1. Policy Framework for Greening Transportation in Georgia
Jen JungEun Oh
September 28, 2012
World Bank
Sustainable Development Department

2. 1. Framing the Policy Questions
2. Defining Goal, Principle, and Instruments
3. Policy Framework for Greening Transportation
4. Economic, Environmental Benefits of Green Transport Framework
5. Road Map for Framework Implementation

3. Defining green transportation in Georgian context
Reduced Fossil Fuel Consumption
Increased Reliance on Indigenous, Clean Energy Sources
Minimized Impacts on the Global and Local Environment (GHG, local emissions)
Improved Balance of Trade and Energy Security
Reduced Road Congestion
Co-benefits
Green Transportation in Georgian Context

4. Policy motivation for green transportation
Transport sector’s contribution to economic growth
Export competitiveness
Lower prices of goods for Georgian customers
Competitive position in international transshipment
Attraction to tourist destinations
Improved regional integration
Improved access to market and services of rural communities
Catalysis for service sector development
 Good connectivity and low cost transportation brings economic benefits

5. Policy motivation for green transportation
Challenge: Oil imports contributes to the current account deficits
Opportunity: Current capacity and potential for hydropower is high

6. Policy motivation for green transportation
Road transport accounts for major share of emissions
CO Emissions by Sector
NO Emissions by Sector
Industry
Energy
Road Transport
SO2 Emissions by Sector
PM10 Emissions by Sector

7. Rationale for Government involvement
Vehicle ownership growth trajectories vary greatly at same income level
Possible trajectories of motorization rate growth in Georgia

8. Rationale for Government involvement
Lock-in effect of infrastructure investments
Transport infrastructure determines long-term trajectory of travel and land-use patterns and transportation costs
Market failure exists in transport sector
External costs: congestion, local emissions, GHG emissions
Appropriate intervention by Government can correct the distortion

9. 1. Framing the Policy Questions
2. Defining Goal, Principle, and Instruments
3. Policy Framework for Greening Transportation
4. Economic, Environmental Benefits of Green Transport Framework
5. Road Map for Framework Implementation

10. Goal and Principle
Goal: “to reduce the total cost of transportation including all direct and indirect costs, while maintaining total social welfare benefits”
Principle: Influence and improve choices (without undermining the market economy)
Influencing Choices
Making green transport attractive to users (demand side)
Improving Choices
Making green transport available to users (supply side)

11. Instruments: how to influence/improve
Institutions and Planning
High-level policy integration
Spatial planning
Strategic transport planning
Regulations
Fuel quality standards
Vehicle technical standards
Enforcement
Fiscal Policy and Pricing
Taxes and subsidies
Explicit pricing of externalities
Technology and Infrastructure
Greener modes of transport
Infrastructure network and connectivity
Advanced vehicle technologies

12. 1. Framing the Policy Questions
2. Defining Goal, Principle, and Instruments
3. Policy Framework for Greening Transportation
A. Integrate Environmental Concerns into Transport Policies
4. Economic, Environmental Benefits of Green Transport Framework
5. Road Map for Framework Implementation

13. European Union Vehicle Emission Standards for HC and NOx
Why this measure?
No environmental objectives in transport policies
A regulatory framework is not being enforced
Local emissions vary by fuel quality and vehicle standards
Environmental policies should aim to curtail emissions at source
European Union Vehicle Emission Standards for HC and NOx

14. How can this be done? Fiscal Policy and Pricing
Institutions and Planning
Regulations and Enforcement
Fiscal Policy and Pricing
Integrate transport policy and environmental monitoring
Reinstate fuel quality inspection
Revise taxes on motor fuels to be differentiated by quality as incentives for cleaner fuel choices
Maintain high fuel prices relative to income levels as a long-term policy

15. 1. Framing the Policy Questions
2. Defining Goal, Principle, and Instruments
3. Policy Framework for Greening Transportation
B. Achieve and Maintain a Greener Vehicle Fleet
4. Economic, Environmental Benefits of Green Transport Framework
5. Road Map for Framework Implementation

16. Why this measure?
Dominance of second-hand vehicles and lack of vehicle standards enforcement
Vehicle fleet age is significantly higher in Georgia than in EU-27
Vehicle fleet ownership will grow much faster as income grows

