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NAMA Transport Kick-Off Meeting Summary Report

Low Emission Capacity Building Programme

June 9, 2015

Table of Contents

Overview .............................................................................................................................................................................. 1

Objectives of the Meeting ................................................................................................................................................ 1

Workshop Proceedings and Conclusions ........................................................................................................................ 1

Next Steps ........................................................................................................................................................................... 4

Annexes ................................................................................................................................................................................ 5

Overview

Nationally Appropriate Mitigation Actions (NAMAs) are voluntary emission reduction proposals

submitted by developing countries to the United Nations Framework Convention on Climate

Change (UNFCCC). These government-prioritized actions aim at reducing GHG emissions from

various sectors, and are expected to be the main vehicle for mitigation action in developing

countries such as Lebanon under a future climate agreement. Communicating NAMAs aimed at

achieving deviation from business as usual emissions is included in decision 16/CP.1, paragraph

50.

After a NAMA prioritization process in Lebanon, the LECB project retained 2 (out of the six

prioritized) NAMAs for preparation: National Waste Management Strategy for the waste sector

and Market Transformation for Fuel Efficient and Hybrid Vehicles for the transport sector. As part

of the NAMA preparation process, stakeholder consultations have to be organized at several

stages of the NAMA drafting. This summary report contains information on the Transport NAMA

kick-off meeting which took place on June 9th, 2015 at the Ministry of Environment (MoE). The

waste and transport NAMAs are being handled by MoE; the national consultants are ECODIT and

the international consultants are Grue + Hornstrup (G+H), TUV-Nord, and First Climate.

Objectives of the Meeting

The kick-off meeting had the following objectives:

- Introduce the NAMA to the transport stakeholders;

- Give an overview of the transport sector in Lebanon;

- Define the transport NAMA and its scope, the baseline and mitigation scenarios;

- Present the survey results on the preference of individuals, i.e. incentives, willingness to

pay etc.;

- Present the draft greenhouse gas calculations and the barriers of the proposed NAMA;

- Receive feedback from the field as to whether NAMA components are realistic, relevant

and accurate.

Workshop Proceedings and Conclusions

NAMA Overview:

Chabarekh (ECODIT) provided an overview of the transport sector in Lebanon including main

stakeholders and legal framework for the NAMA.

Malaeb (MoPWT) proposed to add 2 projects to the list of planned transport projects in Lebanon:

the Bus Rapid Transit (BRT) system (Beirut-Tabarja) and the railway (Jounieh-Tripoli) funded by

the European Investment Bank (EIB) and the World Bank (WB).

Alameddine (UNDP/Presidency of the Council of Ministers (PCM)) highlighted the importance of a

scrappage program to the government of Lebanon for the standardization of cab fees and

especially considering the rise of fuel prices.

Saad (Association des Importeurs d’Automobiles (AIA)) and Ghraizi (IMPEX) suggested cutting the

intermediary parties and passing through car dealers for all the administrative process of

scrappage. Saad (AIA) referenced the French system where people get the value of the car in

addition to the cash incentive; the car is taken at its value and resold, and both this and the

incentive are used as down payment for a new vehicle. Kabakian (UNDP/Ministry of Environment

(MoE)) responded that this would defeat the purpose as it would not remove the car from the

road.

Elset (Evandy) estimated that the proposed USD 3,000 is too high and that an incentive of USD

500/car would attract approximately 200 cars per day; the problem lays in determining

whether these cars are being utilized.

According to Saad (AIA) out of a sample of 3,000 newly registered cars, 90% were priced lower

than USD 15,000 (11 to 12 horsepower); the same applies for used cars (except these have 30

to 40 Horsepower) and Kia and Hyundai encompassed 40% of the Lebanese market.

Maalouf (Train Train NGO) and Malaeb (MoPWT) raised the issue that this NAMA is for cars, not

transport, highlighting the lack of infrastructure in Lebanon for small cars and recommending the

inclusion of Public Transport (PT) in the NAMA. Malaeb (MoPWT) informed that the MoPWT has a

lot of studies on BRT and train that can be made available upon request.

Kabakian (UNDP/MoE) and El Jisr (ECODIT) clarified that the work on this NAMA is

complementary to any other work MoPWT or other institutions are undertaking in transport. This

NAMA is only one action and there can be more NAMAs in the future as it is a continuous act. MoE

will cooperate with all institutions on that but does not have the mandate to implement any Public

Transport (PT) project in the country.

Alameddine (UNDP/PCM) advised to unify efforts and studies, as the latter are public domain.

Alameddine further suggested that rather than communicating more information with the public,

communicate it with interest groups and iterated that no budget means lack of sustainability.

Regarding financing mechanisms for taxi drivers, Eido (BLOM Bank) highlighted the difficulty for

taxi drivers to get loans as they present a higher risk factor for the bank. Srage (Banque du

Liban) reckoned that BDL can give banks incentives to provide the loans but cannot dictate their

actions or force their hand in that regard. Srage stated that the BDL has imposed a limit on how

much a household can be indebted and that the limit is around 30% of the salary, including

housing.

Case Study:

Vieli (First Climate) presented the Germany car scrappage system as a case study and

recommended to add the option of reserving participation in the program and bonuses

depending on the type of car purchased. In Germany, pre-owned vehicles were eligible for

bonuses if they met the required standards of emission limits. Vieli also pointed that there were

cheaper hybrid alternatives than the Toyota Prius in Germany. Vieli further stated that hybrids

will become more affordable in the future because of technological advancements.

