Policy Framework for Greening Transportation in Georgia

Policy Framework for Greening Transportation in Georgia

Jen JungEun OhSeptember 28, 2012

World BankSustainable Development Department

1. Framing the Policy Questions

2. Defining Goal, Principle, and Instruments

5. Road Map for Framework Implementation

3. Policy Framework for Greening Transportation

4. Economic, Environmental Benefits of Green Transport Framework

Defining green transportation in Georgian context

Reduced Fossil Fuel

Consumption

Minimized Impacts on the Global and Local

Environment (GHG, local emissions)

Increased Reliance on Indigenous,

Clean Energy Sources

Green Transportation in Georgian Context

Reduced Road

Congestion

Improved Balance of Trade and

Energy Security

Co-benefits

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


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1.0Merchandise imports (current US$)Fuel imports (current US$)

(million tons)($ billion)

19992000

20012002

20032004

20052006

20072008

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Electricity production (TWh)Electricity production from hydroelectric sources (TWh)

Challenge: Oil imports contributes to the current account deficits

Opportunity: Current capacity and potential for hydropower is high


• Road transport accounts for major share of emissions

SO2 Emissions by Sector

CO Emissions by Sector NO Emissions by Sector

PM10 Emissions by Sector

Road Transport

IndustryEnergy

Rationale for Government involvement

Vehicle ownership growth trajectories vary greatly at same income level

20102012

20142016

20182020

20222024

20260

50

100

150

200

250

300Private Car ownership per 1000 persons

High (>250)

Medium (≈220)

Low(<200)

Possible trajectories of motorization rate growth in Georgia

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

Goal and Principle

• Goal: “to reduce the total cost of transportation including all direct and indirect costs, while maintaining total social welfare benefits”

Influencing ChoicesMaking green transport

attractive to users (demand side)

Improving ChoicesMaking green transport

available to users (supply side)

• Principle: Influence and improve choices (without undermining the market economy)

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

InfrastructureGreener

modes of transport

Infrastructure network and connectivity

Advanced vehicle

technologies




A. Integrate Environmental Concerns into Transport Policies



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

Euro 1 Euro 2 Euro 3 Euro 4 Euro 5 Euro 60

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1

1.2

1.4

1.6PC Diesel

PC Gasoline

LCV Diesel

LCV Gasoline

HC

+ N

Ox

Emis

sion

(g/k

m)

European Union Vehicle Emission Standards for HC and NOx

How can this be done?

Institutions and Planning Regulations and Enforcement


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





B. Achieve and Maintain a Greener Vehicle Fleet


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

All ve-hicles

Cars Buses Trucks0

5

10

15

20

25

30

35

Georgia EU-27

Vehicle fleet ownership will grow much faster as income grows



Regulations and Enforcement


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




C. Promote Low Emission Freight Transport Modes



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

2006 2007 2008 2009 20100

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0%

10%

20%

30%

40%

50%

60%

0.8 1.1 1.4 1.5Transit

1.7

0.91.1

1.2 1.2

Import1.3

0.2

0.20.2 0.2

Export 0.142%44%

50% 51%54%Share of transit cargo

Cargo Transport by Road (million tons)

Rail

Road Ra

il

Road Ra

il

Road Ra

il

Road Ra

il

Road

2006 2007 2008 2009 2010

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0%10%20%30%40%50%60%70%80%90%

Transit

Import

Export

81% 78% 78%

65% 64%

Cargo Transport (million tons)Share of rail of total transit

Why this measure?

Vehicle Emission Class

Truck charges per kilometer (in EURO)Austria Switzerland Georgia

2-axle 3-axle 4+ axle 2-axle 3-axle 4+ axle No classification

EURO 0–II 0.187 0.262 0.393 0.460 0.767 1.022

0.188EURO III 0.399 0.664 0.886EURO IV–V 0.165 0.231 0.347

0.339 0.564 0.752EURO EEV 0.150 0.210 0.315EURO VI 0.145 0.203 0.305

2004 2005 2006 2007 2008 2009 201002468

101214161820

0

50

100

150

200

250

300

Dry cargo

Liquid cargo

Container cargo

(thousand TEU)(million tons)

Containerized cargo volume handled in Georgian seaports has increased rapidly





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




D. Support Commercial Development of Intercity Passenger Transport



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



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




E. Transform Minibuses, Taxis into Modern Urban Transport Modes



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

<5 5-10 11-15 16-20 >200%5%

10%15%20%25%30%35%40%45%

20052010



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




F. Support Sustainable Development of Urban Transport



Why this measure?

• High energy consumption of Tbilisi transport sector

Why this measure?

Very low charges or other restriction on parking in Tbilisi city center

Inverse correlation between energy consumption and density

0

1

2

3

4

5€/hr





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

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 (-9%)

Total electricity use (GWh) 46,249 63,255 (+37%) 75,992 (+64%)Total passenger-km by road (million) 730,502 664,955 (-9%) 689,451 (-6%)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 (-7%) 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 (-4%) 66,455 (-7%)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%)


• Motor fuel consumptions

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million tons / year

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Business-as-usual Green Transportation


• CO2 EmissionsBusiness-as-usual Green Transportation

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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

Phased implementation of priority actions (1)

• Short-Term (2012-2014): 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

Phased implementation of priority actions (2)

• Medium-Term (2015-2020): 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

THANK YOU

Policy Framework for Greening Transportation in Georgia

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