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Carbon finance delivers critical support to mass transit schemes

First publishedin ITS International
2010 September October
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Mexico City's Metrobús on a dedicated lane
Mexico City's Metrobús on a dedicated lane Photo credit: Center for Sustainable Transport in Mexico (CTS-Mexico)

David Crawford investigates carbon finance in transport

World Bank carbon finance grants are delivering critical support to major mass transit deployments in emerging and developing economies. Only recently operative in the transport sector, the Clean Development Mechanism (CDM, see panel) is designed to generate additional income streams and improve internal rates of return on projects funded from public- and private-sector sources.

Cartagena, the fifth-largest city in Colombia, is the most recent urban complex to secure CDM support for improving its public transport. The TransCaribe public-private partnership is replacing an outworn and inefficient bus network with a modern Bus Rapid Transit (BRT) system.

Modelled on the World Bank's pioneering Emissions Reduction Purchase Agreement (ERPA) which is supporting Mexico City's Metrobús BRT scheme, TransCaribe is due to be fully operational by 2013. It is expected to save an annual 38,028 tonnes a year of emission credit-earning Greenhouse Gases (GHGs) over the period to 2021, by moving at least the same number of passengers in fewer, larger vehicles along rationalised routes planned to deliver lower travelled distances.

Tendered operators will run large low-emission vehicles (to at least Euro IV standards) on a trunk-and-feeder basis, with 15km (9 miles) of segregated and dedicated lanes, centralised despatch and integrated fare payment (off-board on trunk routes) cutting journey times. Modal shift from car use is not a core element of the initial concept.

TransCaribe does, however, see the scheme attracting and retaining new passengers, so delivering further gains in energy efficiency and GHG emission reductions. Its carbon funding is earmarked for essential spending on systems for monitoring TransCaribe's performance and passenger demand, to ensure optimal use of the network and assemble data necessary to plan for future expansion.

Mexican success

The pathfinder Metrobús scheme being operated by the Mexico City Metropolitan Area (MCMA) has involved the development of the first surface mass transport corridor in the Mexican capital. It is already earning CDM emission reduction credits and had its necessary CDM methodology approved earlier in 2010.

It was adopted as a cost-saving alternative to a metro in meeting the transport needs of one of the world's most congested cities, with a population of 18 million people and six million cars. Implemented initially along 19km of the 34km (11.7 of the 21-mile) length of the north-south axis of Insurgentes Avenue, the longest street in the city at 29km (18 miles), and later complemented with an east-west route, it currently carries over 350,000 passengers a day. By the end of 2009, 15 per cent of users were also car owners - taken by the MCMA as welcome evidence of modal shift. Additional lines under way in 2010 will add a further 43 service kilometres (28 miles).

Metrobús's elegantly designed stops are set typically at 450m (1,400-foot) intervals with clearly indicated pedestrian and bikeway access links. Serving them is a fleet of 80 diesel-fuelled articulated buses, with engines operating to Euro III and Euro IV environmental standards.

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Manila's EDSA at a crawl
Manila's EDSA at a crawl
Run by concessionaire companies, these have replaced some 350 older vehicles on 15 routes. The buses run in strictly implemented, dedicated lanes under a central control system for vehicle positioning and service programming, while passengers have access to fully automated smartcard-based at-stop fare payment using rechargeable cards.

The MCMA is using the revenues under its ERPA for two main purposes: to build and maintain bicycle parking at key stops in order to encourage green connecting travel; and to finance the systematic monitoring of airborne pollutant levels and other environmental performance indicators, to ensure the optimal performance of the system and provide essential data for future expansions and replications. There are long-term plans for a 33-corridor network.

In 2006, the Mexican Instituto Nacional de Ecología (INE) calculated that the Metrobús corridor in Insurgentes Avenue alone would provide social net benefits with a net value of US$12.3 million and deliver 280,000 tonnes of CO2-equivalent GHG reductions over the period to 2019. A 2008 review by the INE found that the new system had resulted in reductions in commuters' exposure to CO2, benzene and PM2.5 emissions ranging between 20 per cent and 70 per cent; while shorter commuting times brought further falls.

