Jeepney in Metropolitan Manila Region, Republic of the Philippines

Ministry of Economy, Trade and Industry, Japan

JCM Feasibility Study for low carbon city development through introduction of E- jeepney in Metropolitan Manila Region, Republic of the Philippines

Final report

March 2017

Oriental Consultants Global Co., Ltd.

Table of contents

Chapter 1 Project overview ...... 1

1.1 Project objective and background ...... 1

1.2 Study overview ...... 2

1.2.1 Overview of candidate sites for battery swapping electric jeepney technology introduction ...... 2

1.2.2 Survey implementation structure ...... 4

1.2.3 Survey schedule ...... 5

1.2.4 Survey items ...... 8

Chapter 2 Trends in related policies and EV markets in the Philippines ...... 9

2.1 Situation of transport sector in the Philippines ...... 9

2.1.1 Situation of the Philippines and Metropolitan Manila Region ...... 9

2.1.2 Situation of air pollution (Situation of air pollutants emissions) ...... 11

2.2 Transport policy ...... 12

2.2.1 Relationship with development plan and other policies in the Philippines and Metropolitan Manila Region ...... 12

2.2.2 Masterplan in transport sector in the Philippines and Metropolitan Manila Region ...... 14

2.2.3 Situation of traffic congestion mitigation, laws on pollution prevention and relevant regulations, etc...... 15

2.2.4 Situation of countermeasures related to traffic congestion mitigation and environmental pollution prevention in the Philippines (Regulations and countermeasures against exhaust gas and air pollution at level of national government, Metropolitan Manila Region and other municipalities) ...... 18

2.3 Climate change policy ...... 23

2.4 Support measures for introduction of battery swapping electric jeepney technology in the Philippines ...... 27

2.5 Trend of EV market in the Philippines ...... 38

2.6 GHG emission trends in the Phililppines (Overall emission and transport sector) ...... 41

Chapter 3 Result of consideration for Battery Swapping Electric Jeepneys introduction in Metropolitan Manila Region in the Philippines ...... 42

3.1 Selection of potential project sites ...... 42

3.2 Overview of battery swapping electric jeepney technology ...... 51

3.3 Specification of battery swapping electric jeepneys for introduction in the Philippines ...... 54

3.3 Project implementation strucuture in commercial operational phase ...... 56

3.4 Consideration on project cost and financial plan ...... 59

3.5 Appraisal of environmental impact of electric jeepney introduction ...... 61

3.6 Roadmap for battery swapping electric jeepneys introduction in the Philippines including Metropolitan Manila Region ...... 73

Chapter 4 Result of Seminar on Battery Swapping Electric Vehicles Technology and the Joint Crediting Mechanism ...... 78

4.1 Seminar overview ...... 78

4.2 Comments and feedbacks from seminar participants and revision of project plan ...... 80

Chapter 5 Policy proposal for battery swapping electric jeepney technology introduction under the JCM ...... 82

5.1 Policy proposal ...... 82

5.2 Contribution to preparation of standards for modernized electric jeepneys under future Jeepney Modernization Program in consideration by Government of the Philippines ...... 83

Chapter 1 Project overview

1.1 Project objective and background

In Republic of the Philippines (hereinafter referred to as “the Philippines”), air pollution mainly from exhaust gas of automobiles as result of traffic congestion has become a serious problem mainly in major urban areas. According to Ministry of Environment and Natural Resoruces (hereinafter referred to as “DENR”), 80% of air pollution in Metropolitan Manila Region can be attributed to traffic emissions, while the other 20% is result of emissions from factories and open burning. In Metropolitan Manila Region, more than 6,000 jeepneys take part of public transportation system. A large part of them has become obsolete after more than 20 years of its operational period, and are lack of proper maintenance. This situation results in emission of black smoke including particulate matter 10 microns or less in diameter (hereinafter referred to as “PM10”) and total suspended particles (hereinafter referred to as “TSP”). This air pollution represents a threat to the citizens’ lifestyle and health, requiring introduction of low emission vehicles for air pollutants emission reduction as an urgent agenda. Also, the old jeepneys require frequent reparis by jeepney operators, bringing the operators economic loss, and this is regarded as a challenge for transport sector in the Philippines.

At present, electrification program for 3-wheel veicle for public transportation system for citizens (hereinafter referred to as “tricycle”) had been promoted by Department of Energy (hereinafter referreed to as “DOE”) as an iniative for low carbon transport with support from Asian Development Bank (ADB). The program originally had a target of electrification of 100 thousand tricycles by the end of 2017, and was cancelled in December 2016 due to higher cost compared to conventional tricycles. In this situation, electrification of jeepneys with larger size in comparison with tricycles has further financial barriers as unit price of electric jeepney body is more expensive than electric tricycles. Furthermore, prevailed electric jeepneys in process of promotion in the Philippines at stage of March 2017 adopt heavy lead-acid batteries with short crusing distance; manual battery swapping puts workers heavy burden and the lead- acid batteries, with crusing distance of approximately 10 kilometers per charge, do not have enough power output.

