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Thailand : Making Transport More Energy Efficient

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Thailand : Making Transport More Energy Efficient 50034 Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Thailand More EnergyEfficient : Making Transport Making : Table of Contents EXECUTIVE SUMMARY 1. Introduction 1 1.1 Strategic Context 1 1.2 Objective and Scope 1 2. Transport Energy Use: How Thailand Compares to Other Countries? 3 2.1 Energy Intensity: Economy-wide and Transport Sector 3 2.2 Structure of Energy Consumption by Sector 5 2.3 Transport Fuel Use and Greenhouse Gas Emissions 6 2.4 Cross-Country Comparison of Transport Energy Intensity 9 3. A Diagnostic Analysis: What Contributes to Low Transport Energy Efficiency? 13 3.1 Economic Structure and Spatial Distribution 13 3.2 Modal Splits 15 3.3 Vehicle Types and Fuel Used 18 3.4 Fuel Economy 18 3.5 Fuel Prices 19 4. Policy Directions and Implications for Transportation Energy Use 23 4.1 Options for Intercity Transport 23 4.1.1. Rail Modernization and Reform 24 4.1.2. Truck Transport 25 4.1.3. Intercity Passenger Transport 26 4.2 Options for Urban Passenger Transport 27 4.2.1. Recent Achievement and Current Strategy 27 4.2.2. Improving Bus Transport Services 28 4.2.3. Improving Traffic Management 29 4.2.4. Urban Road Pricing 29 4.3 Vehicle Standards and Fuel Choice 29 4.3.1. Vehicle Fuel Economy Standards 30 4.3.2. Age Limits of Trucks and Buses 30 4.3.3. The Use of Alternative Fuels and Fuel Switching 31 4.4 Analysis of Policy Options 32 4.5 The Importance of Fuel Pricing Policy 36 4.6 Institutional Support to the Transport Energy Efficiency Agenda 37 Annex 1: Fuel Consumption in Bangkok Metropolitan Region 39 Annex 2: Modal Roles, Vehicle Types, and Fuel Uses 41 Annex 3: Transport of Key Commodities in Thailand 45 Annex 4: Fuel Economy Standards in Other Countries 49 Annex 5: A Simple Transport-Energy Model 51 Appendix Tables 60 References 69 Abbreviations and Acronyms ADB Asian Development Bank M Million AfD Groupe Agence Francaise de MJ Megajoules Developement (French Development Agency) MPG Miles Per Gallon B Billion MRT Mass Rapid Transit (rail) CDP-INFRA Country Development Partnership MRTA Mass Rapid Transit Authority for Infrastructure MVA Motor Vehicles Act cf/d cubic feet per dag NESDB National Economic and Social BCMA Bus Control Management Authority (proposed) Development Board BITA Bangkok Integrated Transit Authority NGOs Non-governmental organizations (suggested) NGV Natural Gas Vehicle BMA Bangkok Metropolitan Administration NMT Non-motorized transport BMCL Bangkok Metro Company Limited NOX Oxides of Nitrogen BMR Bangkok Metropolitan Region No2 Nitrogen Dioxide BMTA Bangkok Mass Transit Authority OTP Office of Transport and Traffic BOB Bureau of Budget Policy and Planning BRT Bus Rapid Transit OECD Organization of Economic Co-operation BTS Bangkok Transit System and Development BTSC Bangkok Transit System Corporation pa per annum CAI-Asia Clean Air Initiative - Asia PDMO Public Debt Management Office, CDM Clean Development Mechanism Ministry of Finance CNG Compressed Natural Gas PM Particulate Matter CH4 Methane PPM Parts Per Million DEDE Department of Alternative Energy PPP Public Private Partnership Development and Efficiency PPP Purchasing Power Parity DLT Department of Land Transport PTT PTT Public Company Ltd DOH Department of Highways SEPO State Enterprise Policy Office, EPPO Energy Policy and Planning Office Ministry of Finance ESB Eastern Seaboard SRT State Railways of Thailand EU European Union TA Technical Assistance EURO European Emission Standard THB Thai Baht GDP Gross Domestic Product TOE Tonnes of Oil Equivalent GHG Greehouse Gas TOR Terms of Reference GOT Government of Thailand TPES Total Primary Energy Supply GPP Gross Provincial Product µg micrograms IEA International Energy Agency UNFCCC United Nations Framework Convention on ICD Inland Container Pepot Climate Change ITS Intelligent Transportation Systems URMAP Urban Rail Transportation Master Plan IFIs International Financial Institutions (for Bangkok) JBIC Japan Bank for International Cooperation USA United States of America ktoe thousand tonnes of oil equivalent UTDP Urban Transport Development Partnership LPG Liquified Petroleum Gas WRI World Resources Institute LTA Land Transport Act Acknowledgement This study was undertaken by a World Bank team under the Country Development Partner- ship for Infrastructure (CDP-INFRA), which is a knowledge-based partnership program between the World Bank and Royal Thai Government for analytical work on, and implementation support to, key areas of the country’s infrastructure development agenda. The study team was led by Zhi Liu (Lead Infrastructure Specialist) and consisted of Philip Sayeg (Transport Consultant), Chanin Manopiniwes (Infrastructure Economist), Pajnapa