Transportation andGreenhouse Gas

Emissions

Transportation andGreenhouse Gas

EmissionsExploring Opportunities for the

Clean Development Mechanism in Chile

Highlighting Project ConclusionsDecember 2004

Transportation and Greenhouse Gas EmissionsExploring Opportunities for the Clean Development Mechanism in Chile

Project Overview

In December 2004, the International Institute forSustainable Development (IISD), Climate Change andDevelopment Consultants (CC&D) and the Center forClean Air Policy (CCAP) concluded a project that exam-ined possible scenarios for using the Clean DevelopmentMechanism (CDM) as a tool to promote sustainabledevelopment in Chile’s transportation sector. Mobilitychallenges, strong modelling capacity, commitment tothe CDM and excellent data all made Chile an ideallocation to test transportation solutions. The project,which began in October 2002, analyzed three case studies of how the CDM may be used to address tech-nological and demand-side solutions for reducing emis-sions from Santiago’s transportation sector.

Globally, the transportation sector is responsible for almostone quarter of carbon dioxide (CO2) emissions. This shareis increasing annually in many countries, particularly thosein the developing world. With the population in develop-ing countries expected to double by 2030, transportationemissions are a serious issue for urban centres.

This unabated growth of the transport sector highlightsthe importance of monitoring and reducing greenhousegas emissions. In Chile, as in most developing countries,transportation is the largest source of energy-related car-bon dioxide (CO2) emissions which are projected toalmost double by 2020 in the absence of mitigation meas-ures. Increases in emissions are accompanied by augment-ed risks of local air pollution; health impacts; congestion;noise pollution; traffic accidents; and more.

The Clean Development Mechanism (CDM) offers thepossibility to increase funding for transportation

2001 Global C02 Emissions by Sector (IEA, 2003)Source: CO2 Emissions from Fuel Combustion 1970/2001–2003Edition. Paris, IEA/OECD.

projects; enhance local planning and project evaluationcapacity; and expand technology transfer opportunities.However, there are difficult challenges to overcomebefore these projects become more feasible to undertake.

Case Studies: Highlights

Through three different case studies, the project examinedbaseline development and questions of additionality, mon-itoring and data requirements for technological as well asdemand-side emission-based reductions. Below is a briefdescription of each, as well as primary conclusions.

Bicycle Infrastructure

This analysis examined two scenarios: an individualbikeway and a comprehensive network. Key conclusionswere:

■ Individual bikeways do not appear viable as CDMprojects given current rules and the expected valueof certified emission reductions (CER).

■ A comprehensive bicycle network may be more feasiblewith higher savings and reduced monitoring costs

What is the CDM?

The Clean Development Mechanism (CDM), asoutlined in Article 12 of the Kyoto Protocol andelaborated in the Marrakech Accords, is a proj-ect-based mechanism that allows public or pri-vate entities to invest in greenhouse gas (GHG)mitigating activities in developing countries andearn abatement credits, which can then beapplied against their own GHG emissions or soldon the open market. In addition to reducingemissions, CDM projects have the dual objectiveof contributing to the sustainable developmentof the host country.

Source: Canada’s CDM/JI Officehttp://www.dfait-maeci.gc.ca/cdm-ji/cleandev-en.asp

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using regional travel data. This would likely requirea policy-based and/or sectoral CDM approach.

■ Improving the cultural image of cycling (e.g., with pro-motional campaigns) will be as important as highquality infrastructure.

■ Increasing bicycle use requires efficient land use poli-cies to enable shorter trips.

Bus Technology Switch

Transantiago is the transportation master plan for theSantiago metropolitan region; it outlines all major trans-portation infrastructure and investment requirementsover the coming years. Transantiago includes newrequirements for the efficiency of public buses. Thisanalysis assessed the feasibility of employing the CDMto promote additional technology improvements. Keyconclusions were:

■ It is possible to establish an acceptable methodologi-cal framework for the CDM.

■ An agreement on emission factors (for various tech-nologies) would minimize uncertainty and couldpotentially lower project development costs.

■ The marginal return may be too small to attract sig-nificant investment.

■ Improvements to bus technology offer lower GHGsavings than reducing the number of buses or dis-placing car trips.

■ Transantiago defines the future for public transporta-tion projects, and makes baseline development clearer(assuming the initiative unfolds as planned) by provid-ing assumptions about penetration of new technolo-gies and plans for municipal expansion.

