91. The Ministry of Transport and Ministry of Environment expect to complete the transport section of the National Climate Change Plan by December 2011 with input from other agencies and partners. Part of the work in the Phase 2 of the current NLTA would support development of key input into that plan drawing on the findings and recommendations of this study. The focus of this near-term input is expected to be: • What is the cumulative potential for a fleet modernization strategy for freight transport in Brazil? This
could be addressed by leveraging the information being collected for the pilot tests and extend the methodology and scenario analysis used under the World Bank’s Low Carbon Study for Brazil. • What should be prioritized in the short-term and with limited resources? Estimating the time and
resource requirements for the strategies described previously would help inform decisions about priorities within such plans as the PNLT.
• What can be done about barriers such as lack of financing and information for specific segments of the market? The World Bank might encourage a dialog between government agencies and industry to identify the opportunities that would allow the potential to accelerate the “greening” of the truck fleet and sector as a whole to be realized.
5.2
An Operational Agenda
92. The immediate operational priority for Phase 2 of this NLTA includes the following activities:
• Completion, evaluation, and dissemination of ongoing pilot tests of key retrofit technologies and practices with the potential to improve energy efficiency of road-based freight transport;
• Support for the development of the transport section of the National Climate Change Plan through technical input and a stakeholder workshop;
• Policy dialog with government and other stakeholders to identify a national level program to institutionalize freight sector energy-efficiency incentives and investments.
93. Additionally, the World Bank is well placed to support Brazil to develop and implement a comprehensive green freight strategy as identified in Section 4. The potential elements of this support are described below.
94. Technical assistance to support strategic and regulatory analysis.
• Green freight strategy and scenario analysis as input into the National Climate Change Strategy
There are a number of technical assistance studies identified in Section 4 that can be implemented as technical assistance in Bank-financed transport loans. The key recommended studies which to be discussed with government and partners are:
• Incorporating climate considerations and opportunities into PNLT investment strategy – developing a strategic model to evaluate carbon benefits of investment options
• Trucking industry study and database – conducting a study of industry structure, estimating carbon intensity of industry and developing monitorable strategies towards a fleet with lower carbon-intensity • Regulatory framework for trucking – an operational framework to position trucking within a green growth
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• Development of recommendations for a vehicle scrappage policy and replacement program
• Development of multi-modal and internationally harmonized carbon-reporting protocols and comparative evaluation of emissions and life cycle costs for different modes considering the characteristics of the Brazilian sector
• Support for a private sector engagement strategy - including design of a voluntary program and other firms of engagement, supporting capacity building and dissemination through a ‘green freight’ web site, meetings, and technical visits.
• A strategy to support 2nd
• Logistics modernization study - detailed study of the current logistics brokerage industry in Brazil with identification of regulatory, capital and related market barriers; piloting a modern, web-based brokerage platform
generation fuels and advanced technologies
95. Technical assistance to support operational measures
• Support for the development of a voluntary partnership program for the freight industry (based on SmartWay
. Additionally, technical assistance studies can be used to support the development of key programs identified in Section 4. These include:
SM
• Support for feasibility and detailed planning support for low-carbon infrastructure investments (priority road improvements, strategic rail and inland waterway assessments);
and other comparable programs) including setting up: (i) a shipper liaison and energy-use assessment program; (ii) a carrier liaison and energy-use assessment program; and (iii) a supplier management and technology certification program;
• Recommendations for an innovation program that includes: (i) liaison with private sector entities to support innovative pilots; (ii) support for development and deployment of innovative construction methods and materials; and (iii) grant programs that promote innovative solutions focused on the environmental performance of the freight sector.
96.
• Supporting the evaluation and dissemination of additional technology demonstrations, including vehicle retrofit technologies, next generation fuels and propulsion systems, advanced management practices. Pilots and small-scale financial support.
• Support for revolving funds and other financial instruments to support deployment of proven low-carbon technologies in the marketplace. Such a program would support the development of effective, market- based mechanisms to support financing of the equipment, as well as the development of the market for the supply of green technologies. Such a incentive program could be structured in different forms including: developing a risk-sharing facility, where-bye participating banks can mitigate their exposure when lending to higher-risk SMEs and transaction costs of lending to high-risk (usually small
undercapitalized) truckers can minimized with streamlined processes; (ii) rebate schemes to lower the up-front cost of procurement (with the expectation that as technologies become more widely available, prices will fall, and rebates would only be needed in the short-term); and (iii) provision of performance- based payments that will provide trucking companies an incentive to adhere to the operating and maintenance principals associated with maximizing the benefits of such technologies, and reward them for participating in reporting and monitoring schemes.
• Support for the design and implementation of a pilot scrappage fund and technology innovation fund. 97. All of these forms of assistance can be mobilized as components in existing transport sector lending
operations or packaged together as a Global Environmental Facility grant project (see box 5.1 for description of a similar project approved by the GEF in China). Furthermore, various non-lending technical assistance can also be financed separately by other programs and related knowledge products.
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Box 5.1 The GEF GUANGDONG GREEN FREIGHT DEMONSTRATION PROJECT
This project was approved by the World Bank and GEF in April 2011. The GEF-financed project (see Table below for financing structure) has the objective of (a) demonstrating the global and local environmental benefits of the application of energy efficiency vehicle technologies and operating techniques, and (b) support development of sustainable measures for improving energy efficiency and reducing greenhouse gas emissions in the road freight transport sector in Guangdong province in China.
The project is being executed by the Department of Transport (DoT) in the Province as the leading agency for the preparation and implementation of the Project.
Key activities of the project include:
• Component 1: Green Truck Technology Demonstration. Facilitating communication and cooperation among energy efficient vehicle technology suppliers, freight carriers, freight shippers, and other key stakeholders, and enabling Project participants access to government and commercial financing, including the provision of financing of Green Freight Technology Rebates and Performance-Based Payments.
• Component 2: Green Freight Logistics Demonstration. Carrying out of market studies for drop and hook logistics methods and a proposed provincial logistics brokerage platform, and assisting in demonstration exercises of such methods and platform, through the provision of financing of Green Freight Technology Rebates and Performance-Based Payments.
• Component 3: Capacity Building. Provision of technical advisory services for the preparation of green freight policy research papers, delivery of training for government officials and enterprise managers, and promotion of the Project and green freight development, including support to the Guangdong green freight websites. • Component 4: Project Implementation Support.
Project Components Cost (USD) GEF (USD) GEF (%)
1) Green Truck Technology Demonstration 9,805,000 2,400,000 24
2) Green Freight Logistics Demonstration 1,900,000 900,000 47
3) Capacity Building 1,645,000 550,000 33
4) Project Implementation Support 560,000 290,000 52
Total 13,910,000 4,140,000 30
Contingencies 60,000 60,000 100
Total Project Cost 13,970,000 4,200,000 30
Key outcome indicators for measuring the achievement of development objectives are: (a) improvement in the fuel economy (km per unit of fuel combusted) of participating trucks; (b) reduction in the operating cost of truck fleets managed by participating companies (per ton-km travelled); and (c) total amount of CO2e emission reduction directly generated from fuel savings through the duration of the demonstration.