Transportation and the CDM: Key Issues & Potential Case Studies March 14, 2003 Winnipeg

CDM & The Transportation Sector

Project Boundaries  Which gases?  CO2, N2O, CH4, CFCs?  Lifecycle vs. Direct Emissions?  E.g., methane leaks upstream  E.g., biofuel sequestration upstream  What if emissions or sequestration occur outside Chile?

 Technology projects 1.Set baseline as current technology Set baseline as marginal technology, if different  For travel demand/behavioral policies 1.Compare to current mode split and VKT Compare to projected mode split and VKT Transportation Baseline Issues

 For how long should the baseline be valid?  Should the baseline be fixed or revisable during the crediting lifetime?  If implementation time frame is longer than 5-year Kyoto budget periods, is there still a significant role for CDM? Timeframe

 Need to balance environmentally integrity and practicality.  Technology projects  Track VKT, efficiency (emission rates)  For travel demand/behavioral policies  Track VKT, mode split  Is it appropriate to use modeling results for current or projected data?  Frequency of mode split data collection may be a concern Monitoring

Cost Issues  Incremental/Full Cost Assessment  How to allocate costs across project benefits? (GHG, air quality, economic development, etc.)  What aspects are not a part of ‘true’ CDM project costs? (infrastructure, modeling, planning, pre-feasibility)?  Once elements are identified as not part of the CDM project costs, should there be any limits on how those non-CDM costs are financed?  Role for ODA funding:

 EB/Panel has yet to develop guidance on determining when national policies are relevant to baselines and to take them into account  No explicit rule preventing new government policies from qualifying as CDM projects.  The eligibility of government policies as projects will be determined based on OE/EB decisions as projects come through the pipeline Relevance of National Policies

 “Carbon quality” is high if there is a high- degree of certainty that emission reductions will persist over time  Fixed technologies (e.g., hybrid buses) or infrastructure (e.g., metro expansion, segregated busways, land use, pedestrian or bicycle) may be higher quality than policies and incentives that could change over time. Persistence & “Carbon Quality”

Potential Case Studies

Case 1: 25% Increase in Bus Efficiency  What if… buses were converted to Hybrid Electric or CNG technologies  Key Assumptions  Diesel bus:2.0 km/liter  New bus: 2.5 km/liter  100,000 km/yr/bus  9,000 buses in Santiago region

GHG Savings from +25% Bus Efficiency  GHG savings if 9,000 buses replaced  Direct:0.08 MMTCE (300 Gg CO 2 )  1.4% of transport sector emissions  Lifecycle:0.10 MMTCE (360 Gg CO 2 )  GHG savings if 25% of buses replaced  Direct:0.021 MMTCE (75 Gg CO 2 )  0.3% of transport sector emissions  Lifecycle:0.025 MMTCE (90 Gg CO 2 )

Issues to Consider  Data improvements and monitoring  Track actual VKT  Improve fuel efficiency data  What would CDM investors invest in?  Marginal cost of high efficiency bus?

Case 2: 10% Increase in Bus Ridership  What if…the number bus passenger trips increased by 10%?  Key Assumptions  4.25 million bus trips/day in Santiago  10 km trip length  265 weekdays/year  Average vehicle loading  Bus = 34, Car = 1.9  BAU mode split (2010)  Bus = 62%, Car = 35%

GHG Savings from +10% Bus Ridership  GHG savings if all new riders shift from cars  0.12 MMTCe (436 Gg CO 2 )  2.0% of transport sector emissions  GHG savings if new riders shift from BAU mode split (35% car) 0.04 MMTCe (150 Gg CO 2 )  0.7% of transport sector emissions

Issues to Consider  Data improvements and monitoring  Ridership, trip length, vehicle loading  Current and projected mode split  Bus and car efficiency  Additionality concerns  What would CDM investors fund?  Segregated busways, electronic fare boxes, multi-modal stations, signalization improvements?

Other Potential Case Studies

Taxis? Taxis  10% of sector emissions  25% efficiency improvement in 25% of the fleet would result in GHG savings of:  0.04 MMTCE (131 Gg CO 2 )  What policies?  Tax credit? Producer incentives?  Voluntary agreements??

Trucks? Trucks  22% of sector emissions  25% efficiency improvement in 25% of the fleet would result in GHG savings of:  0.08 MMTCE (301 Gg CO 2 )  What policies?  Tax credit? Producer incentives?  Voluntary agreements??

 Metro expansion  Busways  Under consideration by World Bank for PCF  Good “carbon quality” if segregated corridors with 10-year concessions Transit System Improvements

 “Infill” development in the Anillo Central?  “Mixed-use” development around new Metro stations?  What would a CDM investor fund?  Planning, tax credits for developers?  Developer as CDM investor? Land Use Policies

 Bicycle network expansion  Need to assess leisure vs. non-leisure trips Bicycle

Others? Others: urban planning; freight? (inter modal shifting?); What about the most prominent ‘culprit’? The privately owned vehicle? Any room for improvements here? Efficiency/air quality tests, etc?

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