Based on understanding of above challenges and problems, Oriental Consultants Global Co., Ltd. (hereinafter referred to as “OC Global”), PUES Corporation (hereinafter referred to as “PUES”) and International Center for Environmental Technology Transfer (herein after referred to as “ICETT”) conducted a commissioned study on potentials of promotion and project implementation for battery swapping electric jeepneys introduction in Metropolitan Manila Region and other regions in the Philippines under Ministry of Economy, Trade and Industry (hereinafter referred to as “METI”).

The study objectives were shown below, and these three institutions have conducted field surveys and consultation activities with Electric Vehicle Association of the Philippines (hereinafter referred to as “EVAP”), the business partner in Philippine side.

- To propose fiscal and/ or non-fiscal incentives for promotion of battery swapping electric jeepney technology introduction in the Philippines under the Joint Crediting Mechanism

(hereinafter referred to as “JCM”) between the Philippines and Japan,

- To consider project plan for battery swapping electric jeepney technology introduction for Metropolitan Manila Region and other regions in the Philippines with financial incentives under the JCM, and

- To make identification of challenges for battery swapping electric jeepney technology promotion and countermeasures against identified challenges as an input for the said project plan.

1.2 Study overview

1.2.1 Overview of candidate sites for battery swapping electric jeepney technology introduction

METI Study Team conducted on- site surveys at 10 candidate sites in northern and central Luzon Island during 4 field surveys with schedule shown in sub-sub-chapter 1.2.3. The Study Team made consultation with the owner institution of respective candidate sites for consideration of battery swapping electric jeepney technology introduction during the F/S Figure 1.1 Location of candidate sites period.

Location and overview of candidate sites is shown in Figure 1.1 and Table 1.1.

Table 1.1 Overview of candidate sites Number of jeepneys at candidate site No Site name Current situation of candidate Site owner Atributes of the candidate Plan for future site name site Current number expansion of of unit jeepney fleet 1 Clark Freeport - Conversion and development Clark - A Freeport Zone. 335 diesel N/A area (Angeles of a former US Air Force base Development - CDC is keen to Jeepneys (2015) City, Pampanga site is in progress. Corporation promote environmental ( equivalent to Province) - The diesel jeepneys are (CDC) friendly development the number of operational in 5 routes now, in the Freeport zone drivers who had and route buses are in area with electric obtained the operation on its main roads. vehicle (hereinafter driving license in CFZ area) - Currently around 87,000 referred to as “EV”) workers and around 1,800 introduction. residents are using the diesel jeepneys and route buses. In the future, with the development of the area, the demand for transportation is expected to increase. 2 John Hay - Conversion and development John Hay - A Special Economic None in the N/A Special of a former US forces Management Zone (SEZ). SEZ area. Economic Zone residential and retreat area is Corporation - JHMC is keen to (Except for a （Baguio City, in progress. (JHMC) promote ecotourism electric jeepney Benguet which

Number of jeepneys at candidate site No Site name Current situation of candidate Site owner Atributes of the candidate Plan for future site name site Current number expansion of of unit jeepney fleet Province) - No jeepney is in operational, and development as a Philippine and taxis and private vehicles business center. JHMC Utility Vehicles are used for transportation also wishes to preserve Inc. (hereinafter within the special economic their environmental referred to as zone area. status with abundant of “PhUV”) - With the increase of workers, forest resources in the provided for a companies and turism, the area including hotel in SEZ transportation demand is surrounding natural area for their expected to increase. reserve. tourist - There is a plan to transportation combine prohibition of service.) access of diesel vehicles to the SEZ area with electric jeepneys introduction to cope with increased transport demand in SEZ area. 3 University of the - Diesel jeepneys are University of Main campus of the 71 diesel N/A Philippines operational for the the university. jeepneys Diliman transportation of university philippines (Operational for (Quezon City, students and staff in campus (UP university Metropolitan area.（5km/ round trip） Diliman) students and Manila Region) - Its faculty of engineering has staff, etc. in information on vehicle bodies university area.) and their related equipment that conform to government regulations in the Philippines and expertise in vehicle inspection. 4 Quezon City Diesel jeepneys are operational OneTeam N/A 500 diesel 150 diesel and Kaloocan by a private company. Company jeepneys jeepneys to be City replaced by Chinese diesel jeepneys 5 Tanauan City, - Tricycles are operated in city City of N/A Around 200 N/A Batangas area. Tanauan diesel Jeepneys Province - For transport service in operation at connecting inter-city jeepney inter-city terminal and neighboring cities jeepney including San Pablo City, terminal Caramban City and Ripa City, diesel jeepneys are operational in their operational route (16km/ one way). 6 Subic Bay - Conversion and development Subic Bay A freeport zone. None in the N/A Freeport Zone of a former US Naval base site Metropolitan freeport zone is in progress. Authority area - Taxis and buses are (SBMA) operational in the freeport zone area by 27 operators, and no jeepney is oeprational within the area. - Port, industrial parks and commercial areas are located within an area of 55,000 ha in the freeport zone area. 7 Olongapo City, - Located in the north of Subic City of N/A（Under the eco- N/A N/A Zambales Bay Freeport Zone. Olongapo friendly development Province - Diesel jeepneys are plan, the city is aiming operational in 13 jeepney for a sustainable and routes in City area. comprehensive development.） 8 Muntinlupa - PhUV Inc. operates an electric PhUV Inc. - As a municipal project, 12 electric 5 additional e- City, jeepney service for connection PhUV Inc. operates jeepneys with jeepneys for Metropolitan of Muntinlupa city area, city under contract with large-size lead- 2017 bus terminal and neighboring