Discussion:

Inclusion of Hybrid Cars in the NAMA

Mansour (LAU) advised to consider all hybrids: micro-hybrid (stop and go engine), mild hybrid

(gets energy from breaking) and full hybrid (like the Prius). He further stated that the gas

discovered in Lebanon could be used for cars either directly or indirectly through the supply of

energy and electric cars. Mansour explained that (1) High Efficiency Vehicles (HEV) are functional

in all topographies and have a good performance and (2) there are a lot of solutions for the

battery which should not be considered as an issue and (3) maintenance is also not an issue, since

Lebanon has good technicians and the HEV technology is not very complicated.

Tannous (ECODIT) reckoned the greenhouse gas emission reduction brought on by using hybrids is

too small when compared to the cost, and highlighted that the deployment of this technology will

only be based on the market demand, which is currently low.

Market Transformation

Red and white plates have different incentives to participate in the scrappage scheme and the

NAMA should determine the end beneficiaries. With regards to the preference in including red or

white plates in the NAMA, different opinions were voiced:

Alameddine (UNDP/PCM) suggested including only white plates since they constitute the majority

of the fleet. Red plates will gradually reduce with the improvement of public transport. He also

highlighted that some red plates are inactive and that there are “day shifts” and “night shifts” to

consider.

Saad (AIA) supported this idea of excluding taxis, highlighting that there are currently 22,000

fake red plates in the market, in addition to Syrian taxis which makes it very hard to control the

system.

Abi Zeid highlighted the importance of considering the social aspect of the NAMA and directing

the benefits to the most in need, i.e. red plated cars. Kabakian proposed to run the model using

different parameters such as CO2 reduction per USD invested, in order to determine the best

approach to optimize the use of any available fund for this NAMA.

Financing

Ghraizi (IMPEX) suggested segregating cars by age. Alameddine (UNDP/PCM) countered to

segregate cars by emission levels and to prioritize by geographic area. Saad (AIA) stated there

should be more stringent implementation of Mécanique standards.

Elset (Evandy) suggested a system where people pay a fixed fee when registering their cars

which can later be used for the scrappage of this vehicle. This would ensure the sustainability of

the NAMA.

Mansour (LAU) considers that government expenditures and foregone taxes will be partly

regained (see manus France and Germany) through the taxes of the new cars that will be bought

(through imports). Malaeb (MoPWT) stated there could be other donors to this project, besides the

NAMA funding.

Scrappage Mechanism

Saad (AIA) suggested the cars be put under government supervision for better detection of faults

and highlighted the importance of having clear eligibility criteria for scrappage facilities.

Next Steps

ACTIVITY RESPONSABILITY DEADLINE

Send NAMA Transport Kick-Off Meeting - Summary Report

Climate Change Team Week of June 15th

Finalize NAMA ECODIT End of July

2nd Validation Workshop Climate Change Team & ECODIT End of July

Annexes

Annex 1. List of participants

Annex 2. Agenda for the Kick-Off Meeting

Annex 3. Presentations

Annex 1. List of participants

Name Institution Email

1 Karim El Jisr ECODIT [email protected]

2 Rola Eido BLOM Bank [email protected]

3 George Xanthakos SISSAF – EU Project [email protected]

4 Simon El-Hachem SISSAF – EU Project [email protected]

5 Hisham Malaeb

Strategic Planning Unit – Directorate General of Land and Marine Transport - Ministry of Public Works and Transport

[email protected]

6 Ahmad Osman StREG – Project at the Ministry of Environment

[email protected]

7 Jad Stephan LAU [email protected]

8 Vahakn Kabakian UNDP/Ministry of Environment [email protected]

9 Mary Awad UNDP/Ministry of Environment [email protected]

10 Sara Rayes UNDP/Ministry of Environment [email protected]

11 Ahmad Elset Evandy [email protected]

12 Elias Maalouf Train/ Train NGO [email protected]

13 Souraya Srage Banque du Liban [email protected]

14 Edwin Saliba Ministry of Finance [email protected]

15 Jihan Seoud UNDP [email protected]

16 Rola Sheikh UNDP/Lebanese Petroleum Administration

[email protected]

17 Ayman Abdel Ghafour Traffic Management Organization

[email protected]

18 Capricia Chabarekh ECODIT [email protected]

19 Sélim Saad Association des Importeurs d’Automobiles

[email protected]

20 Barla Vieli First Climate [email protected]

21 Maya Abou Zeid ECODIT [email protected]

22 Lea Kai Aboujaoudé UNDP/Ministry of Environment [email protected]

23 Izzat Alameddine UNDP/Presidency of the Council of Ministers/Office of the Prime Minister

[email protected]

24 Naji Tannous ECODIT [email protected]

25 Christine Abillama Civic Influence Hub [email protected]

26 Charbel Mansour LAU [email protected]

27 Khaled Ghraizi IMPEX [email protected]

mailto:[email protected]



























Time Session

9:00 – 9:20 Registration

9:20 – 9:25 Background and Objectives of the NAMAs

Vahakn Kabakian

9:25 – 9:30 The NAMAs National and International Teams

Karim El Jisr & Barla Vieli

9:30 – 11:10

The Transport NAMAs: Goals and Actions

Overview of the Transport Sector - Capricia Chabarekh

Transport NAMA: Definition and Scope - Maya Abi Zeid

Baseline & Mitigation Scenarios - Maya Abi Zeid

Survey Design and Analyses - Maya Abi Zeid

Draft GHG Calculations – Baseline and Mitigation Scenarios - Naji Tannous

Barriers of the proposed NAMAs - Maya Abi Zeid

11:10– 11:20 Coffee Break

11:20 – 11:30 Ways to address potential barriers: Case study from Europe

Barla Vieli

11:30 – 12:00

Discussions: Ways to address potential barriers in Lebanon

Moderator: Karim El Jisr

Hybrid issue: Price, Performance, Infrastructure

Market Transformation: Targeted Percentage?