17. How can this be done? Institutions and Planning
Regulations and Enforcement
Fiscal Policy and Pricing
Investments
Strengthen institutions for effective enforcement
Expand vehicle inspection requirements to include all commercial and non-commercial vehicles
Scrap and recycle the old and polluting vehicle fleet
Tax credits and other financial incentives for higher fuel-efficiency and technological improvements of vehicles
Subsidize the scrapping and recycling of old and polluting vehicles

18. 1. Framing the Policy Questions
2. Defining Goal, Principle, and Instruments
3. Policy Framework for Greening Transportation
C. Promote Low Emission Freight Transport Modes
4. Economic, Environmental Benefits of Green Transport Framework
5. Road Map for Framework Implementation

19. Why this measure?
Transit traffic is increasing; share of rail transit decreasing
Growing share of transit cargo of total international road transport
Decreasing share of rail transport of total transit cargo

20. Vehicle Emission Class Truck charges per kilometer (in EURO)
Why this measure?
Vehicle Emission Class
Truck charges per kilometer (in EURO)
Austria
Switzerland
Georgia
2-axle
3-axle
4+ axle
No classification
EURO 0–II
0.187
0.262
0.393
0.460
0.767
1.022
0.188
EURO III
0.399
0.664
0.886
EURO IV–V
0.165
0.231
0.347
0.339
0.564
0.752
EURO EEV
0.150
0.210
0.315
EURO VI
0.145
0.203
0.305
Containerized cargo volume handled in Georgian seaports has increased rapidly

21. How can this be done? Institutions and Planning
Regulations and Enforcement
Fiscal Policy and Pricing
Investments
Develop a coherent transport policy that focuses on intermodality and international collaboration with key trading partners and neighboring countries
Apply vehicle inspection regime to domestically registered trucks and to Georgian transport companies
Introduce and enforce regulations on vehicle emissions and axle loads for foreign registered transit vehicles
Differentiate charges on transit trucks according to vehicle emission class and axle loads
Allocate revenues to the maintenance of road network assets and green transport investments
Develop multimodal, green transit corridors by improving intermodal connectivity, eliminating bottlenecks and supporting containerization

22. 1. Framing the Policy Questions
2. Defining Goal, Principle, and Instruments
3. Policy Framework for Greening Transportation
D. Support Commercial Development of Intercity Passenger Transport
4. Economic, Environmental Benefits of Green Transport Framework
5. Road Map for Framework Implementation

23. Why this measure?
Under-regulated/underdeveloped intercity passenger transport market offers inferior service quality (lack of safety, environmental damage)
Lack of intercity transportation options hinder future tourism potential
Foreign transport services companies reaping benefits from the increasing number of visitors
Clean and high-quality intercity bus services can compete with private road transport

24. How can this be done? Institutions and Planning
Regulations and Enforcement
Investments
Improve the convenience of and access to intercity bus services through coordinated marketing strategy and passenger information services
Control market entry through regulations and enforcement of vehicle and emission standards
Introduce competitive tendering for strategic intercity routes and manage service quality
Improve quality of infrastructure and consumer amenities through public and private investments

25. 1. Framing the Policy Questions
2. Defining Goal, Principle, and Instruments
3. Policy Framework for Greening Transportation
E. Transform Minibuses, Taxis into Modern Urban Transport Modes
4. Economic, Environmental Benefits of Green Transport Framework
5. Road Map for Framework Implementation

26. Minibuses fleet in Georgia is old and getting older over time
Why this measure?
Minibuses generate local emissions, congestion
Contractual arrangement is not conducive to competition and long-term sustainability
Unregulated taxi market contributes to negative externalities
These modes need to be integrated into coherent public transport services
Minibuses fleet in Georgia is old and getting older over time

27. How can this be done? Institutions and Planning
Regulations and Enforcement
Investments
Develop a strategic vision and strengthen market competition for minibuses and taxis
Develop a strategy for coherent multimodal public transport system
Minibus market: introduce competitive tendering and gross-cost based contracting
Taxi market: introduce partial regulations that control fare and quality but allow free market-entry
Refrain from direct budgetary support for vehicle improvement
Oblige commercial entities to maintain their vehicle fleet quality