Number of jeepneys at candidate site No Site name Current situation of candidate Site owner Atributes of the candidate Plan for future site name site Current number expansion of of unit jeepney fleet Manila Region San Pedro city, with route City government. acid batteries length of 10km. - City government - Citizens and holders of a positions the electric "Resident Welfare Card" jeepney project as a issued by City of Muntinlupa platform for promotion can take the jeepney service of the city's efforts for without charge. environmentally friendly transport for citizens. (It broadcasts the city’s PR program on the electric jeepneys.) 9 Filinvest - The area is commercial area Electric EVEEI operates under the 18 electric Adittional Alabang area, including a shopping mall Vehicle principle of jeepneys with electric (Muntinlupa under control by Filinvest, a Expansion environmental large-size lead- jeepneys under City, conglomerate including real Enterprices consideration by acid batteries following Metropolitan estate business in the Inc. (EVEEI) Filinvest. schedules: Manila Region) Philippines. EVEEI operates - 2 electric electric jeepney transport jeepneys in services in the route which 2016 connects the shopping mall, neighboring residential and - 2 electric office areas in the site unuder jeepneys in control by Filinvest and city 2017 bus terminal. (7.4 km/ round - 20 electric trip). jeepneys in - Filinvest provides EVEEI with 2018 previleged permit for (Transportation passenger transport services in demand residential and office areas on increase is their operational route, under expected after their principle of establishment of environmental consideration. an university (Except for existing local campus.) private van taxis.) - Users of the electric jeepneys are mainly staff of call centers in Filinvest Alabang area. 10 Ayala Alabang A high class residential area. PhUV. Inc N/A A electric N/A District jeepney with (Muntinlupa large-size lead- City, acid batteries Metropolitan Manila Region) Source: METI Study Team

1.2.2 Survey implementation structure

OC Global, PUES and ICETT formed METI Study Team to conduct survey in cooperation with EVAP, the business partner in Philippine side. Also, METI Study Team received support from Commercial Section, Embassy of the Republic of the Philippines in Tokyo for coordination with Philippine institutions including owner institution of each candidate project site during F/S period.

Furthermore, representative from OC Global, the leading company of METI Study Team, PUES, the company with battery swapping electric vehicle technology, and EVAP signed a memorudum of understanding (MoU) for trilateral cooperation for implementation of this study, in witness of President Rodrigo Duterte, at a signing ceremony in Tokyo in 26 October 2016. The ceremony was organized by the Embassy.

Figure 1.2 Sttudy iimpllementtattiion sttructture

Figure 1.3 MoU siigniing ceremony iin Tokyo (Photo by Embassy off tthe Republliic off tthe Phiilliippiines iin Tokyo)

1.2.3 Survey schedule

The following ttablle rreprresentts tthe surrvey prrocess.. 4 ffiielld surrveys werre conductted iin Augustt,, Octtoberr and December of year 2016 and February 2017.

Table 1.2 Survey schedule (Actual performance)

2016 2017

Jul Aug Sep Oct Nov Dec Jan Feb Mar

Field Survey

- Survey plan preparation

- Proposal of policies related to EV introduction under the JCM

- Policy information collection

- Study on EV market trends in the Philippines

- Preparation of electric jeepneys introduction plan

- Consideration on project implementation structure in the Philippines including financial plan - MRV methodology preparation and estimation of GHG emissions reduction amount

- Evaluation of economic impact of the project

- Consideration on schedule for electric jeepneys introduction

- Seminar on Battery Swapping Electric Vehicles Technology and the Joint Crediting Mechanism Work in Japan

- Survey preparation

- Literature survey on existing documents

- Technological consideration

- Preparation and submission of project final report

Work in the Philippines Work in Japan

Table 1.3 and Table 1.4 represents member list of METI Study Team and destinations of field surveys.