Peamsil- pakulchorn (Infrastructure Analyst), and Edouard Ereno Blanchet (Infrastructure Analyst). Kenneth Gwilliam (formerly Transport Economic Advisor at the World Bank) provided advice on the analytical framework for the study and useful comments on an earlier draft of this report. The study team benefited greatly from technical discussions and policy dialogue with relevant government agencies over the last two years. These agencies included the National Economic and Social Development Board of Thailand (NESDB), Ministry of Transport (MOT), and Ministry of Energy (MOE). The study team is grateful for helpful comments from Paul Amos (formerly Transport Advisor at the World Bank), Ranjit Lamech (Lead Energy Specialist, World Bank), Shomik Mehndiratta (Sr. Urban Transport Specialist, World Bank), and the staff of the Office of Transport and Traffic Policy and Planning (OTP) and the Department of Land Transport (DLT) under the MOT and the Energy Policy and Planning Office (EPPO) and the Department of Alternative Energy Development and Efficiency (DEDE) under MOE. The study was conducted under the general guidance of Ian Porter (formerly Country Director for Thailand, World Bank), Arkhom Termpittayapaisith (Deputy Secretary General, the National Economic and Social Development Board of Thailand), and Junhui Wu (formerly Sector Manager, Transport Energy and Mining Unit, East Asia and Pacific Region, World Bank). Currency Equivalent Currency unit = Baht (THB) Exchange rate at March 31, 2008: US$1.00 = THB31.6229 THB1.00 = US$0.03162 Government Fiscal Year October 1- September 30 Weights and Measures Metric units 1 meter (m) = 3.2 feet (ft) 1 kilometer (km) = 0.62 miles (mi) Price Units Prices in this report are expressed in approximately early 2008 prices unless otherwise noted Executive Summary This study addresses the question of how Thailand’s transport sector can become more energy-efficient. It assesses the performance of the transport sector in energy utilization, analyzes where inefficiencies lie, and proposes options in order to improve transport energy efficiency. Improved energy utilization is imperative for Thailand’s national energy security and continued economic prosperity. Historically, Thailand has not performed well in terms of energy efficiency. Total energy intensity, defined as total final energy consumption per unit of Gross Domestic Product (GDP), is high compared to other countries and at least twice that of Germany, Japan and the USA. Moreover, Thailand’s total energy intensity has remained more or less the same over the past three decades despite the availability of more energy efficient technologies. This is in sharp contrast to many other countries that have reduced their energy intensity over the same period. This implies that Thailand has high potential to achieve lower energy intensity. At present, two sectors, ‘manufacturing and mining’ and ‘transport’, account for 70 percent of total energy use in Thailand, with each having approximately an equal share. Petroleum products account for half of the total final energy consumption in Thailand. Almost all energy used by the transport sector comes from petroleum products which represent 72 percent of the total consumption of petroleum products in Thailand. Seventy-six percent of transport energy is consumed in the road sector. With little fuel diversification, and with only a small amount of energy coming from renewable energy sources, the security of Thailand’s energy supplies is highly vulnerable to possible future supply constraints or rapid price increases. Thailand’s transport energy intensity, defined as transport energy consumption per unit of GDP, is much higher than found in China, Germany, Japan, South Korea and the USA. More strikingly, it has remained at a high level between 1995 and 2006, while the comparator countries have been able to reduce their transport sector energy intensity. Clearly, Thailand’s transport sector has significant potential to improve its energy efficiency. The study found that the economic structure and spatial distribution of economic activities in Thailand do not impose extraordinary requirements on transport. Other factors—mainly the high level of motorization, heavy dependence on road transport and lack of fuel economy standards—contribute to the high level of transport energy intensity. Road transport overwhelmingly dominates freight and passenger transport markets, while rail plays a very small and declining role. The majority of Thailand’s vehicles use diesel, and fuel economy standards are not applied to gasoline or diesel powered vehicles. The truck fleet is on average quite old and fuel-inefficient. Due to low taxes, fuel prices are relatively low compared to Japan and Western European countries. The estimated fuel efficiency of Thailand’s
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