Financing the NAMAs

What defines an eligible replacement car?

Scrappage Mechanism

12:00 – 12:30 Next Steps

Karim El Jisr & Barla Vieli

Annex 2: Transport NAMA Kick-off Meeting Agenda

Annex 3: Presentations

Inception Workshop Transport NAMA

June 9, 2015

Name of Staff Designation/Title

1. Karim El-Jisr Team Leader / Environmental Expert

2. Lama Abdul Samad Mitigation Expert –Waste Sector

3. Maya Abou Zeid Mitigation Expert – Transport Sector

4. Naji Tannous Monitoring and Verification Expert

5. Osama Abu Rayyan Economic/Financial Expert

6. Jihane Khattar Legal Advisor

7. Capricia Chabarekh Project Coordinator and QA Officer

Project Team:

The Transport NAMA: Goals and Actions

• Overview of the transport sector in Lebanon

• Transport NAMA definition and scope

• Baseline and mitigation scenarios

• Survey design and analyses

• Draft GHG calculations – baseline and mitigation scenarios

• Barriers of the proposed NAMA

3

GHG Contribution and Road Transport

• Contributes to 21% of national greenhouse gases, with road transport being the largest contributor in this sector (around 96%)

• Road transport in Lebanon: ≈ 1.4 million cars

- Car ownership rate: 1 car for every 3 persons

- Public transport: perceived to be unreliable (old vehicles, no fixed stops, slow speeds, limited coverage)

4

Class White Plates Red Plates

Pre 2000 Post 1999 Pre 2000 Post 1999

Total 792,701 602,483 20,824 12,231

5

GHG Contribution and Road Transport (cont.)

71%

10% 19%

Private Car Buses Jitneys

• Modal Shares in GBA

Policies and actions are needed to reduce the reliance on the private car and/or to reduce the emissions from the road transport sector.

Main Transport Stakeholders

6

Public Sector + Private Sector (incl. NGOs) – NAMAs

Ministry of Public Works and Transport Association of Cars Importers

Ministry of Interior and Municipalities Auto-dealers

Ministry of Environment Association of Taxi Drivers

Ministry of Finance Scrappage facilities

Ministry of Energy and Water Commercial banks

Council for Development and Reconstruction

Insurance companies

Banque du Liban

Existing Laws & Regulations

• Law 341 (06/08/2001) - Reducing air pollution from the transport sector and encouraging the use of less polluting fuel

- Banned the use of Diesel in private vehicles and the use of leaded gasoline in all vehicles

- Reinstated mandatory vehicle inspection (mécanique)

• Draft amendment in 2010 (still awaits parliament approval) - Retrieval by the GOL of up to 10,000 public license plates (taxis)

- Provides incentives (tax cuts and tariff exemptions) for vehicle owners to switch to hybrid electric, fuel cell/hydrogen, and natural gas vehicles

7

Existing Laws & Regulations (cont.)

• Law 243 (25/10/2012) – The New Traffic Law - Reinstated the installation of catalytic converters in all gasoline vehicles

- Exempted new vehicles from inspection for the first 3 years after registration

• Decree 8942 (21/9/2012) – Draft Law which aims to incentivize the public transport sector: public transport vehicles and buses (still awaits parliament approval)

- Various exemptions and government support of low interest loans

8

Public Transport Initiatives

• In 2002, draft transport policy was submitted by the Directorate General for Land and Maritime Transport at the MOPWT to the GOL

- Aims to promote the economic, financial, environmental and social sustainability of the land transport sector in Lebanon

- Policy was not enacted nor approved

• In 2010, the Directorate assigned SISSAF to develop a National Integrated Strategy for Public Transport in Lebanon and a Pilot Project for Greater Beirut Area (GBA)

- Project involves purchase of new buses and establishment of stops and ticketing and information system

- Status today – To be discussed in the Discussion part

9








10

Transport NAMA Statement

• Development of Nationally Appropriate Mitigation Actions (NAMAs) and respective Measurement, Reporting, and Verification (MRV) systems for the transport sector, focusing on:

Market transformation for fuel efficient vehicles (FEV’s) and hybrid electric vehicles (HEV’s), and car scrappage program

11

Transport NAMA Definitions Fuel Efficient Vehicles (FEV’s)

• Vehicles with downsized engines, but with same power as equivalent conventional gasoline car

• Lower fuel consumption and emissions than equivalent gasoline cars

• Can practically be considered small cars

• Examples: Toyota Avanza, Toyota Yaris, Mazda 2, Hyundai i10

12

Transport NAMA Definitions Hybrid Electric Vehicles (HEV’s)

• Cars with a gasoline engine and an electric motor; a set of rechargeable batteries charge while the car is running

• Electric motor provides additional power when needed, e.g. when accelerating and passing

• Lower fuel consumption and emissions than equivalent gasoline cars and FEV’s

• Examples: Toyota Prius, Toyota Yaris, Kia Optima, Hyundai Sonata

13

Transport NAMA Definitions Scrappage Program

• An individual with an old car (e.g. pre-2000) receives monetary incentives for scrappage of old car

• Incentives include: cash-for-scrappage (down payment on new car), reduced purchase price of new car due to various exemptions, soft loans, and possibly revenues from placing ads on new car

14

Cash-for-scrappage (no condition imposed on replacement of old car)

Cash-for-replacement (condition imposed on replacing old car with a new car, e.g. FEV or HEV)

Transport NAMA Definitions Scrappage Program (cont.)