Table 1.3 Member list of METI Study Team Name Organization name Field visit Note Mr. Masahiko Fujimoto OC Global 1, 2, 3, 4 Team leader Mr. Kentaro Ofuji OC Global 1, 2. 3, 4 Ms. Fumio Sugawara OC Global - Assistance in Japan (Reporting) Mr. Izumi Miyashita PUES 1, 2, 3, 4 Mr. Yuji Takezaki PUES 3 Mr. Takeshi Suzuki PUES 2 Mr. Koji Asano PUES 4 Ms. Etsuko Minamikawa ICETT - Ms. Yasuko Ozaki ICETT - Mr. Hiroyuki Ueda ICETT - Mr. Charles Cole B. Navarro ICETT - ICETT consultant in the Philippines Mr. Yusuke Yamamoto Oriental Consultants Co., Ltd. 4

Table 1.4 Schedule table for field surveys (Activities in the Philippines) Date Time Destination or activity name Kick-off meeting for the F/S (Meeting with EVAP, EVEEI, Board of 9:30am Investment (hereinafter referred to as”BOI”), and Commercial Section, Mon, 8 August 2016 Embassy of Republic of the Philippines in Tokyo) 2:00pm Embassy of Japan in the Philippines Low Carbon Transport Planning Department, Department of Transport 10:00am (hereinafter referred to as “DOTr”) 1st field survey Tue, 9 August 2016 Climate Change Division, Environmental Management Bureau, Department 2:00pm (7-11 August of Environment and Natural Resources (hereinafter referred to as “DENR”) 2016) Investment Promotion Office, Department of Energy (hereinafter referred to 8:50am as “DOE”) Base Conversion and Development Authority (hereinafter referred to as Thu, 10 August 2016 10:40am “BCDA”), Office of the President of the Philippines Wrap-up meeting for 1st field survey (Meeting with EVAP, BOI and 1:30pm Commercial Section, Embassy of Republic of the Philippines in Tokyo) Kick-off meeting for 2nd field survey (Meeting with EVAP, BOI, Commercial Section, Embassy of Republic of the Philippines in Tokyo, 9:45am University of the Philippines National Center for Transportation Studies Mon, 10 October 2016 (hereinafter referred to as “UP-NCTS”), DOTr, DENR and DOE) 2:00pm UP-NCTS 4:15pm President of University of the Philippines (hereinafter referred to as “UP”) 10:15am Mayor of City of Olongapo, Batangas Province Tue, 11 October 2016 2:30pm Isuzu Philippines 4:50pm Visit to factory of PhUV Inc. 9:00am Clark Development Corporation (hereinafter referred to as “CDC”) 2nd field survey (9-17 October Wed, 12 October 2016 3:30pm Subic Bay Metropolitan Authority (hereinafter referred to as “SBMA”) 2016) 4:40pm City council of Olongapo City, Zambales Province Thu, 13 October 2016 2:00pm John Hay Management Corporation (hereinafter referred to as “JHMC”) Wrap-up meeting for 2nd field survey (Meeting with EVAP and Commercial Fri, 14 October 2016 2:40pm Section, Embassy of Republic of the Philippines in Tokyo） Ride on electric jeepneys under PhUV project in Muntinlupa City, 10:00am Metropolitan Manila Region Sat, 15 October 2016 Ride on electric jeepneys under EVEEI project in Filnvest Alabang District, 11:30am Metropolitan Manila Region Afternoon Analysis on field survey outcomes(*1) Sun, 16 October 2016 Whole day Analysis on field survey outcomes(*1) 10:20am SBMA Mon, 5 December 2016 2:15pm CDC 3rd field survey Tue, 6 December 2016 2:15pm JHMC (4-8 December 2016) 1:20pm UP Diliman Wed, 7 December 2016 Wrap-up meeting for 3rd field survey (Meeting with EVAP, BOI and 3:55pm BCDA) 10:00am JHMC Mon, 6 February 2017 2:15pm Benguet Electric Cooperatives Inc (hereinafter referred to as “BENECO”)

4th field survey Tue, 7 February 2017 10:00am CDC (5-11 February 10:20am EVAP、MERALCO Wed, 8 February 2017 2017) 1:30pm EVEEI 9:30am BOI Thu, 9 February 2017 1:30pm Seminar on Battery Swapping Electric Vehicles Technology and the Joint

Date Time Destination or activity name Crediting Mechanism 10:00am Climate Change Division, Environmental Management Bureau, DENR (*2) 10:00am Clark Electricity Distribution Corporation (*2) Fri, 10 February 2017 1:00pm 1 Team 4:00pm Wrap-up meeting for the F/S (Meeting with EVAP and BCDA) Note: (*1) Extension of schedule in Manila for a part of study team members due to typhoon attack. (*2) Separate meetings with participation by different study team members

1.2.4 Survey items

The feasibility study conducts survey on following items:

i. Proposal of policies related to EV introduction under the JCM ii. Consideration on concrete project plan for electric jeepneys introduction based on proposed policies - Collection and analysis of policy information collection e.g. upper policies and incentives - Research on latest EV market trends - Preparation of plan for electric jeepneys introduction in the Philippines (i.e. consideration of specification of electric jeepneys and design) - Consideration on project impelementation structure in the Philippines (i.e. project implementation structure, consideration on project cost and financial plan)

- Evaluation of environmental impact of electric jeepneys introduction (i.e. CO2 and air pollutants emission reduction amount) - Consideration on schedule for electric jeepneys introduction in the Philippines (i.e. preparation of roadmap for electric jeepneys introduction) iii. Analaysis on impacts on the Philippines including economic impact from electric jeepney project (e.g. economic evaluation, expected economic impact and contribution to local economy) iv. Consideration on challenges for electric jeepneys introduction, success factor and solutions for the challenges for project implementation under Philippine-Japan JCM scheme v. Activities for enhancement of understanding on the JCM in Philippine stakeholders and reinforcement of partnership with the stakeholders (i.e.Seminar on Battery Swapping Electric Vehicles Technology and the Joint Crediting Mechanism for governmental institutions and EV industry in the Philippines)