The results, says the INE, suggest that BRT can be "an effective means of reducing human exposure to traffic-related air pollutants and associated health impacts". It concludes that expanding the Metrobús system to a 33-route network "would provide beneficial synergies. This in turn will increase the mode change effect observed in the current Metrobús corridor, increasing the environmental and economic benefits of the system".

In 2009, Metrobús won the Roy Family Award for Environmental Partnership, given by the John F. Kennedy School of Government at the US Harvard University, for its success in reducing journey times by 40 per cent and reducing CO2 emissions by 80,000 tonnes a year.

Metrobús is a cooperative effort by World Bank, the World Resources Institute Center for Sustainable Transport (EMBARQ), Mexican non-governmental organisation CEIBA, Mexico City's municipal government, and the Shell, Caterpillar and Hewlett foundations. It forms a core element in the Transit-Oriented Development (TOD) concept of regenerating comunities within 1km (0.62 miles) of mass transit being progressed by EMBARQ partner CTS-México.

Manila hitch

Not all carbon finance projects, however, are proceeding smoothly. Summer 2010 was to have seen the implementation of an ERPA signed in January 2010 with the Metro Manila Development Authority (MMDA) of The Philippines' capital.

The deal promised financial support to the Epifanio De Los Santos Avenue (EDSA) Bus Reduction Project (BRP), with its aim of substantially reducing congestion and GHG emissions by optimising bus performance along a busy commuter link between Manila's northern and southern sectors. The solution proposed involved introducing RFID bus identification technology for better management of dispatch and limiting dwell times at stops, with vehicles being given clearly specified unloading and loading times.

Carbon finance

The World Bank's Carbon Finance Unit (CFU) uses funds contributed by governments and companies in OECD (Organisation for Economic Co-operation and Development) countries to purchase project-based GHG emissions reductions in developing and newly industrialised ones. It thus allows OECD members with emission-reduction or -limitation commitments under the UN's Kyoto Protocol to implement relevant emission-reduction projects elsewhere.

Over a pre-agreed period, the World Bank purchases the emission reductions - in the form of credits, each equivalent to one tonne of CO2 - on behalf of contributors, in effect in commercial transactions through a CFU carbon fund. The recipient projects benefit from additional income streams and the ability to improve internal rates of return; while contributors can then count the reductions purchased towards meeting their own Kyoto targets Transactions take place within the framework of the Protocol's Clean Development Mechanism (CDM) with payments made at agreed intervals on a 'pay as you deliver' principle once a third-party auditor has verified the emission reductions.

The CDM, operational since 2004 as an instrument specially created to promote projects designed to reduce CO2 emissions, is the first global environmental investment and credit scheme to deliver a standard emissions offset instrument.

The World Bank sees carbon finance as a key means of leveraging new private- and public-sector investment for projects - including, now, ones in the transport sector - that can contribute to mitigating climate change.
The World Bank has, however, recently served the MMDA with notice of termination of the ERPA. It cites the rejection by the United Nations Framework Convention on Climate Change (UNFCCC) of the authority's proposed CDM methodology.

The ERPA provided for the purchase from the MMDA of €364,000 worth of GHG emission reductions over the period 2011-2013. The money was to defray the costs of operating and maintaining the RFID system.

The BRP is not yet dead, however. The World Bank has now referred it to the alternative voluntary buyers' market of companies that have voluntarily made commitments to compensate for their GHG emissions by acquiring emission reduction certificates from additional GHG reduction projects.

One problem to be resolved has resulted from delays in fast-tracking the development of the RFID backbone concept. Much will depend on the priorities of new MMDA chair Francis N. Tolentino; but special operations director Ramon Santiago has told ITS International that he is "hopeful".

Some kind of continuation project is clearly important to reduce both the numbers of buses in transit on EDSA and queuing times at stops, so alleviating congestion and increasing average speeds of travel. Most Manila residents make use of public transport to travel to work, schools and shops.

As and when implemented, the system will be available only to authorised operators and their fleets (up to 30 per cent of the 5000 vehicles plying EDSA are illegal 'colorums'). It will enforce operator franchise and traffic rules and prevent the arbitrary trip-cutting and out-of-line operations that currently plague public transport in Manila.

Companies in this article

Instituto Nacional de Ecología
ITS International
World Bank
Metro Manila Development Authority

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