• Eligibility requirements: - Vehicle age: older than a certain year, e.g. 15 years or older (pre-2000 cars in

Lebanon constitute around 51% of the car fleet, as of 2014)

- Ownership requirement: e.g. vehicle should be registered in the country for a minimum of 12 months before scrappage

- Vehicle should still be in operable condition: otherwise, it would be scrapped anyway without the program

• Recent examples: Egypt, USA, several countries in Europe - E.g. in Egypt, replacing taxis older than 20 years; 621 Euros cash-for-

scrappage amount and soft loans; replacement car from 5 locally produced fuel efficient cars

15

Car Scrappage Process

18

Selection of replacement car

Application for a bank loan

Confirmation of replacement car

Scrappage of old car

Issuance of subsidy check

Participation in ad program (taxis)

Bank loan final approval

Receipt for new car

Licensing of new car

Placement of ads on the car (taxis)

(car dealers)

(banks)

(car dealers)

(Scrappage facilities)

(Ministry of Finance)

(advertising agencies)

(banks)

(car dealers)

(Ministry of Interior)

(advertising agencies)

Inspection of old car

(Ministry of Interior)

Transport NAMA Scope

• Geographical: all of Lebanon

• Sector: passenger transportation (freight is excluded)

• Vehicle age: year of manufacture before 2000

• Vehicle class: white plate cars and red plate cars (taxis and jitneys)

19








20

Base and Future Years

• Base year: 2014 - National car registration data for white and red plates available for 2014

- Transport market survey was conducted in 2015

• Future years: 2025 and 2030 - Car scrappage program would start in 2018/2019 and last for about 5 years

21

Baseline Scenario Assumptions

• Passenger car transport mode share: assumed to remain constant over the study period

• Number of registered cars in future years: obtained by applying growth factors to current numbers

• Composition of registered cars in future years by car size: assumed to remain the same as in the base year

• Gasoline price: assumed not to undergo major changes

• Rate of vehicle scrappage: assumed to be 2% per year (complete fleet turnover in ≈ 50 years)

22

Mitigation Scenarios 3rd National Communication to the UNFCCC

• Scenario 1: Increase the share of fuel efficient vehicles (FEV)

• Scenario 2: Increase the share of fuel efficient vehicles and hybrid vehicles

• Scenario 3: Increase the share of mass transport

23

Mitigation Scenarios Transport NAMA

• Scope: Car fleet renewal (public transport not within the scope of this NAMA)

• Scrappage program: cash-for-replacement to ensure replacement with new and less polluting cars

24

Scenario Scrappage Program

Replacement Car: Fuel Efficient

Vehicles

Replacement Car: Hybrid

Vehicles

1 X X

2 X X

3 X X X

Mitigation Scenarios Financial Incentives

• Cash-for-scrappage: - Should be greater than the resale value of the old car

- Base range: $2000-3000 (in line with scrappage programs around the world)

- Favorable range: $3000-$4000

• Soft loans: 0-3% interest rate (discussed with Banque du Liban)

• Exemptions: - Registration and first mécanique fee waivers

- Customs fee waiver for HEV’s (as in draft law) and for FEV’s (only for taxi drivers)

- VAT exemptions not realistic

- Additional monthly revenues from ads (only for taxi drivers – as in the Egypt case)

25

Mitigation Scenarios Financial Incentives (cont.)

Incentive White Plate - FEV White Plate - HEV Red Plate - FEV Red Plate - HEV

Cash-for-scrappage $2000-$3000 or $3000-$4000

$3000-$4000 $2000-$3000 or $3000-$4000

$3000-$4000

Soft loans 0-3% interest; 5-year repay period

0-3% interest; 5-year repay period



Exemption from customs fee

X X X

Exemption from registration fee

X X X X

Exemption from first mécanique fee

X

X X X

Additional revenue from ads

X X

26

Replacement Vehicle

Mitigation Scenarios Assumptions

• Passenger car transport mode share: assumed to remain constant over the study period

• Number of registered cars in future years: obtained by applying growth factors to current numbers

• Composition of registered cars in future years by car size: will change based on % replacement of old cars by new FEV’s (generally small) and/or HEV’s

• Gasoline price: assumed not to undergo major changes

• Rate of vehicle scrappage: determined by assuming that there is a regulation in place to discourage ownership of cars older than 15 years

• Scrappage of pre-2000 cars: equally distributed over a 5-year period and uniformly within any year

27








28

Surveys

• 3 surveys targeted at: - pre-2000 white plates (N = 400) eligible for scrappage

- pre-2000 red plates (N = 100) eligible for scrappage

- post-2000 white plates (N = 100) not eligible for scrappage

• Geographical coverage: - Beirut, Byblos, Nabatieh, Saida, Tripoli, Zahle

29

Survey Structure

• Introduction

• Screening criteria (car year of manufacture, regular car use)

• Information about current car (make/model, engine size and power, fuel efficiency, distance driven, AC usage, car occupancy, etc.)