Chapter 2 Trends in related policies and EV markets in the Philippines

2.1 Situation of transport sector in the Philippines

2.1.1 Situation of the Philippines and Metropolitan Manila Region

At stage of year 2013 7.69 million automobiles are registered in the Philippines at stage of year 2013, and this figure includes 868 thousand private cars, 346 thousand SUVs, 40 thousand trailers, 4.2 million 2-wheel vehicles including tricycles and 350 thousand trucks. Also, 30 thousand buses for public transportration service and 179 thousand public utility vehicles including jeepneys were included in the overall figure.Proportion of utility vehicles amounts for 23.3% and utility vehicles were second largest group among overall registed automobile fleets in the Philippines. In comparison with registered automobile volume in year 2010, the volume was increased for every automobile type by 1.05 million vehicles or 16% in total.

In comparison with registered automobile volume in year 2010, the volume was increased for every automobile type by 1.05 million automobiles or 16% in total. Among the overall volume of increased automobiles, 2-wheel vehicle amounts for 768 thousand and it mainly owes to public utility vehicles with increased volume of 930 thousand vehicles. Among increase rate of diferent vehicle type, the highest rate is that of trailers (i.e. 37% or 10 thousand vehicles) and the second highest rate is that of SUVs (i.e. 33% or 85 thousand vehicles).

Table 2.1 Registered automobile volume in the Philippines Private Bicycles and Public utility Item Year Buses SUVs Trailers Trucks Total cars tricycles vehicles 2010 34,933 808,583 3,482,149 261,213 29,279 317,903 1,700,795 6,634,855 Registered 2011 34,478 828,587 3,881,460 284,099 32,531 329,385 1,748,402 7,138,942 volume 2012 33,586 852,255 4,116,690 310,521 37,459 341,572 1,771,310 7,463,393 2013 31,665 868,148 4,250,667 346,396 40,145 358,445 1,794,572 7,690,038 Proportion by vehicle type 2013 0.4% 11.3% 55.3% 4.5% 0.5% 4.7% 23.3% 100.0% Increase rate in year 2013 in comparison with 0.91 1.07 1.22 1.33 1.37 1.13 1.06 1.16 year 2010 (Times) Unit:: vehicle Source: LTO

On the other hand, registered automobiles in Metropolitan Manila Region in year 2013 amounts for 2.1 million vehicles, including 453 thousand private cars, 185 thousand SUVs, 18 thousand trailers, 773 thousand 2-wheel vehicles including tricycles, and 18 thousand trailers, and 27% of overall registered automobiles are concentrated in the Region. The registered automobile volume in the Region includes 13 thousand buses and 57 thousand utility vehicles (including jeepneys) as public transport service vehicles. Proportion of utility vehicles among the registered automobiles in the Region is 27.5% and is the second largest among them, while 2-wheel vehicles including tricycles in the largest. If excluding 2-wheel vehicles, proportion of utility vehicles among the rest of automobiles in the Region amount for 44%. Furthermore, more than 40% of registered buses, private cars, SUVs and trailers in the Philippines are

concentrated in national central region.

Table 2.2 Registered automobile volume in Metropolitan Manila Region Private Bicycles and Public utility Item Year Buses SUVs Trailers Trucks Total cars tricycles vehicles 2010 14,184 435,473 667,424 145,438 14,572 69,181 558,123 1,904,395 Registered 2011 13,345 446,106 734,465 156,188 16,911 72,121 575,614 2,014,750 volume 2012 13,007 450,189 745,777 167,105 18,220 72,009 566,083 2,032,390 2013 13,989 452,959 773,291 185,623 18,033 78,521 578,732 2,101,148 Proportion by vehicle type 2013 0.7% 21.6% 36.8% 8.8% 0.9% 3.7% 27.5% 100.0% Increase rate in year 2013 in comparison 44% 52% 18% 54% 45% 22% 32% 27% with year 2010 (Times) Registered volume 2010 1.04 1.16 1.28 1.24 1.14 1.04 1.10 Unit: vehicle Source: LTO

According to JICA study report on Roadmap for Transport Infrastructure Development for Metro Manila and Its Surrounding Areas in year 2014, V/C ratio which represents traffic congestion in Metropolitan Manila Region is 0.8 in average, and automobiles operate in approximately a half of roads in the Region in velocity of 20km/h and below. As to road network development, 1,032 kilometers of national roads with road density of 0.095km/km2 and 27,457kilometers of local roads with road density of 0.57km/km2 are developed, and roads in Metropolitan Manila Region enjoy comparatively high road density and development rate compared to other regions in the Philippines. However, more automobile volume on less developed rod network amounting for 1 kilometer of road for 424 automobiles is considered to lead to traffic congestion in the Region. Furthermore, traffic volume by time period is drastically increased in around 7:00 am and evening time at 8:00pm and after, and it is observed there is traffic congestion in daytime and evening time, as well as peak hours, as shown in Figure 2.1.

