Transcript World Development Report 2009 Spatial Disparities

TURNING THE RIGHT CORNER
ENSURING DEVELOPMENT
THROUGH A LOW-CARBON TRANSPORT SECTOR
Andreas Kopp
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Transport is crucial for development
• There is not necessarily a conflict between low carbon
intensity and income growth (fast growing Asian
countries)
• Low-carbon transport is not only a matter of progressive
engine technologies
• Affordability, low transport costs depend on adaptation
and mitigation policies now.
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Figure 1. Countries have a choice: energy
consumption in road transport can be low at high
per capita incomes
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Outline 1/2
• A narrow climate change agenda limits the chances for
reform in transport
– Technical change is not the solution to high emissions
– Deeper cuts in emissions depend on changing
behavior and mobility patterns
– Deeper cuts depend on early action in infrastructure
policies
• Financing costs of adaptation and mitigation are high
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Outline 2/2
• Financing schemes of a narrow climate agenda have
failed in transport
• Inclusion of “co-benefits” reduces the costs of change
• Fiscal measures to correct for external costs self-finance
reform
• Fiscal measures make a change in the long-run
• A broad reform agenda requires policy coordination
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Technical change is not the solution to high
emissions
• Even under optimistic assumptions on technical change
of engine technologies, emissions will not be drastically
reduced
• Deep cuts in emissions depend on breakthroughs in
biofuel technologies and fuel cell technologies (and CCS
in energy)
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Figure 2. Business as usual will make transport the
dominant consumer of oil
Oil consumption increases in the medium term…
Source: IEA (2009).
and in the long
Source: Clarke (2007).
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Figure 4. The optimistic view: reductions in
transport related CO2 emissions by technical
standards
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IPCC Deep cuts only after 2030
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Carbon pricing induces behavioral change…
Carbon price paths depend on biofuels and CCS
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Figure 6. …and still transport becomes the main
emitter, even with carbon pricing leading to a
greenhouse gas concentration of 450 ppm
Source: Clarke and Calvin (2008).
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Figure 7. The pessimistic view: transport remains a
major CO2 emitter, even with carbon capture and
storage
With CCS
Without CCS
Source: Luckow and others (2010).
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Deeper cuts in emissions depend on changing
behaviors and the pattern of mobility
• Inertia due to slow changes in infrastructure stocks
requires early action
• Demand for modal attributes of transport services leads
to inertia in consumer behavior
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Deeper cuts need a broad reform agenda:
Long lifetimes of infrastructure require early action
– Early stages of infrastructure development create a
technological “lock-in”.
– Early emphasis on individual car use leads to
dependency on technical change in engine
technologies:
• Infrastructure investment is sunk: existing
infrastructure has no opportunity costs
• To reduce emissions, costs of changing engine
technologies is compared to costs of building up
alternative modes
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Deeper cuts need a broad reform agenda:
Supply measures alone are not enough
• Energy intensity by mode, USA 1970 – 2005
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Financial needs for adaptation and mitigation are
high
Narrow mitigation agendas are costly
• Financing requirements for green transport will add to
often existing funding deficits
– Incremental costs for the adaptation to climate
change estimated $ 1.6 to 26 billion annually,
substantially higher with accounting for closing for
infrastructure gap and maintenance deficits in DCs
– Mitigation costs are estimated to be $ 100 billion
annually between 2010 and 2020, reaching $ 300
billion in 2030 (IEA), with no change in mobility
patterns
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Financing mechanisms based on a narrow climate
change agenda have failed in transport
• Transport has been neglected by carbon finance
– CDM: 3 of more than 2200 registered projects are in
transport, investment share 0.11 percent
– GEF approved 28 transport projects in 20 years,
attracting 6.4 percent of all resources
– Country programs of Clean Technology Fund have
16.7 percent investment in transport on average
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Financing mechanisms on a narrow climate change
agenda have failed in transport
• Reasons for underinvestment in greening transport
– Mitigation outcomes are more expensive in transport
than in other sectors when focusing on one dimension
of external costs
– Success of supply side measures, infrastructure and
operations depends on change in demand
– Implementation of complementary demand side
measures is uncertain
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Incentives based on narrow climate change agenda
are insufficient to induce modal shift
• Incentives of a narrow climate change agenda will not
change mobility patterns
• High carbon prices lead to small changes at the gas
pump
• A broad reform agenda in the sense of the World Bank
transport business strategy changes the picture.
• With a broad reform agenda the transition to a lowcarbon sector is no longer more expensive than in other
sectors.
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Inclusion of “co-benefits” changes the story of the
relative costs of a transition to a sustainable sector
• Neglected external costs:
–
–
–
–
Congestion costs
Health costs of local air pollution
Accident costs, road safety
On top of Climate change effects
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Inclusion of “co-benefits” changes the story of the
relative costs of a transition to a sustainable sector
• Empirically external costs of climate change are not
dominant form of external costs of transport , US 2000
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Fiscal measures to correct for the external costs of
transport help financing the transition to green
transport
• Implementation of fiscal incentives will lead to fiscal
surplus: GHG emissions
– Removal of subsidies for fossil fuel use in transport is
happening in some countries, Iran could save $ 20
billion annually
– Implementing a carbon tax could yield
$ 10, 24 or 145 billion with a carbon price of
$ 20, 30, 300 per ton of carbon in the US.
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Fiscal measures to correct for the external costs of
transport help finance the transition to green
transport
• Implementation of fiscal incentives equivalent to
accounting prices will lead to fiscal surplus: local air
pollution
– Local air pollution charge for Los Angeles area
(district 7 of Caltrans) of 8 cents per mile would lead
to $ 40 billion annually for the district
– Health costs are not lower in cities of developing
countries, estimated $ 3.5 billion for Beijing.
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Fiscal measures lead to change in the long-run
• North Americans consume 4 to 6 times more fuel per
head in transport than Europeans.
• Had all OECD countries had the fuel prices of North
America fuel consumption and emissions would have
been 30 percent higher throughout.
• Had all countries had the taxation level of UK or NL, fuel
consumption would have been 44 percent lower on
average
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Summary
• Mobility is essential for economic development.
• Reducing fossil fuel use now will ensure low transport
costs in the long run.
• Greening of the sector will contribute to funding deficits
of the sector in many countries
• Implementing fiscal measures based on charges for
external costs generates fiscal surplus and avoids
mismatch of supply and demand
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Summary
• Consequences for project work
– National plans for low-emission transport
Example of Georgia
– New evaluation framework
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Thank you!
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