• Scenarios

• Socio-economic and demographic information

30

Next

• Survey design and analysis of pre-2000 red and white plate cars

• Survey design and analysis of post-1999 white plate cars

31

Pre-2000 Red Plate Survey Example of Scrappage Scenario

32

If this program is implemented, do you think you will participate in it by scrapping your current car and buying a new fuel efficient car? 1. Yes 2. No 3. Don’t know For you to participate in this program, what is the maximum monthly amount that you can afford to pay as an installment for the new car (including mandatory insurance), over a period of 5 years?

Pre-2000 Red Plate Survey Incremental Presentation of Scenarios

33

Scenario 1 (FEV)

Scenario 2 (FEV)

Scenario 3 (FEV)

Scenario 4 (FEV)

Scenario 5 (HEV)

Cash-for-scrappage $2000-3000 $2000-3000 $3000-4000 $3000-4000 $3000-4000

Loan conditions 0-3% interest over 5 years

0-3% interest over 5 years




Exemption from customs fee X X X X

Exemption from registration fee X X X X


X X X X

Additional monthly revenue from ads

$100-150 $100-150

Avg. car price after exemptions $15,000 $11,725 (20-25%

reduction)

$11,725 (20-25%

reduction)

$11,725 (20-25%

reduction)

$42,000 (25-30%

reduction)

Pre-2000 White Plate Survey Scenarios

• Very similar to red plate scenarios except for: - No customs fee exemption on FEV’s

- No additional monthly revenue from ads

34

Pre-2000 Car Surveys Scenario Analysis

• % participating in scrappage program

• Willingness to pay (WTP) for monthly installment for replacement car

• Reasons for not participating in the program

35

Pre-2000 Car Surveys Probability of Participation

• There is greater interest among taxi drivers in participating in the program than white plate car owners

• Significant market for car scrappage program where replacement car is FEV:

- Under the most favorable scenario, 80% of taxi drivers and 56% of white plate car owners would participate in the program

• There is virtually no interest in HEV’s among both segments

36

Pre-2000 Car Surveys Average Willingness To Pay (WTP)

37

Monthly WTP ($) Pre-2000 Red Plate Cars Pre-2000 White Plate Cars

FEV as replacement car $204 $212

HEV as replacement car $300 $317

Pre-2000 Car Surveys Reasons for Not Participating in the Program

• Main reasons when the replacement car is FEV: - Good operating condition of the current car

- Skepticism about the benefits of the program

- Financial considerations

• Main reasons when the replacement car is HEV: - High purchase price of HEV’s

- Skepticism about the benefits of the program

- Preference for regular gasoline cars over HEV’s

38

Post-1999 White Plate Survey Base Scenario

39

Which car will you most likely purchase in the future if you are faced with these options? 1. Option 1: Small (fuel efficient) gasoline car 2. Option 2: Midsize gasoline car 3. Option 3: Large gasoline car

Subsequent scenarios were presented, based on the answer to the above question, to evaluate the market for FEV’s and HEV’s

Post-1999 White Plate Survey Scenarios with Financial Incentives for FEV’s and HEV’s

Incentive/Disincentive New Car: FEV New Car: HEV New Car: Midsize or Large Gasoline Car

Soft loans 0-3% interest; 5-year repay period


Exemption from customs fee

X

Exemption from registration fee

X X


X

X

Additional tax 20% additional tax on car price

40

New Car Purchased

Post-1999 White Plate Survey Scenario Analysis

• % buying FEV’s and HEV’s in the future

• Reasons for not buying HEV’s

41

Post-1999 White Plate Survey Interest in FEV’s and HEV’s

• Even without incentives, a high percentage of respondents (49%) will choose small gasoline cars (FEV).

• There is potential to switch those who originally prefer midsize cars into FEV’s (around 20%) and to HEV’s (around 17%) if FEV’s and HEV’s are offered with incentives and midsize cars have additional taxes.

• But there is no interest in FEV’s and HEV’s among those who originally prefer to buy large cars.

42

Post-1999 White Plate Survey Reasons for Not Switching to HEV’s

• Main reasons: - High purchase price of HEV’s

- Preference for regular gasoline cars over HEV’s

- Lack of awareness about HEV’s

- Considering future fuel savings not to be significant

- Other

43








44

Economic and Financial

• High purchase price of new cars, especially HEV’s, compared to the income of the targeted population segment

• Insufficient amount of cash-for-scrappage of old cars submitted for scrappage

• Current favorable market conditions for purchasing pre-owned cars (up to 8 years old) as well as midsize and large cars (such as favorable loan financing conditions, inappropriate tax structure, etc.)