Source: The Project for Capacity Development on Transportation Planning and Database Management in the Republic of the Philippines (JICA,2013)

Figure 2.1 Traffic volume by time period in main roads in Metropolitan Manila Region

Published estimate by NEDA based on result of the abovementioned JICA Study indicates daily traffic cost including expense for operation of automobiles and time cost in users side amounts for 2.4 billion

Philippine Pesos, and it is shown that traffic congestions have serious negative social impact.

2.1.2 Situation of air pollution (Situation of air pollutants emissions)

Situation of installed air pollution monitoring stations and monitoring items are summarized in Table 2.3.

Table 2.3 Situation of installaed air pollution monitoring stations in Metropolitan Manila Region Location Monitoring item(s) Sampling method Installed volume

Central Office PM10 Lower volume sampling system 1

(Quezon City) NO2、SO2、O3 DOAS-Open path; BTX-CO 4 TSP (Total Suspended Particulates) Higher-volume sampling system 10 Metropolitan PM / PM Real-time BAM 3 Manila Region 10 2.5 PM10 Higher-volume sampling system 5 Source: National Air Quality Status Report 2010-2011(DENR,2012)

Concetration of TSPs in atmosphere, as shown in Figure 2.2, had been decreased from 171μg/Ncm to 171μg/Ncm in the period of year 2004-2013 by approximately 30%. Focusing on TSP concentration, this represents air quality improvement in Metropolitan Manila Region, and this is considered as success of mandated exhaust gas inspection, improved fuel quality and preparation of laws related to air pollution countermeasures; however, further improvement is still necessary to meet long-term national air quality standard level (90μg/Ncm as average yearly value).

200 171 162

m 146 150 n c 138 i

131 129 N / n 150 118 119 118 g o i μ t a e r r t 100 e n h e Long-term air quality standard level:(90μg/cm) p c s n o o 50 m C t a 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Year Source: DENR

Figure 2.2 Concentration of TSPs in atmosphere in Metropolitan Manila Region

National air quality standard value for PM10 is set as 60μg/Ncm(long-term value in yearly average) and 150μg/Ncm (short-term value in 24-hour average) At stage of year 2013, observed concentration

value of PM10 at all of 9 stations for observation of PM10 concentration was below the short-term

national standard value. Also, as shown in Table 2.4, observed concetration value of PM10 at 5 of 9 stations in year 2013 was 74μg/Ncm in average and was slightly below the long-term value. There is a

decreasing PM10 concentration on a continuous basism, and the long-term PM10 concentration value had been decreased by 39% from upper half of year 2011 to latter half of year 2014, while the observed

PM10 concentration value in year 2015 (i.e. 50μg/Ncm) was also below the long-term value.

Table 2.4 PM10 concentration at each monitoring station in year 2013 (yearly geometric mean value) Monitoring Ateneo RT NPO- Marikina DOH- MMDA- Pasay Muntinlupa Val-ESDA- NAMARI station EDSA Manila EDSA RT A-RT Value (μg/Ncm) 50 73 61 69 67 105 25 74 53 Source: DENR

Observed value on SO2 and NO2 concetration had been below air quality standard value in period of year 2007-2011, as result of efforts including mandated exhaust gas inspection and fuel quality improvement.

2.2 Transport policy

2.2.1 Relationship with development plan and other policies in the Philippines and Metropolitan Manila Region

Transport policy has close relationship with national development plan and national land policies.NEDA is a major supervising authority over national and regional land policies. National land policy is formulated in dimension of spatial planning and socio-economic planning at national and regional levels, as shown in Table 2.5. Especially in Metropolitan Manila Region, the Metropolitan Manila Development Authority (hereinafter referred to as “MMDA”) formulates plans for its terrain under Republic Act No. 7924 titled An Act Creating the Metropolitan Manila Development Authority, Defining its Powers and Function, Provinding Funds Therefor and Other Purposes.

Table 2.5 Framework of land policy plans and supervising agencies Spatial planning Socio-econoimic planning Supervising agency National level National Framework for Physical Medium Term Philippines Development NEDA Planning (2001-2030) Plan (2011~2016、2017~2022) Metropolitan - A Physical Development Framework Plan for Metropolitan Manila 1996-2016 MMDA Manila Region - The Metro Manila greenprint 2030 : building a vision

Description on each land policy plan is shown as follows:

a. Medium Term Philippines Development Plan and National Framework for Physical Planning (2001- 2030)

Medium Term Philippines Development Plan (hereinafter referred to as “MTPDP”) is a six-yearland policy plan as the socio-economic development plan framework by the National Economic and Development Authority (hereinafter referred to as “NEDA”). The MTPDP is the national plan which covers policy goals of administration of each President of the Philippines1. The components of the MTPDP on infrastructure sector stipulates transport system development from viewpoint of “safety, efficiency, appropriateness, competency, inclusiveness, environmental consideration and citizens-based”, and its disiplines include promotion of Public-Private Partnership (PPP), efficiency in plan development

1 MTPDP2017-2022 as the latest MTPDP was approved by President Rodrigo Duterte on 21 February 2017, and its pre- publication version is available on NEDA website as of 16 March 2017.

and budget procurement, enforcement in institutional arrangement and implementation structure and consideration on environment including climate change.

