Connections Transport & ICT 96249 Reducing Greenhouse Gases GHG Analysis in Transport Andreas Kopp The World Bank is applying to transport initiatives a new and distinctive method of 23% Transport’s share of greenhouse gas (GHG) analysis as part of its GHG emissions from comprehensive GHG accounting policy. fuel—projected to become much larger In transport, choices by travelers determine without expanding usage—and a fundamental trend in much of low-emissions mobility the world is strongly boosting GHG emissions: the massive rise in motorization as household incomes and technical advances make it affordable. This tendency will push transport fuel emissions much higher unless projects sharply expand the opportunities and incentives for users to adopt low-emission modes. The World Bank’s GHG analysis for transport shows whether a given transport project can help lower the trajectory of the sector’s GHG emissions. A central feature is an estimate of the wider social costs of emissions under various modes—for example, air pollution and accidents—as well as climate change. Including them greatly increases the demonstrated benefit of emissions- reducing projects and thus will also help accelerate the move to a sustainable transport sector. Unlike other sectors, transport requires a behavior- moves above a lower middle-income threshold: oriented method of GHG accounting. In activities a massive increase in motorization (including a such as manufacturing and power generation, the switch to larger vehicles when fuel efficiency makes project itself can largely determine the emissions it affordable). The trend is strongly raising the outcome. In transport, choices by users determine growth trajectory of GHG emissions. Without policy outcomes. Modes and use of transport continu- action, the transport sector’s share of GHG emis- ally change—witness the rising use of fuel-efficient sions from fuel will rise much higher—perhaps to cars, car sharing, and, in some parts of the world, more than half by midcentury. nonmotorized transport. GHG analysis in transport must therefore understand how user behavior will Technology innovations are necessary, but alone evolve both with and without a proposed project. they cannot halt the prospective rise in GHG emis- sions. Automobile travel, attractive to consumers individually, causes problems for all, particularly Targeting Motorized Transport in cities: the exponential rise of time lost in traffic, the high health costs of local air pollution, and road Transport policy itself must confront a fundamental accidents that take a global toll of 1.2 million lives trend in areas where average household income each year. MARCH 2015 NOTE 08 To address these trends effectively, GHG analysis The Analysis Embeds Carbon Costs must be able to realistically show how emissions and other costs associated with motorized trans- To cut emissions in practice, investments in low-emis- port can be avoided without damaging transport’s sion modes must often include a demand manage- essential role in development, trade, and the func- ment component. Will drivers shift to mass transit? tioning of cities. Inducing the shift will require a price signal to users that reflects the total costs of GHG emissions. GHG Analysis Fuels Smart Investment To that end, the World Bank has defined a path of current and future carbon prices reflecting the Transport infrastructure and the commercial and locality-based social costs of carbon—congestion, residential patterns it shapes are long lived. There- pollution, and accidents as well as climate change. fore, the modes of travel established by today’s The new method of analyzing GHG emissions in transport investments will largely be fixed for the transport quantifies the user response to such next 50 to 70 years. An essential element of trans- prices. It can thus identify the policy signals needed port-specific GHG analysis is a long-term view that to induce shifts in mode and technologies that will accounts for the evolving constraints on fossil fuel achieve targeted reductions in GHG emissions. supplies, costs, and usage as well as other aspects of user choice. Ultimately, the GHG analysis quantifies the mone- tary benefits of lowered emissions over a given pe- By evaluating a project against a baseline that ac- riod with a calculation that multiplies the physical counts for the long-term picture, GHG analysis can reduction by the social cost of carbon. The closer show whether a particular investment—whether in the project comes to attaining this value added, the road traffic flow, mass transit, inland waterways, or greater will be the internal rate of return. freight and passenger railways—can realistically cut emissions over a given period. It will be especially influential in low-income countries with relatively Leading the Way To a Low-Emission little infrastructure, where it can help inform a strat- Transport Portfolio egy of lower-emissions transport investments that will produce major savings as economic develop- Quantifying the social value of carbon reductions ment progresses. gives transport investments a much larger role in policies to mitigate climate change. The pivotal fact Likewise, in the case of a country with a highly de- is that the wider social costs encompassed in the veloped road sector, the analysis can help sort out GHG analysis (the effects of congestion, local air which investments will or will not help cut motor pollution, and road safety risks) are much larger for vehicle emissions. In areas with congested traffic, a given locale than climate effects alone. Account- emissions per vehicle-kilometer are extremely high. ing for them gives a critical boost to the benefit- GHG analysis can support projects in these areas if cost ratio of emission-reducing projects. That is they can be shown to improve traffic flow without why allocating transport investments on the basis simultaneously inducing more traffic and higher of such a broad measure of value added should be emissions—a bounce-back that will likely follow in effective not only in reducing GHG emissions, but the absence of measures to induce the use of alter- also in accelerating the transition to a sustainable native modes. transport sector. For more information on this topic: http://www.worldbank.org/en/topic/transport/brief/low- emission-transport Connections is a weekly series of knowledge notes from the World Bank Group’s Transport & Information and Communication Technology (ICT) Global Practice. Covering projects, experiences, and front-line developments, the series is produced by Nancy Vandycke, Shokraneh Minovi, and Adam Diehl and edited by Gregg Forte. The notes are available at http://www.worldbank.org/transport/connections MARCH 2015 NOTE 08