50034 v2 THAILAND : MAKING TRANSPORT MORE ENERGY EFFICIENT Thailand-World Bank Country Development Partnership for Infrastructure March 2009 Executive Summary ThisstudyaddressesthequestionofhowThailand'stransportsectorcanbecomemore energy-efficient.Itassessestheperformanceofthetransportsectorinenergyutilization, analyzeswhereinefficiencieslie,andproposesoptionsinordertoimprovetransportenergy efficiency. Improvedenergy utilization isimperative forThailand's national energysecurity and continued economic prosperity. Historically, Thailand has not performed well in terms of energyefficiency.Totalenergyintensity,definedastotalfinalenergyconsumptionperunitof GrossDomesticProduct(GDP),ishighcomparedtoothercountriesandatleasttwicethat ofGermany,JapanandtheUSA.Moreover,Thailand'stotalenergyintensityhasremained moreorlessthesameoverthepastthreedecadesdespitetheavailabilityofmoreenergy efficienttechnologies.Thisisinsharpcontrasttomanyothercountriesthathavereduced theirenergyintensityoverthesameperiod.ThisimpliesthatThailandhashighpotentialto achievelowerenergyintensity. Atpresent,twosectors,`manufacturingandmining'and`transport',accountfor70percent oftotalenergyuseinThailand,witheachhavingapproximatelyanequalshare.Petroleum productsaccountforhalfofthetotalfinalenergyconsumptioninThailand.Almostallenergy usedbythetransportsectorcomesfrompetroleumproductswhichrepresent72percentof thetotalconsumptionofpetroleumproductsinThailand.Seventy-sixpercentoftransport energyisconsumedintheroadsector.Withlittlefueldiversification,andwithonlyasmall amountofenergycomingfromrenewableenergysources,thesecurityofThailand'senergy suppliesishighlyvulnerabletopossiblefuturesupplyconstraintsorrapidpriceincreases. Thailand'stransportenergyintensity,definedastransportenergyconsumptionperunit ofGDP,ismuchhigherthanfoundinChina,Germany,Japan,SouthKoreaandtheUSA. Morestrikingly,ithasremainedatahighlevelbetween1995and2006,whilethecomparator countrieshavebeenabletoreducetheirtransportsectorenergyintensity.Clearly,Thailand's transportsectorhassignificantpotentialtoimproveitsenergyefficiency. Thestudyfoundthattheeconomicstructureandspatialdistributionofeconomicactivities inThailanddonotimposeextraordinaryrequirementsontransport.Otherfactors--mainly thehighlevelofmotorization,heavydependenceonroadtransportandlackoffueleconomy standards--contributetothehighleveloftransportenergyintensity.Roadtransportoverwhelmingly dominatesfreightandpassengertransportmarkets,whilerailplaysaverysmallanddeclining role.ThemajorityofThailand'svehiclesusediesel,andfueleconomystandardsarenot appliedtogasolineordieselpoweredvehicles.Thetruckfleetisonaveragequiteoldand fuel-inefficient.Duetolowtaxes,fuelpricesarerelativelylowcomparedtoJapanandWestern European countries. The estimated fuel efficiency of Thailand's passenger vehicle fleet todayisapproximately25to30percentlowerthanthelevelsfoundinJapanandWestern Europe.TrafficcongestionintheBangkokMetropolitanRegion(BMR)wouldalsocontribute significantlytoThailand'shightransportenergyintensity. Asapolicyoption,pricingfuelsonthebasisoftheirlong-runmarginalcostsisexpected tohaveasignificantandsustainedeffectontheimprovementintransportenergyefficiency inThailand.However,recognizingthepoliticaldifficultiesinimplementingacomprehensive fuelpricingpolicyintheshorttomediumterm,thestudyalsoexamined16otherpolicyand technologyoptions.Thesearegroupedintothefollowingfivecategories: · Fuel efficiency and fuel switching:upgradeenginetechnologiesforbusesandtrucks, andusenaturalgasselectivelyinvehiclefleets,especiallycommercialvehicles. · Better vehicle standards:establishand(progressively)tightenfueleconomystandardsof passengervehiclestomatchEuropeanstandards,andimprovelogisticspracticesinthe road-basedfreighttransportsectortobettermatchtrucksizestothetaskandoperating environment. · Rail investment and reform:reformandmodernizetherailsector,expandtheroleofrail infreighttransportandlong-distancepassengerservices;andintheBMR,expandMass RailTransit(MRT)andimproveitsintegrationwithbusservices,andimproveaccessibility andwalkabilitytobusstopsandmassrapidtransitstations. · Better urban bus services:increasethespeedandqualityofbusservicesthroughexpansion ofBusRapidTransit(BRT)andinvestmentinnewfleetwhichwillbringimproved passengercomfort,betterfuelefficiencyandloweremissions. · Policy and pricing measures:upgradethevehicleregistrationsystemandassociated chargesthatreflectactualvehicleuse;improvetrafficmanagement;andpromotemore efficientbusservicesthroughreformsthatencouragecompetitionandnewinvestment. Theseoptionsareessentialelementsinanyefficienttransportsectorstrategy.Mostof themarewin/winoptionsintermsofbothtransportperformanceandenergyefficiency.A simplequantitativeassessmentoftheseoptionsindicatesthatifalloptionsaresuccessfully implementedinThailand,aboutone-thirdofthetotalannualtransportenergyusecanbe reducedin2025comparedtothe"businessasusual"scenario.Thesavingswouldbemore substantialifacomprehensivefuelpricingpolicyisalsoimplemented. Toimplementtheaboveoptionsrequiresstrongcommitmentandseriouseffortbythe governmentespeciallyinovercomingpoliticalandinstitutionalimpedimentsthatpreferthe statusquo.Fuelpricingoffersgreatpotentialtoinducefavorablebehavioralchangeinfuel usageandmodalshift.Appropriatefuelpricing,andvehicletaxesandchargeswillunderpin thetechnologyandpolicyoptionsbycreatingtherightincentivesfortransportfirms,logistics providers,andhouseholdstocarefullyconsiderthelifecycleenergyconsumptionassociatedwith theirchoicesoflocation,activitypatterns,modesandvehicles.Toimplementthemajorityof optionsrequiresstronginstitutionalcapacitytoleadandcoordinatetheconcertedeffort.This maybeamajorchallengeforthegovernment.Thailand'sownsuccessinphasingoutleaded gasolineandimprovingBangkok'sairqualityinthe1990sprovidesmanyrelevantlessonsfor applicationtotheimplementationofthetransportenergyefficiencyagenda. THAILAND : MAKING TRANSPORT MORE ENERGY EFFICIENT The World Bank Office, Bangkok Siam Tower,30th Floor, 989 Rama 1 Road, Pathumwan, Bangkok 10330 Tel.: +66 (0) 26868300 Fax: +66 (0) 26868301 www.worldbank.or.th Office of The National Economic and Social Development Board 962 Krung Kasem Rd., Pomprab, Bangkok 10100 Tel.: +66 (0) 22804085 Fax: +66 (0) 22813938 www.nesdb.go.th