Location Efficiency

In Santiago, urban area growth is occurring at a rate 70per cent faster than population growth. This rapid landconversion has important implications for transportationinfrastructure provision and air quality. The “locationefficiency” concept rests on the premise that influencingland patterns can produce fundamental changes in indi-vidual travel behaviour and thereby influence transporta-tion emissions. This analysis assessed the potential forreducing transportation GHGs by changing patterns ofurban development. Key conclusions were:

■ Location efficiency represents a significant opportu-nity for emission reductions, with considerable co-benefits.

■ The methodologies are data- and capacity-intensive.

■ Monitoring is difficult, though not impossible.

■ The current CER price is unlikely to provide anincentive against overall urban development costs.

■ Given the strong influence that development pat-terns have on travel behaviour, it is important topursue policies and measures to promote locationefficiency and better integrate transportation andland use planning.

■ Allowances for policy-based or sectoral CDM wouldmake location-efficient initiatives more feasible as datasources are more readily available at the regional level.

International Transportation Workshop

The Government of Chile and the project partners host-ed an international workshop on Transportation and theCDM in August 2004. Over 100 participants from thepublic, private and non-profit sectors of over 15 devel-oped and developing countries attended.

Participants agreed that given rapid growth in trans-portation emissions, and the clear sustainable develop-ment benefits from reductions in the sector, the CDMmust become more accommodating to transportationprojects. Progress is needed in the following areas:

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■ Expanding CDM capacity building efforts.

■ Managing uncertainties: accounting for leakage,building more robust data collection systems.

■ Better integrating the value of reduced traveldemand and co-benefits (e.g., congestion, local airquality, health) into urban development planning.

■ Simplifying methodological (additionality) require-ments for transportation projects.

■ Examining potential alternative structures for theCDM in a second commitment period (e.g., sectoralor metropolitan targets).

The workshop made clear that technological solutionsbring us only part of the way; demand-side measuressuch as public transit improvements and efficient landuse policies are crucial to slowing rapid growth in trans-portation emissions.

Two specific recommendations for Parties to the KyotoProtocol emerged from the workshop:

1) Parties request that Methodological Panel of theCDM Executive Board conduct an analysis onmethodologies for transportation and the CDM thatwould include an analysis of urban land use and theCDM as well as identify data and capacity needs.

2) Parties request that the United Nations FrameworkConvention on Climate Change (UNFCCC) host aformal workshop on issues related to urban trans-portation and climate change.

Cross-Cutting Issues

Despite their emission reduction potential, projects inthe transportation sector have been slower to developthan those in other sectors. Such projects, especiallydemand-side initiatives, face significant methodological

and financial barriers. The project examined some ofthese cross cutting issues:

Methodological challenges

One of the primary challenges with transportation proj-ects under the CDM is additionality. Misinterpretationof additionality rules has the potential to harm theCDM, either by granting credits where business-as-usualactivities are presented as projects, or by focussing onoverly strict interpretations and making beneficial proj-ects infeasible. A combination of high costs of trans-portation projects, low prices for CERs and low mone-tary value of co-benefits makes establishing additionalityvery challenging for transportation projects. Specific rec-ommendations on the issue of additionality from theresearch in Chile include considering committed fund-ing as an additionality measurement; initiatives (projectsor policies) planned but not funded should not be consid-ered “business as usual.”

Development of baselines and verification of emissionreductions are further stumbling blocks. Baseline scenar-ios must reflect actual circumstances, (vs. official stan-dards that in many cases are not being met) and shouldbe developed to reflect changes in technology and policy

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over time. Improvements in data collection; forecastingability; incorporation of non-motorized trips; and con-sideration of policy impacts over time can all contributeto stronger methodologies. Robustness must be balancedwith practicality and consideration must be given to themultiple co-benefits from transport projects.

Those projects that fit within current CDM rules havelimited impact on long-term emission trends. Projectsthat address fundamental structural change (e.g., busrapid transit and fuel economy standards) offer majorGHG reductions but do not fit well into the project-based structure of the mechanism.

CDM: Looking forward

As countries work toward reductions for the first com-mitment period, negotiations commence in 2005 for thenext commitment period. Further examination of thearchitecture post-2012 should take transportation intoaccount and provide greater sustainable developmentincentives for developing country participation byexpanding the scope of the CDM to cover sector-wideor policy-based activities.