28. 1. Framing the Policy Questions
2. Defining Goal, Principle, and Instruments
3. Policy Framework for Greening Transportation
F. Support Sustainable Development of Urban Transport
4. Economic, Environmental Benefits of Green Transport Framework
5. Road Map for Framework Implementation

29. Why this measure?
High energy consumption of Tbilisi transport sector

30. Inverse correlation between energy consumption and density
Why this measure?
Inverse correlation between energy consumption and density
Very low charges or other restriction on parking in Tbilisi city center

31. How can this be done? Institutions and Planning
Regulations and Enforcement
Fiscal Policy and Pricing
Investments
Develop a national-level urban transport policy framework
Institute integrated city development and transport planning
Make private car use less convenient by introducing parking restrictions in urban centers
Make private car use more expensive through appropriate forms of road user charges
Invest in high-quality and competitive alternatives to private transport
Introduce intelligent transportation systems for efficient traffic management and better user services in urban areas

32. 1. Framing the Policy Questions
2. Defining Goal, Principle, and Instruments
3. Policy Framework for Greening Transportation
4. Economic, Environmental Benefits of Green Transport Framework
5. Road Map for Framework Implementation

33. Business-as-usual vs. Green Transportation
Indicators
Business-as-usual
Green Transportation
Moderate
Aggressive
Total vehicle-km on road (million)
258,235
249,319
(-4%)
244,075
(-6%)
Total fuel consumption (thousand tons)
23,492
21,746
(-7%)
21,667
(-8%)
Total fuel costs, excluding electricity (million GEL)a
96,226
87,434
(-9%)
87,331
Total electricity use (GWh)
46,249
63,255
(+37%)
75,992
(+64%)
Total passenger-km by road (million)
730,502
664,955
689,451
Total passenger-km by rail and electric public transport (million)
30,490
62,600
(+105%)
77,633
(+155%)
Total ton-km by road (million)
524,924
489,010
453,096
(-14%)
Total ton-km by rail (million)
154,504
190,420
(+23%)
226,335
(+47%)
Total CO2 emissions (thousand tons)
71,793
68,996
66,455
Total CO emissions (thousand tons)
1,200
392
(-67%)
941
(-22%)
Total VOC emissions (thousand tons)
178 82
(-54%)
131
(-26%)
Total NOx emissions (thousand tons)
458
351
(-23%)
406
(-11%)

34. Business-as-usual vs. Green Transportation
Motor fuel consumptions
Business-as-usual
Green Transportation

35. Business-as-usual vs. Green Transportation
CO2 Emissions
Business-as-usual
Green Transportation

36. Fiscal implications
Reduction in fuel imports would lead to reduction of the current account deficits
Can be designed not to undermine the small government philosophy
Income (households) and cost (firms) effects of fiscal measures can partly be compensated
Revenues can be allocated for development of green transport modes
Compensated by reducing taxes that have negative effects on economic growth

37. 1. Framing the Policy Questions
2. Defining Goal, Principle, and Instruments
3. Policy Framework for Greening Transportation
4. Economic, Environmental Benefits of Green Transport Framework
5. Road Map for Framework Implementation

38. Phased implementation of priority actions (1)
Short-Term ( ): Institutional Capacity and Preparatory Tasks
Strengthen the institutions and policies at national and municipal level
Carry out preparatory work and studies for medium-term actions, including
Assessment of appropriate levels of transit truck charges
Green logistics study: feasibility of transshipment facilities
Strategy for intercity passenger transport
Strategy for minibus reform, taxi regulations
Urban transport strategic plans in cities other than Tbilisi
Alternative analysis / feasibility studies for public transport modes in Georgian cities, including trams, ropeways, LRT, BRT

39. Phased implementation of priority actions (2)
Medium-Term ( ): Enforcement, Market Reforms, and Infrastructure
Implement the improved regulatory framework
Promote market competition through key sub-sector reforms
Develop infrastructure for lasting transformation
Long-Term (2020 and after): Transformation
Transform mobility using advanced technologies
Shape green mobility patterns

40. Thank you