Transport and Carbon Finance Part I Dr. Jürg M. Grütter [email protected] matching transport...

Transport and Carbon Finance Part I

Dr. Jürg M. Grü[email protected] www.transport-ghg.com

matching transport with carbon finance

Feb 11 grütter consulting 2

Company Background

Methodology development CDM: AM0031, ACM0016 (both NMs), AMS IIIT, AMS IIIU

Methodology development non-CDM: VCS bike, VCS freight, BC freight, various Switzerland

Under preparation: Rail passenger, Eco-Drive Projects CDM

4 registered (2 BRTs, cable car, plant-oil) 2 in registration (BRT, Metro) 14 in validation (4 electric vehicles, 1 metro, 9 BRTs) 4 enter validation next 1-2 months (3 metros/LRT, freight)

Projects non CDM: 1 registered VCS (gaseous HDVs) 2 VCS in validation (1 BRT, 1 metro) 1 BC validation (freight) >80 registered in Switzerland


Current Carbon Finance Transport Projects of grütter consulting


Problem Areas

Methodologies Validators Additionality procedure


Methodologies

See discussion per methodology In general very high complexity In general far more is demanded

in the transport sector than in other sectors


Validation

Problems: Most accredited DOEs for sectoral scope 7 lack

competence and experience DOEs use staff which compare transport projects to

hydro dams DOEs are afraid of UNFCCC DOEs charge for transport project 2-3x more than for

other projects DOEs take 1-3 years for validation

Proposed Solutions: Suspend incompetent DOEs Automatically suspend DOEs which take more than 1

year for validation


Additionality I

Overarching Problem: Additionality has been reduced by the EB to IRR assessment

The reduction of project additionallity to one financial parameter is not only questionable per se but reduces effectively the participation of project types where the barriers are far more complex

Food for thought: Using a marginal cost approach like GEF not one HFC and most N2O projects after 6 months are no longer additional i.e. > 50% of CERs issued by EB are NON-additional using a slightly different concept

Conclusion: There is no single and objective criteria for additionality. Therefore keep in mind CO2 plus sustainable development is important and environmental additionality should get back its role


Additionality II

If the UNFCCC wants transport to play a role additionality rules for transport must be adapted

UNFCCC has shown it is flexible with small scale projects or LLDCs

The sustainable development benefits of transport should be recognized. This justifies simplified additionality procedures

Simplified additionality proof is suggested for urban public transit and GHG efficient vehicles e.g.: Based on common practice Based on benchmark


AM0031: BRTs in CDM


Problem Areas: Summary

Leakage calculations: Costly and not necessary

Monitoring survey: Costly and could be made less frequent


Leakage Load Factor

Situation today: every 3 years occupation rate measurements

Problem: Cost for surveys around 30,000 USD every

3 years Analysis:

Theoretically impact on load factor highly improbable due to market forces

Empirically no impact on load factor has been registered

Solution: Eliminate this leakage from methodology


Leakage Load Factor Empirical

City Occupation rate taxis prior

project

Occupation rate taxis after

project

Occupation rate buses prior

project

Occupation rate buses after

project

Bogota 0.7 to 0.8 0.9 56% to 66% 61%

Seoul 1.3-1.5 1.4 12.1 passengers 13.5 passengers


Leakage Congestion

Situation today: leakage determined ex-ante Problem:

Cost for surveys around 20,000 USD Data analysis is complex and involves another cost

Analysis: Speed and congestion impact cancel each other

out Methodologies from other sectors do NOT include

rebound effect Total impact marginal Empirically clear that overall impact negative

leakage i.e. elimination is conservative Solution: Eliminate this leakage from

methodology


Congestion Impact Empirically

Project Meth Rebound tCO2/a

Speed tCO2/a

Total congestion impact tCO2/a

ER per annum

Bogota AM0031 9,000 -15,000 -6,000 247,000

Cali AM0031 11,000 -23,000 -12,000 258,000

Pereira AM0031 2,000 -1,000 1,000 35,000

Barranquilla AM0031 1,000 -2,000 -1,000 55,000

Medellin AM0031 0 -4,000 -3,000 194,000

Guatemala AM0031 -3,000 -95,000 -97,000 534,000

Guadalajara AM0031 1,000 0 1,000 51,000

Quito AM0031 1,000 -19,000 -19,000 155,000

Chongqing AM0031 -2,000 0 -2,000 218,000

Zhengzhou AM0031 -8,000 0 -8,000 205,000

Joburg AM0031 -1,000 0 -1,000 35,000

Seoul ACM0016 0 0 0 >200,000


Monitoring Survey

Situation today: 6 surveys per annum Problem:

Cost for surveys around 60,000 USD per annum Analysis:

Trip behaviour does not change dramatically in the short period

Over time more people have access to private cars and use these thus conservative to take past surveys

Empirically results show little short term change Solution: Conduct surveys only every 3 years


Monitoring Survey Empirical

Item Baseline Year 1 Year 2 Year 3 Year 4 Year 5

Bogota trip distance car 9.0 10.7 11.5 11.9 14.2 12.3

Bogota trip distance taxis 7.0 9.7 9.3 11.1 11.8 10.8

Chongqing trip distance car 8.8 9.0 10.5 NA NA NA

Chongqing trip distance taxi 7.3 7.5 9.4 NA NA NA

Item Year 1 Year 2 Year 3 Year 4 Year 5

Bogota mode share buses 89% 90% 91% 92% 92%

Bogota mode share taxis + cars 10% 8% 8% 7% 8%

Chongqing mode share buses 61% 57% NA NA NA

Chongqing mode share taxis + cars 37% 35% NA NA NA


ACM0016: MRTS


Problem Areas: Summary

Leakage load factor and congestion: Costly and not necessary: idem to AM0031

Monitoring survey: Costly and could be made less frequent

Additionallity: Common practice is a killer


Monitoring Survey

Situation today: 1 large and 1 re-test survey per annum

Problem: Cost for surveys around 150,000 USD per annum

Analysis: Trip behaviour does not change dramatically in the

short period Over time more people have access to private cars

and use these thus conservative to take past surveys

Empirically results show little short term change Solution: Conduct surveys only every 3 years

or once per crediting period


Common Practice I

Situation today: less than 50% of cities > 1 million (or 0.5-1 mio) LUZ definition

Problem: Most countries in the world only have 1 city of this size.

If this 1 city established 50 years ago a tram line covering 1% of transit trips in the city no MRTS project is additional due to common practice

Common practice procedure is ONLY adequate for countries like China and India

This sole factor has excluded dozens of projects in many Latin American, Asian and African countries

LUZ is unclear and a concept not used outside selected EU countries

Comparison criteria is number of cities instead of asking how are urban trips made


Common Practice II

Solution: Common practice should indicate if something is widely and commonly used. Not the amount of cities is relevant but the share of MRTS in trips in the project city.

Comparison criteria: How are trips commonly made in the project city over time and what are the dynamics

Criteria Proposal: Share of public transit in motorized trips

Justification: if public transit looses ground then private transit is increasingly getting common practice

Share of MRTS in motorized tripsJustification: The role of MRTS in the respective city in motorized trips is considered

A project is common practice: If the share of public transit trips over total motorized trips shows an

increasing trend over the last 10 yearsand If MRTS in the city have more than 50% of motorized transit trips in the

project city


Further Information

CEO grütter consulting:Dr. Jürg M. Grü[email protected]

www.transport-ghg.com

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