By Alessandro Parodi

(Reuters) – Europe needs to spend 39 billion euros ($42.46 billion) a year to reach its net zero targets in the transport sector by 2050, campaign group Transport & Environment (T&E) said on Monday, issuing five key recommendations for the European Union.

The EU is seeking a more coordinated industrial policy involving massive investment, including in green technologies, following a report by former European Central Bank chief and Italian prime minister Mario Draghi in September.

An EU-level investment strategy must be urgently deployed to decisively support transport decarbonisation and enhance the sector’s competitive sustainability,” T&E said in the report.

The required investments are only slightly higher than the bloc’s annual 34 billion euros in fossil-fuel transport subsidies, it said, recommending phasing out such subsidies in favour of green transport.

The report comes amid weakening demand for electric cars and calls from some politicians and auto executives – including Italian Prime Minister Giorgia Meloni and BMW CEO Oliver Zipse – for the EU to cancel a 2035 ban on fossil-fuel cars.

Brussels-based T&E also called for a greener EU budget with streamlined access to EU funds, the institution of a 1-trillion-euro Social and Climate Investment Plan to 2034, a stronger role for the European Investment Bank in transforming the mobility system, and increased involvement of private finance.

T&E said total investments, including spending from private investors, should be 310 billion euros a year by 2030 to achieve its five recommendations and decarbonise the critical transport sectors of aviation, shipping, passenger cars, buses and trucks.

Total spending should rise to a yearly 507 billion euros by 2040, for a total of 7.6 trillion euros, as the shift gathers pace, it added.

“The earlier investments will take place, the cheaper the transition bill will be”, T&E said.

($1 = 0.9184 euros)

(Reporting by Alessandro Parodi, Editing by Bernadette Baum)