To capture emission reductions from transportation underthe CDM, research confirms the need for reform of themechanism and how it is applied. Efforts should be madeto build upon the infrastructure already in place; introduc-tion of entirely new institutions would lead to high levelsof uncertainty and may undermine the currently fragilecarbon market. A range of reform options exists to pro-mote transportation within the CDM.

Parties should examine taking a sectoral approach to emis-sion reductions, which would help overcome the com-petitiveness concerns of industry related to the currentstructure of the CDM. A sectoral structure could incor-porate technology standards and may contribute tofuture additional reductions by non-Annex 1 Parties.Taking comprehensive approach at a metropolitan levelwould better address travel demand and lead to moresustainable and comprehensive reductions.

Incorporating the impacts of demand-side measures couldpotentially be addressed by viewing de facto new policies asprojects under the CDM. For example, project developerscould be eligible for tax credits if they undertake urbandevelopment in the city core, or industries purchasingfleets of vehicles could be eligible for subsidies for volun-tary measures such as upgrading to less GHG-emittingtechnology. Allowing policies as projects reverses the “per-verse incentive” concern by stimulating developing coun-tries to introduce measures that address GHGs. As instandard projects, proponents would need to prove thatthe value of the CER bridged a barrier to the projectgoing forward. While the difficulties of double countingand measurement certainly would need to be addressed,there is considerable opportunity for policies as projects toreduce GHGs in the transportation sector, particularlythose related to travel demand.

Just as small scale and renewable projects are recognizedfor their sustainable development benefits and havereceived special treatment under the 2001 MarrakechAccords, alternate methodologies and procedures could bedeveloped for projects in the transportation sector.Further guidance on additionality requirements fortransportation projects could be provided that wouldfacilitate additional project development.

Finally, financing for CDM project development contin-ually serves as a barrier. Additional incentives, increasedsupport from Annex 1 Party governments, valuation ofco-benefits and better use of Official DevelopmentAssistance (ODA) are all needed. Climate change (bothmitigation and adaptation) and sustainable transporta-tion should also be more fully integrated into the fund-ing frameworks of the International Monetary Fund, theWorld Bank, regional development banks and officialPoverty Reduction Strategy Papers.

Sustainable transportation

Reducing the length and number of trips is seen as a keyissue for the future relevance of the CDM. Technologyprojects that focus on vehicle efficiency and fuel carboncontent do not address the full transportation picture—fundamental change in transportation emissions requirespolicies and measures to slow growth in travel demand.

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Enhanced public transportation and more efficient landuse development patterns can have very significantimplications for travel-related emissions at the regionaland neighbourhood levels; this is primarily a “behavioural” change, not a technological one.

It is important to recognize the high opportunity costs ofnot investing in sustainable transportation infrastructureand pursuing complementary land use policies. Given therapid growth in car ownership and use, planning early fortransportation alternatives is crucial. Current infrastruc-ture, investment and development decisions have a majorimpact on future emissions and implementing sustainablesolutions (bicycles, public transport) now can advancemultiple public goals. These changes, however, will requiredeliberate planning, investment and political will; theCDM can only play a small part in a larger framework ofplanning for sustainable development.

While international assistance through ODA or CDMcan kick-start reform, it cannot force local change. Localgovernments need to make the final decision for moresustainable transportation. Long-term sustainability solu-tions are only politically viable if they are accompaniedby tangible short-term benefits (e.g., health, congestionrelief ). Metropolitan “visioning” processes can be a pow-erful tool to educate leaders and arm them with theinformation needed to champion implementation.Further, allowing for policy-based or sectoral CDM

could better accommodate structural changes such ascomprehensive transit and land use strategies, fuel econ-omy standards and renewable fuel standards.

These and other issues are explored in further depth inthe final report of the project, available in January 2005.

Contact Information

For further information on the project please contact:

Jodi BrowneInternational Institute for Sustainable Development +1 (613) 238-9821jbrowne@iisd.ca

Eduardo Sanhueza Climate Change and Development Consultants+56 (2) 209-1770j.sanhueza@mi.cl

Steve WinkelmanCenter for Clean Air Policy+1 (202) 408-9260swinkelman@ccap.org

For more information on the project, including case stud-ies and materials from the international workshop, see:http://www.iisd.org/climate/south/ctp.asp

Transportation and Greenhouse Gas EmissionsExploring Opportunities for the Clean Development Mechanism in Chile

This project is undertaken with the financial support of theGovernment of Canada provided through the CanadianInternational Development Agency (CIDA).

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