require financing throughout their life cycle [35]. In this regard, the authors in [15] point out that public–private partnerships are widely used to finance railway projects due to their benefits. However, experience in different case studies have shown that their implementation can pose many challenges and complexities that lead to failure, so it is not advisable to use PPPs in all cases. The success of a PPP in railway projects will depend on feasibility studies, a sound and comprehensive regulatory framework, and government support through incentives and financial subsidies. In [17,20], the authors also note that public–private partnerships may not be ideal for transportation infrastructure projects, especially if government will not play a major role and if robust regulatory frameworks are not in place, since these are large-scale and high-risk projects, and without government support the projects are likely to fail.

Other authors highlight the potential of green bonds in the transition to a movement of casualties in missions in rail transport, and are an important instrument in achieving the objectives of the Paris Agreement. In relation to this, in [21], the authors point out the importance of creating a taxonomy that allows the unification of environmentally sustainable economic activities and differentiate them from those that are not. Investors can then have a clear idea what investments are sustainable, and it also allows actors to also differentiate projects that are considered sustainable from the framework of transport and rail. For the EU, for example, a unified taxonomy will let them know which projects can apply for green finance and which projects need to be prioritized. Likewise, in [34] the authors emphasize that the development of the green bond market depends on the green policies that are implemented. This means that both PPPs and green bonds require regulatory frameworks that strengthen the benefits of the mechanism, so that the application can become a success story.

Other financing mechanics mentioned in the literature summarized in Table 1 include value capture instruments. These mechanisms can also be a potential financing alternative to finance railway projects such as land value tax, financing of tax increases (TIF), public transport tax, etc. [22,33].

With respect to inland waterway transport, the literature reviewed in Table 2 determines that inland waterway transport is one of the means of transport with the most potential for intermodal change and emissions reduction. Despite this, this mode presents many challenges for its ecological modernization and maintenance in many countries of the world. In [52], it is determined that the financing needs of the sector cannot be solved only through public investments as is the usual practice, and propose among the ways to achieve sustainable river transport access to various types of long-term financing that allow the inclusion of new technologies and allow betting on financial innovation. The future of inland waterway transport can be promising, as regulatory policies are established and sustainable investment is promoted. In [48], the authors also reach a consensus that facing the challenges of fluvial transport development requires measures from different levels. This includes involving different actors to promote investment, using financing mechanisms such as public–private associations to attract new sources of financing and the implementation of policies that improve the benefits of these mechanisms. In many regions, the costs of maintaining and operating waterways are financed through taxes and user fees; however, in some regions these fees are very low, making it unsustainable to finance the large infrastructure investments required. This way, in the EU, priority has been given to the development of the inland waterway mode as this is a sustainable transport option, for which benefits and incentives are offered that allow investment from different routes and the involvement of different institutions [44]

5. Limitations of This Study

In this study, only the databases mentioned in Section 3 were reviewed, which is a limitation for our research because although these databases contain extensive relevant information with open access, it is possible that other databases may contain related data that meet the inclusion criteria, contribute to this research and alter the results.

In addition, the keywords included also represent a limitation, since they address and allow the search and selection in databases of the information available in a specific stream or area. The set of keywords selected in this research limit the study, since it is possible that they do not cover other studies or documents dealing with the topic as they do not detect the relationship between the topic and the keywords. The chances of finding more related sources may increase if more keywords or other combinations are included.

It should also be mentioned that only studies and documents written in English or Spanish were included in the research; this is a limitation because it limits the size of the sample. There may be related and open-access information that can contribute to the results of this research in other languages, research that may contain other types of funding mechanisms, or other studies that have conducted literature reviews on green finance and transportation.

6. Conclusions

This article shows the results of a literature review on financing mechanisms aimed at promoting alternatives to decarbonization in rail and inland waterway transport modes. To this end, we sought to answer the questions related to the following: what are the main financing mechanisms to promote decarbonization alternatives in rail and inland waterway transport worldwide, and what financing mechanisms have been used in Colombia to promote decarbonization alternatives in rail and inland waterway transport? The sources of information that were reviewed to answer the research questions correspond to academic sources such as Scopus, MDPI and Google Scholar, but also the portals and websites of the governments of some countries’ study cases such as Colombia, the United States, Norway, Japan, etc. were reviewed. The methodology used in this research allowed us to select 38 sources that include information related to financing mechanisms in low-emission rail and river transport, where 23 sources are directly related to rail transport, and 15 are related to inland waterway transport.

The reviewed authors reached the consensus that designing and implementing green transport infrastructure projects and modernization of low-emission fleets require financial resources that are currently very limited. Many governments and entities are in the process of promoting and creating financing mechanisms that grant better benefits to sustainable projects and those related to reducing greenhouse gas emissions. In this regard, the article was able to review a set of financing mechanisms of different types that have been implemented or addressed in different case studies such as bonds, credits, funds, debt, public–private partnership, and public works, among others. The financial instruments that featured predominately in the cases studied were green bonds, public-private partnerships and public works.

In addition, the literature review allowed us to determine that the growing needs of the development of transport infrastructure. This is not only to improve the efficiency and competitiveness of operations, but also to make it sustainable and resistant to climate change, and make it essential to implement green financing mechanisms that can sustain projects throughout their life cycle, and that allow the implementation of low emission technologies in the transport sector. The design and implementation of these mechanisms must be accompanied by policies, regulations and measures to intensify efforts to attract private sector investment in projects and programs that promote sustainable development in rail and inland waterway modes. This implies, to a large extent, that financial policies, rules and regulations must be aligned with the Sustainable Development Goals and the objectives of the Paris Agreement. These in turn must be accompanied by a package of measures such as penalties for polluting, emissions trading schemes, implementation of green economic incentives, among others.

In the case of Colombia, where there are great financing needs for modernization and the transition to low-emission mobility in rail and river transport, international experiences can be an example for designing new policies and regulations that allow taking greater advantage of existing financing mechanisms and promote other sources of financing different from those commonly used, such as public–private partnerships. It is necessary to diversify financing options so that projects can have access to different sources of financing, and use those that provide greater benefits in the short, medium and long term to all of the actors involved.

Finally, future research on financing mechanisms aimed at financing rail and inland waterway transport may address the feasibility of applying specific green financing mechanisms for certain projects within the framework of low-emission transport. Other literature reviews covering case studies where financing mechanisms such as bonds, credits and green funds have been used in rail and river projects, can also be conducted to provide a broader perspective on the advantages and disadvantages of the application of these mechanisms in infrastructure and sustainable transportation projects. This topic is of great relevance from a scientific, social and environmental perspective, since research in this area can lay the groundwork for the design and implementation of policies, regulations and reforms to create new green financing mechanisms, promote green investment and contribute to meeting the objectives of the Paris Agreement.