Magda Lovei Environment Department Transport air pollution Key issues, policies, and the case of phasing out leaded gasoline Magda Lovei Environment Department

Urban air pollution: key environmental concerns Human health impacts Highest risk: lead, particulates Other pollutants of concern: carbon monoxide, sulfur dioxide, nitrogen oxides, ozone, toxic chemicals Other environmental externalities damage to natural and physical capital, amenity losses, noise, climate change

Relative burden of various environmental impacts Note: Average for 6 developing cities Source: Lvovsky et al.

Health impacts of air pollution Almost 40 thousand excess deaths annually in the Newly Independent States More than 4,000 premature deaths and 1.5 million asthma attacks annually in Jakarta Average 3 - 6 IQ points loss in urban children in Bangok, Cairo, Manila...

The costs of air pollution $1.1 -$4 billion annually in large cities of Asia Almost $6 billion annually in the Newly Independent States 5% of urban income in Europe and Central Asia, 10% in Bangkok, Kuala Lumpur, Jakarta...

Sources of the environmental damage of air pollution Note: Average for 6 developing cities Source: Lvovsky et al.

Increasing problem in developing countries Rapidly growing vehicle fleet High pollution intensity of vehicles inefficient and old vehicle fleet poor maintenance lack of proper emission control poor fuel quality Large roadside population exposed (street vendors, pedestrians)

Approaches to motor vehicle pollution abatement Fuel efficiency taxation, standards Emission control emission standards, I&M Fuel properties fuel standards, taxation Demand management vehicle and fuel taxes, restrictions, incentives Other long-term planning

Ranking measures to reduce traffic emissions in Mexico City Marginal cost of emission reductions (dollars per ton) 2600 Fuel Improvements 2100 Emission standards 1600 Passenger cars Taxis (replacement) 1100 Gasoline trucks Strengthen inspection 600 Minibuses Inspection of passenger cars 100 Inspection of high-use vehicles Retrofitting (natural gas and LPG) -400 Cumulative emission reductions (million weighted tons) Target Reduction 1.2 million tons Technical controls only Controls, matched with gasoline tax Note: Calculations are based on -0.8 elasticity of demand for gasoline. Source: Gunnar Eskeland, World Bank, 1994.

The case of leaded gasoline phaseout An effective way of addressing an urban environmental priority

Blood lead levels worldwide (average of sampled populations, 1980s-1990s)

Lead in gasoline and human exposures: close links

No serious technical constraints All vehicles can run on unleaded gasoline Catalytic converters are not needed Valve seat recession only affects few old cars Lubricating additives are available to protect All refineries can adjust to produce unleaded gasoline Process changes (catalitic cracking, isomerization, alkylation) Additives (e.g., oxygenates)

Benefits and costs of lead phaseout in the U.S.

Key policy conditions Political commitment Policies to encourage change in gasoline supply Liberalized gasoline markets and prices Policies to encourage shift in gasoline demand Differential taxation - make unleaded cheaper! Consensus and public information

Price difference and market share of unleaded gasoline

Progress in the global phaseout of lead Total phaseout in 25+ countries Decline in the amount of lead in gasoline Around 80% of gasoline is unleaded world-wide Improvements in ambient air quality and human health

Rapid phaseout in the Slovak Republic Driving force: refinery Key obstacle: valve seat recession in old cars Solution: lubricating additive Supporting policies: tax differentiation, public information Other factors: monopoly and control of distribution system Not only rich industrialized countries have successfully got rid of leaded gasoline. In the Slovak Republic, the total phaseout weas also accomplished relatively fast. Thh key driving force was the countries sole refinery, which undertook modernization measures to adjust to changing export requirements. While the refinery possessed capacity to produce large volumes of unleaded gasoline, the old vehicle fleet and concern about valve seat recession created the largest obstacle. The solution became a lubricating additive developed by the refinery to protect domestic vehicles from damage. The government introduced supporting policies including differentiated taxes, and supported a public information program carried out by the refinery. Of course, other factors played a role, too. The fact that the refinery had a monopoly over the production and distribution of gasoline has facilitated the process.

Rapid Phaseout in a Small Country: El Salvador Completed in 1 year Fast decline in airborne lead (from 1.5 ug/m3 to 0) Enabling conditions: Private ownership of petroleum sector Liberalized petroleum prices Significant imports Cost: 1 U.S. cent/liter One of the best practice cases of rapid lead phaseout in a small country is El Salvador, where the process took place in one year. This example may be representative for other small countries with a small refinery and import of gasoline. Key advantages of the rapid phaseout are (i) environmental benefits demonstrated by a large decline of ambient lead concentrations; (ii) cost savings by avoiding a dual distribution system; and (iii) no risk of misfueling and destroying catalytic converters. Several factors contributed to the rapid phaseout: private ownership of the petroleum sector did not compel the government to provide subsidies liberalized product prices (1994) import of high octane gasoline components The phaseout did not involve significant invests, and the costs were estimated at 1 cent per liter of gasoline. Lead phaseout has also provided the first step towards broader air quality issues addressing fuel specifications, air quality monitoring, and environmetnal regulations and I&M programs.

From health concerns to total phaseout in Thailand Risk assessment study: lead exposure is priority problem Political commitment Price and market liberalization Strengthened environmental regulations, institutions Differentiated taxation Clean fuels program and refinery adjustment Increasing community awareness Another example of fast lead phaseout in a developing country is from Asia. In Thailand, a comprehensive risk assessment study was carried out by US AID which demonstrated the health damages caused by high exposures to lead. The results helped biulding commitment ans strong support from the King of Thailand. Regulations were introduced to reduce the legal limit of lead in gasoline, and to introduce unleaded gasoline. The petroleum price and market liberalization also helped the refineries to adjust. Differentiated taxation played a role here, too. The lower price for unleaded gasoline encouraged consumers to increase the use of unleaded gasline, which was completely eliminated by 1995.

World Bank’s support Raise awareness and political commitment Regional programs in Latin America, Caribbean, Central and Eastern Europe, Central Asia Help introducing national strategies and policies - technical assistance, dialogue Bulgaria, El Salvador, Jamaica, Peru, Romania, Thailand, Vietnam... Facilitate implementation Thailand: refinery upgrade

Conclusions The transport sector is a large source of environmental damage Of largest health concern are particulates and lead Phasing out leaded gasoline is very effective in addressing and environmental priority Combination of policies and measures are needed Many stakeholders should be involved