MTPDP 2011-2016 has target of air pollutant emissions reduction in Metropolitan Manila Region and city center of other major cities by 30% by year 2011 compared to year 2009 level with yearly emissions reduction by 5% within period of year 2011-2016. To accomplish this target, the MTPDP covers fiscal mechanism introduction for large-scale introduction of public transport services based on EVs among other efforts such as enforcement in initiatives including emission test and mandated inspection for stationery and mobile emission sources, promotion of conversion to high efficient automobile engines, full-scale installation of air quality monitoring stations in Metropolitan Manila Region and city center of other major cities under the Clean Air Act. MTPDP positions the fiscal mechanism as promoting measure to support both EVs production and conversion of conventional fossil fuel vehicles to EVs2.

NEDA published the pre-publication version of MTPDP 2017-2022 in March 2017. The MTPDP urged LGUs and MMDA to work on quality improvement in road public transport services and raised development of high-quality public transport services as a more attractive alternative for citizens compared to use of private vehicles as a goal for accerated infrastructure development under the MTPDP. As examples of actions for accomplishment of the goal, the MTPDP mentioned to fleet modernization and development of environmentally-friendly sustainable urban transport.3.

Apart from MTPDP, National Framework for Physical Planning (hereinafter referred to as ”NFPP”) 2001-2030 represents a 30-year long-term national special development plan, and the NFPP is reviewed and revised every 10 years. The NFPP positions transport sector as a sub-sector in infrastructure development field, and stipulates that dissemination and promotion of inter-modal transport system needs to be mainstreamed into infrastructure development plans and policy directions. Also, the NFPP stipulates that such mainstreaming efforts need to consider desirable mutual compatibility, economic feasibility, comparative advantage and linkage among different type of transport modes for promotion of smooth transportation of passengers and freights between different locations4. b. Physical Development Framework Plan for Metropolitan Manila 1996-2016

The Physical Development Framework Plan for Metropolitan Manila 1996-2016 was formulated by MMDA, as a city and region development plan at regional level in Metropolitan Manila Region for development of the Region with better planning and efficent management.

The Plan is a 20-year long-term plan with review every 10 year. The latest version of the plan (Version for 1996-2016 after revision in year 1999) set a new focus on development of wider range of metropolitan region including peripheral area of Metropolitan Manila Region, detailed description on development policy zones and countermeasures against transport issues.

2 p.329, MTPDP2011-2016 3 p.3, p.19 and p.20, Chapter 3, Pre-publication version of MTPDP2017-2022 (Version of March 2017) 4 p.12, NFPP2011-2030 Executive Summary

Consideration on the next phase of physical development framework plan for period of year 2017-2037 has been in progress by MMDA. c. The Metro Manila Greenprint 2030: Building a Vision

MMDA prepared and published development vision titled The Metro Manila Greenprint 2030: Building a Vision for overall Metropolitan Region area including 16 cities and a municipality under Metropolitan Manila Region with support from the

World Bank. The Greenprint was prepared in Source: MLIT website response to Presidential direction for preparation of Figure 2.3 Policy zoning map under Physical long-term plan for Metropolitan Manila Region and Development Framework Plan for Metropolitan Manila 1996-2016 the Greater Metropolitan Manila Region to the Regional Development Council in the National Capital Region (RDC-NCR) by the former Aquino administration in year 2011.

The Greenprint Vision set a goal for implementation of following measures for Building a Green, Connected, and Resilient Metropolis for All in Metropolitan Manila Region, through implementation of large-scale infrastructure development and coordination among relevant governmental agencies with coordination for vitalized public and private vehicle transport system in the Region:

- Re-organizing of jeepney and Asian Utility Vehicle (AUV) services to feed (rather than compete with) major trunk routes and key nodes, while providing short-distance intra-nodal travel using cleaner fuels and vehicle technologies, and

- Upgrading of jeepney drivetrains, moving from polluting diesel and/or petrol to cleaner fuels or electric batteries5.

2.2.2 Masterplan in transport sector in the Philippines and Metropolitan Manila Region a. Transportation Road Map for the Sustainable Development of Manila Metropolitan Area of the Philippines

The Transportation Road Map for the Sustainable Development of Manila Metropolitan Area of the Philippines was prepared and approved at the Cabinet meeting in June 2014, with support from JICA, in response to request from NEDA. The Road Map is a comprehensive transport development roadmap with focus on Metropolitan Manila Region and neighboring Central Luzon and Calbarzon Regions. The Road Map includes transport development investment program and priority projects in a short term for year 2014-2016 and medium-term for year 2017.