45

Behavioral and Organizational

• Resistance of Lebanese consumers for purchasing small FEV’s, general preference for large cars, and lack of interest in car fuel consumption

• Lack of awareness about hybrids

• Resistance from car dealers of large cars and from the association of pre-owned car importers because of potentially reduced business

46

Political and Structural

• Insufficient level of coordination among different ministries involved and fragmentation of transport policy making across different entities

• Resistance due to possible reduction of government revenues (e.g. lost revenues from tax exemptions and from fuel taxes due to lower fuel consumption)

• Lack of political will or delay in the enactment of decrees by the Council of Ministers needed for the granting of exemptions for the purchase of new FEV’s

47

Financing

• Insufficient NAMA funds to finance the scrappage and replacement process in such as way as to achieve a significant market transformation

48

Discussion

49

1. Hybrid issue

2. Market transformation

3. Financing the NAMA

4. What defines an eligible replacement car

5. Scrappage mechanism

1) Hybrid Issue

• Price: Example; Toyota Prius: Total price: $60,000; CIF: ≈ $37,000

• Performance: Topography

• Infrastructure: maintenance and battery replacement

50

2) Market Transformation

• Targeted percentage: cars replaced

51

Class White Plates Pre-2000 Red Plates Pre-2000

Total 792,701 20,824

Total: 813,525 cars

Class Emissions – Current (gCO2/Km) NAMA (gCO2/Km)

100% Replacement 192,658,198 153,375,644 (20% reduc.)

Replacement of Red Plates 192,658,198 191,644,628 (0.5% reduc.)

• Targeted percentage: % GHG reduction?

3) Financing the NAMA

• Cost elements

52

Red White

Total price of the car (FEV) ($) 15,000 15,000

Exemptions ($) 3,275 1,125

Cash for Scrappage ($) 3,000 3,000

Ads ($) 3,000 0

Total to be paid by the participant ($) 5,725 10,875

• Sources of Finance

53

3) Financing the NAMA (cont.)

22%

17%

3%

20%

38%

Red Plates

Exemptions - GOL Cash for Scrappage - NAMA

Cash for Scrappage - Scrappage facility Ads

Total to be paid by the participant

7%

20%

3%

0%

70%

White Plates

Exemptions - GOL Cash for Scrappage - NAMA

Cash for Scrappage - Scrappage facility Ads

Total to be paid by the participant

54

• Total cost of the NAMA

3) Financing the NAMA (cont.)

NAMA Funds: $15M 5,800 cars

• What is the realistic GOL contribution to achieve a sizeable market transformation?

• What is the prioritization scheme? Red VS White? Red by age?

Red Plates White Plates

Exemptions - GOL ($) 68,198,600 891,788,625

Cash for Scrappage - NAMA ($) 54,142,400 2,378,103,000

Cash for Scrappage - Scrappage facilities ($) 8,329,600 317,080,400

Ads ($) 62,472,000 0

Total to be paid by the participant ($) 119,217,400 8,303,542,975

4) What Defines an FEV Eligible Replacement Car? • Emission limit?

• Fuel consumption limit?

• Engine size?

• Other

55

5) Scrappage Mechanism

• Where does the old car get inspected and by whom and where?

• Mechanism for issuance of cash-for-scrappage check

• Eligibility conditions / process to be followed at car scrappage facilities

• Other

56

Appendix

57

Summary of Average Car Attributes Across the Three Surveys

58

Attribute Pre-2000 Red Plate Cars

Pre-2000 White Plate Cars

Post-1999 White Plate Cars

Three most common models Mercedes (76%), Nissan (7%), Honda (4%)

Mercedes (30%), BMW (14%), Toyota (10%)

BMW (20%), Honda (14%), Mercedes (13%)

Avg. fuel efficiency 160 km/tank 162 km/tank 175 km/tank

Monthly fuel cost $355 $137 $166

Avg. distance driven per day 152 km 37 km 39 km

Avg. distance driven per year 48,025 km/year 10,241 km 11,136 km

Avg. % of miles spent in traffic jams 40% 30% 29%

Avg. % of mileage driven on mountain roads

30% 29% 28%

% who check tire pressure monthly 89% 79% 79%

% who use air conditioning in summer

13% 22% 79%

Avg. car occupancy (excluding driver) 3.4 1.9 2.0

Avg. number of years remaining in car life

5.1 5.1 -

Avg. resale value $3263 $3526 $9275

% planning to replace their cars in the next 2-3 years

59% 51% 37%

Avg. expected purchase price of next car

- - $15,032

Pre-2000 Car Surveys Probability of Participation

59

Scenario Pre-2000 Red Plate Cars


1: cash-for-scrappage $2000-3000, soft loan, no exemptions on FEV

0.54 0.41

2: cash-for-scrappage $2000-3000, soft loan, exemptions on FEV

0.61 0.46

3: cash-for-scrappage $3000-4000, soft loan, exemptions on FEV

0.69 0.56

4 (for red plate cars): cash-for-scrappage $3000-4000, soft loan, exemptions on FEV, revenue from ads on cars

0.80 N/A

5 (for red plate cars) / 4 (for white plate cars): cash-for-scrappage $3000-4000, soft loan, exemptions on HEV, revenue from ads on cars (for taxis only)

0.04 0.02

6 (for red plate cars) / 5 (for white plate cars): cash-for-scrappage $3000-4000, soft loan, exemptions on FEV and HEV, revenue from ads on cars (for taxis only)

Choice between FEV and HEV: Prob (FEV) =

1, Prob (HEV) = 0

Choice between FEV and HEV: Prob (FEV) = 0.2, Prob

(HEV) = 0.6, Prob (Don’t know) = 0.2

Overall prob. of participation in program 0.80 0.57

Pre-2000 Car Surveys Preferred Makes for Replacement Car

60

Most Preferred Makes

Pre-2000 Red Plate Cars


Toyota 39% 25%

Mercedes 18% 12%

Nissan 11% 15%

Kia 8% 7%

Hyundai 6% 9%

Dodge 6% 11%

Post-1999 White Plate Survey Example of Scenario where Initial Choice Was Midsize Gasoline Car

61

Will you switch from your previous choice of midsize gasoline car to a small (fuel efficient) car if you are faced with these options? 1. Yes, I will switch to a small (fuel efficient) car 2. No, I will not switch to a small (fuel efficient) car

Post-1999 White Plate Survey Base Scenario (No Incentives on FEV’s and HEV’s)

62

Car Type Choice Percentage

Small (fuel efficient) gasoline car 49

Midsize gasoline car 41

Large gasoline car 10

Total 100

• Even without incentives, a high percentage of respondents will choose small gasoline cars (FEV).

