Transport and Carbon Finance Part I

1. Transport and Carbon Finance Part I Dr. Jürg M. Grütter jgruetter@gmail.com www.transport-ghg.com matching transport with carbon finance

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 grütter consulting

3. Current Carbon Finance Transport Projects of grütter consulting grütter consulting

4. Problem Areas • Methodologies • Validators • Additionality procedure grütter consulting

5. Methodologies • See discussion per methodology • In general very high complexity • In general far more is demanded in the transport sector than in other sectors grütter consulting

6. 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 grütter consulting

7. 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 grütter consulting

8. 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 grütter consulting

9. AM0031: BRTs in CDM grütter consulting

10. Problem Areas: Summary • Leakage calculations: • Costly and not necessary • Monitoring survey: • Costly and could be made less frequent grütter consulting

11. 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 grütter consulting

12. Leakage Load Factor Empirical grütter consulting

13. 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 grütter consulting

14. Congestion Impact Empirically grütter consulting

15. 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 grütter consulting

16. Monitoring Survey Empirical grütter consulting

17. ACM0016: MRTS grütter consulting

18. 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 grütter consulting

19. 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 grütter consulting

20. 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 grütter consulting

21. 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 trips Justification: 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 years and • If MRTS in the city have more than 50% of motorized transit trips in the project city grütter consulting

22. Further Information CEO grütter consulting: Dr. Jürg M. Grütter jgruetter@gmail.com www.transport-ghg.com grütter consulting