Financing the paradigm shift ASAP. Supported by: Economic Policy Instruments to promote Sustainable, Low Carbon Transport. Holger Dalkmann 26 May 2010

Transcription

1 Financing the paradigm shift ASAP Economic Policy Instruments to promote Sustainable, Low Carbon Transport Supported by: Holger Dalkmann 26 May 2010

2 Money makes the world go round. but in different ways Paradigm Shift Source: M. Breithaupt Picture: M. Breithaupt Investments focused on private, motorised modes Transport costs do not include externalities Source: M. Breithaupt VS. Investments in sustainable, low carbon transport Transport users pay full costs

3 The millions, the billions and the trillions

4 Current Financing Paradigm: A systematic bias Private Flows Market signals Domestic Finance Budgetary planning ODA Strategic planning Climate Finance Earmarks Appraisal Regulation Project Appraisal Safeguards MRV Requirements Unsustainable Transport Sustainable Transport

5 Climate finance has (so far) not worked for transport Climate Funds (e.g. GEF and CIF/CTF) - Very limited scale in comparison to wider flows - Difficulty with practical access to funds (proving additionality, calculating incremental costs) Market mechanisms; - CDM with only two transport projects (0.3% of CERs) - No JI projects - ETS excludes transport Transport in CDM (% CERs)

6 Current Pricing Paradigm Transport prices that do not reflect costs to society: - Taxes and levies not linked to externalities - Subsidised / underpriced fuel Taxes on motor vehicles per kilometre USD (PPP adjusted, 1990) 0.6 Fuel tax/km Ownership tax/km 0.5 Acquisition tax/km Difficulty in implementing full cost pricing (e.g. road pricing) - Political constraints 0 Kuala Lumpur Singapore Tokyo Bangkok Seoul Jakarta Manila Hong Kong Beijing LA Copenhagen Source: Hirota and Minato (2003)

7 Fuel subsidies Indonesia (US$/l): 0.1 (1998) 0.27 (2005) 0.5 (2008) 300 billion US Dollar on fuel subsidies in 2008 (UNEP)

8 Need for a paradigm shift Implement full cost pricing Reform subsidies Shift priorities Provide additional funding Optimise usage Policy Institutions Technology Infrastructure Operation

9 Elements of the paradigm shift are already there! Road User Charges: London, Stockholm, Seoul, Singapore Employer contributions: France: French Versement Transport (VT) levied on employees salaries to pay for improvements to public transport, Belo Horizonte (PT tickets for employees) Land Value Capture (e.g. Copenhagen: Orestad) Next step: Mainstreaming good practice in developing countries Page 9

10 A menu of funding sources also available! Funding mechanism Avoid Shift Improve Transport oriented funding mechanisms Fuel tax Vehicle taxes Parking charges Road pricing Public Sector Fare revenue* Funding Public transport subsidies Business taxes Land related taxes and charges Grants, loans, tax transfers Advertising Private sector investments Green funding mechanisms Environmental taxation and subsidies CDM P PP PP ETS P P / P GEF P Multilateral/ bilateral funds P / P / P NAMA related funding** P PP P

11 A strategy to make this happen ASAP: ANALYSE the impacts of financing decisions on sustainability; SHIFT existing resources towards a sustainable direction; ADD / increase funding for those areas where resources are lacking; and PAY for the full costs of transport including environmental depreciation. Please see our White Paper comments welcome!

12 Everyone needs to act ASAP Developing country governments (national and local) - Shift their domestic budgets towards a sustainable direction - Request for international support in sustainable transport - Provide market signals to the private sector to invest in sustainable ways Multilateral Development Banks and bilateral development agencies - Align their grant support and lending criteria with sustainability objectives - Catalyse major changes in domestic priorities as a result Export credit agencies - Shift their focus towards facilitating the diffusion of sustainable transport vehicles - Promote sustainable infrastructure investments

13 Everyone needs to act ASAP UNFCCC and other climate finance institutions/mechanisms - Direct current and future climate financing mechanisms towards capacity building and policy support, to leverage further changes in other financial flows The private sector - Given the right market signals, invest in, innovate and create new technologies and services that are supportive of sustainable transport NGOs / civil society and academia - Lead the development of new methods to holistically assess the costs and benefits of transport interventions - Act as advocates for sustainable transport through campaigning, research and public communication

14 High hopes for ADB! STI can be enacted ASAP: Analyse the impact of ADB activities on carbon Shift lending to support low carbon transport Add support where currently lacking (through the STPF) Subsector Shares of ADB Transport Lending Actual, Pipeline and Target (%). Source: ADB, 2010 Pay for the extra funding via implementing full cost pricing

15 Thank you Holger Dalkmann(TRL) Programme Director Sustainable Transport and Climate Change To be published soon: GTZ Sourcebook: Financing Urban Sustainable Transport ( White Paper on Sustainable Transport ( Green Economy Report: Transport chapter ( Join the debate on our Google Group: (Registration required) Page 15