• But there is also a significant potential for increasing the market penetration of FEV’s since 51% still prefer midsize or large gasoline cars.

Post-1999 White Plate Survey Scenarios with FEV/HEV Incentives

63

Scenario Prob. (FEV)

Prob. (HEV)

Prob. (FEV)

Prob. (HEV)

Prob. (FEV)

Prob. (HEV)

Incentives only for FEV / disincentives for midsize and large gasoline car

1.00 - 0.24 - 0.00 -

Incentives only for HEV / disincentives for midsize and large gasoline car

0.92 0.08 - 0.17 - 0.00

Incentives for both FEV and HEV / disincentives for midsize and large gasoline car

0.94 0.06 0.20 0.17 0.00 0.00

Base choice = small (FEV)

Base choice = midsize

Base choice = large

• There is some interest in HEV’s but not very significant.

• There is potential to switch those who originally prefer midsize cars into FEV’s (around 20%) if FEV’s are offered with incentives and midsize cars have additional taxes.

DRAFT GHG CALCULATIONS Baseline & Mitigation scenarios

June 9, 2015

Ministry of Environment /UNDP

INCEPTION WORKSHOP NAMA TRANSPORT SECTOR

ECODIT

Transport NAMA draft GHG calculations Baseline & mitigation scenarios

Calculations Methodology & Assumptions

1- Scrappage program starts 2018 and ends 2022 (Car age > 15 years) 2- Emissions calculations assume follow up replacement post 2022 3- Only CO2 emissions are considered 4- Three vehicle classes are considered namely; • Small: weight < 1 Ton, Engine size < 1.4 liters • Medium: 1 Ton < weight < 1.5 Tons, 1.4 < Engine size < 2.3 Liters • Large: weight > 1.5 Tons, Engine size > 2.3 Liters


Calculations Methodology & Assumptions (cont’d)

Current vehicles emissions per category of age (gCO2/km)

Age > 15 years Age <= 15 years Age <= 3 years

Small 166 147 128

Medium 230 204 177

Large 290 283 248



Passenger cars emissions impact factors

Driving Conditions Impact Factor

Traffic jams 1.05

Driving upgrade 1.05

Passenger load (Red plates) 1.03

AC during hot season (<=15 years) 1.05

Substandard vehicle maintenance 1.03



Average passenger cars travel (km/year)

Class WHITE PLATES RED PLATES

> 15 years < = 15 years > 15 years

Small 10,200 15,000 55,000

Medium 10,200 11,200 44,000

Large 10,200 10,200 52,000



Passenger cars distribution by class and age categories (2013)

Class White Plates Red Plates

Pre 2000 Post 1999 Pre 2000 Post 1999

Small 102,762 13% 100,409 17% 2,621 13% 1,971 16%

Medium 489,690 62% 301,424 50% 13,586 65% 8,869 73%

Large 200,249 25% 200,651 33% 4,617 22% 1,391 11%

Total 792,701 100% 602,483 100% 20,824 100% 12,231 100%



New and used passenger cars registration (2010 – 2013)

2010 2011 2012 2013

New 36,097 38.0% 34,522 45.1% 37,662 51.1% 38,366 55.3%

Used 59,000 62.0% 42,000 54.9% 36,000 48.9% 31,000 44.7%

Total 95,097 100% 76,522 100% 73,662 100% 69,366 100%


Period 2014-2017 2018-2022 2023-2025 2026-2030

Growth 0.8% 1.50% 0.8% 1%


Assumed passenger cars stock growth (applies to WP & RP)



1- Emissions are computed using excel spreadsheet 2- The model covers 2014 – 2030 time frame 3- Model considers population movement between New (<= 3 years) NC (<=15 years) & OC (> 15 years) 4- A variable natural scrappage rate was included in model distributed among NC and OC (New is included in NC) 5- Model considers 4 vehicle size mix options for each of the 4 scenarios for white plates

Vehicles replacement engine size mix options EXISTING: Actual engine size mix in NC Leb. OPT1 : 40% small, 40% medium, 20% Large OPT2: 60% small, 30% medium, 10% Large OPT3: 75% small, 20% medium, 5% Large

White plates mitigation scenarios emissions (MTCO2/year)


OC Vehicles replacement scenarios SC1: 40% replacement SC2: 70% replacement SC3: 100% replacement

2014 2025 2030

EXISTING EXISTING OPT1 OPT2 OPT3 EXISTING OPT1 OPT2 OPT3

BAU 4.68 5.24 4.54 4.47 4.42 5.51 4.41 4.31 4.23

SC1 - 5.24 3.82 3.68 3.58 5.49 3.68 3.50 3.37

SC2 - 5.27 3.31 3.12 2.98 5.54 3.19 2.97 2.79

SC3 - 5.28 2.79 2.55 2.36 5.55 2.67 2.39 2.18

White plates mitigation scenarios emissions (% of baseline)


2014 2025 2030

EXISTING EXISTING OPT1 OPT2 OPT3 EXISTING OPT1 OPT2 OPT3

BAU 100.0% 112% 97% 96% 94% 118% 94% 92% 90%

SC1 112% 82% 79% 77% 117% 79% 75% 72%

SC2 113% 71% 67% 64% 118% 68% 63% 60%

SC3 113% 60% 54% 51% 119% 57% 51% 47%

Vehicles replacement engine size mix options EXISTING: Actual engine size mix in NC Leb. OPT1 : 40% small, 40% medium, 20% Large OPT2: 60% small, 30% medium, 10% Large OPT3: 75% small, 20% medium, 5% Large

OC Vehicles replacement scenarios SC1: 40% replacement SC2: 70% replacement SC3: 100% replacement


THANK YOU

KEEP THE QUESTIONS & CHALLENGES COMING

Ways to address potential barriers: Case study from Europe

Kick-off Meeting for the Transport Sector 09 June 2015

09.06.2015 Workshop: Transport NAMA

Overview

• Scrappage programs in Europe

• Eligibility criteria for new cars

• Challenges / barriers

2


Scrappage programs in Europe

• Aim of scrappage programs:

• Remove inefficient vehicles from the road

• Stimulating the automobile industry

• Introduced in many European countries during recession in 2008

• Austria, France, Germany, Italy, Ireland, Luxembourg, Netherlands, Norway, Portugal, Romania, Slovakia, Spain, UK

3


Scrappage program in Germany

• Duration: July 2009 – September 2009

• Program fund: 5 billion EUR

• 1.7 Mio. cars replaced (5% of total fleet and 12% of eligible cars)

• Cash-for-scrappage: 2’500 EUR

• Requirement for scrapped car: Minimum age of 9 years

• No ecological requirements for new car

4


Scrappage program in Germany

5

Newly registered cars per emission category

Nu

mb

er o

f p

asse

ng

er c

ars

CO2-emission category [g/km]

Average: 142 gCO2/km


Lessons learned in Germany

• About 50’000 cars were illegally exported instead of being scrapped

• Amendment of the regulation

• «First come, first serve» principle for participation

• Long delivery times of new cars: possibility to reserve cash-for-scrappage

• Fund was used up after a few months

6


Overview




7


Eligibility criteria for the scrappage program

Germany, Austria, Romania, Slovakia: no CO2 emissions restriction

8

Emission Limit Extra Bonus

France 160 gCO2/km 130 gCO2/km

Italy 140 gCO2/km (130 gCO2/km Diesel)

Ireland 140 gCO2/km

Luxembourg 150 gCO2/km 120 gCO2/km

Portugal 140 gCO2/km

Spain 120 gCO2/km


Emission Limit in the EU

Until 2015

•Target value for newly registered cars: 130 gCO2/km in average

•Regardless of any kind of scrappage program

Until 2020

•Target value: 95% of newly registered cars 95 gCO2/km in average

9


Overview




10


Economic and Financial Challenges

Identified Challenges

•High purchase price of new cars compared to the income of the targeted population segment

•Insufficient amount of cash-for-scrappage of cars submitted for scrappage

•Insufficient NAMA funds to achieve a significant market transformation

11

In Germany the funds have been used up after a few months time. 5% of the total fleet was replaced. The emissions of the fleet were reduced by around 1%.


Economic and Financial Challenges

12

0

200

400

600

800

1,000

1,200

1,400

1,600

Mar

ket

Pe

net

rati

on

[%

]

Cash-for-scrappage incentive

10%

0%

20%

30%

40%

50%

60%

70%

80%

Incentive is too low: • desired market

penetration will not be achieved

• fund will not be used up

Incentive is too high: •desired market penetration will not be achieved •fund will be used up quickly


Challenges concerning purchase decision

Identified Challenges

•Preference for large cars and lack of interest in car fuel consumption

•Lack of awareness about hybrids

•Favorable market conditions for purchasing pre-owned cars as well as midsize and large cars

13

Extra bonus on cars with very low emissions (hybrid, electric car) and an additional bonus-malus system on top of the scrappage program (France)

Pre-owned cars were allowed to the scrappage program if they meet the eligibility criteria (Germany)


Hybrid Cars

14

Toyota Yaris: EUR 17’300*

Toyota Prius: EUR 26’850* Honda Jazz: EUR 19’690*

• There are cheaper cars on the market than the Toyota Prius

• Prices will probably further decrease until start of scrappage program in 2018

*German prices as indicated on the websites of the respective manufacturer.

Engine size: 1’497 cm3

Weight: 1’235 kg Fuel eff.: 3.6 l/100km CO2-emissions: 82 g/km





CONTACT: Barla Vieli· Project Manager First Climate (Switzerland) AG Brandschenkestr. 51 CH-8002 Zürich, Switzerland Phone: +41 (0) 44 298 2883 Fax: +41 (0) 44 298 2899 [email protected]


Annex: CO2-price

Assumptions: •Lifespan of car: 200’000 km

•CO2-savings per car: 100 gCO2/km

•Scrappage fee: USD 2’000

CO2-price: 100 USD/tCO2

16

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