5 p.37, The Metro Manila Greenprint 2030: Building a Vision, MMDA

The Road Map sets goal of 5 NOs: namely, NO traffic congestion, NO household living in high hazard risk areas, NO barrier for seamless mobility, NO excessive transport cost burden for low-income groups and NO air pollution. Furthermore, improvement in bus and jeepney public transport service, along with BRT introduction as a long-term priority, is positioned as a part of road public transport project among 5 major projects under the dream plan for better Metropolitan Manila Region through accomplishment of the said 5 NOs targets. Specifically, the improvement in the said public transport service is aimed for modernization, safe fleet management, rational operational route arrangement and improved terminal and transition station facilities development for bus and jeepney transport services6.

Among them, jeepney modernization is also positioned as an effort under road public transport project in combination with relevant efforts including conversion of old conventional buses to lower pollutant- emitting buses and utilization of ICT system, with target year of year 20307.

Source: Translation of p.44, Japanese summary of Final Report for Technical Assistance in Creating a Transportation Road Map for the Sustainable Development of Manila Metropolitan Area of the Philippines, JICA Figure 2.4 Impact of implementation of 5 major projects under the Road Map on travel time of users in Metropolitan Manila Region

2.2.3 Situation of traffic congestion mitigation, laws on pollution prevention and relevant regulations, etc. a. Tranportation Policy Act

The Act covers division of roles between national and regional governments, roles, criteria for selection of plans and measures, subsidy programs of governments at different levels and other contents. However, there is no description on details of financial sources and restriction on concessions.

6 p.33. Japanese summary of Final Report for Technical Assistance in Creating a Transportation Road Map for the Sustainable Development of Manila Metropolitan Area of the Philippines, JICA 7 p.50, Japanese summary of Final Report for Technical Assistance in Creating a Transportation Road Map for the Sustainable Development of Manila Metropolitan Area of the Philippines, JICA

In item of urban transport policy, there are following eight items as priority policies in the Act.

- Development of hirachy of urban public - Promotion of travel demand control transport system policies - Promotion of mass freight and public transport - Strengthened regulation over cargo system as a suitable option for intra-urban vehicles transport service - Consideration for pedestrians and bicycle - Promotion of improved mutual connectivity users in transport policies and nodosity among public transport services - Promotion of traffic impact assessment - Promotion of actions for low cost transport implementation engineering and transport management b. Clean Air Act

The Clean Air Act regulates standard value of concentration of substances include carbon monoxide (hereinafter referred to as “CO”), nitrogen oxide (hereinafter referred to as “NOx”) and suspended particulate matter (hereinafter referred to as “SPM”) as summarized in Table 2.6 and Table 2.7. Also, the Act mandates automobile users to undergo exhaust gas inspection and requires installation of automobile pollution control device.

Table 2.6 National ambient air quality guideline for criteria pollutants Pollutant name Short term (*1) Long term (*2) μg/Ncm ppm Averaging time μg/Ncm ppm Averaging time SPM(*3) - TSP 230(※4) - 24hours 90 - 1 year(*5) - PM10 150(※6) - 24hours 60 - 1 year(*5) Sulfur dioxide (*5) 180 0.07 24 hours 80 0.03 1 year Nitrogen dioxide 150 0.08 24 hours - - Photochemical 140 0.07 1 hour - - oxidants Photochemical 60 0.03 8 hours - - oxidants as ozone Carbon monoxide 30 mg/Ncm 30 1 hour - - 10 mg/Ncm 9 8 hours - - Lead*7 1.5 - 3 month(*7) 1.0 - 1 year Note: *1 Maximum limits represented by ninety-eight percentile (98%) values not to be exceed more than once a year. *2 Arithmetic mean *3 SO2 and Suspended Particulate matter are sampled once every six days when using the manual methods. A minimum of twelve sampling days per quarter of forty-eight sampling days each year is required for these methods. Daily sampling may be done in the future once continuous analyzers are procured and become available. *4 Limits for Total Suspended Particulate Matter with mass median diameter less than 25-50 um. *5 Annual geometric mean *6 Provisional limits for Suspended Particulate Matter with mass median diameter less than 10 microns and below until sufficient monitoring data are gathered to base a proper guideline. *7 Evaluation of this guideline is carried out for 24-hour averaging time and averaged over three moving calendar months. The monitored average value for any three months shall not exceed the guideline value.

Source: Section 12, Clean Air Act

Table 2.7 National ambient air quality standards for source specific air pollutants from industrial sources/ operations Pollutants (*1) Concentration (*2) Averaging Analysis/ Measurement method (*3) μg/Ncm ppm time (min) Ammonia 200 0.28 30 Nesselerization/ Indo Phenol Carbon Disulfide 30 0.01 30 Tischer Method Chlorine and Chlorine 100 0.03 5 Methyl Orange Compounds (Cl2) Formaldehyde 50 0.04 30 Chromotropic acid Method or MBTH Colorimetric Method Hydrogen Chloride 200 0.13 30 Volhard Titration with Iodine Solution Hydrogen Sulfide 100 0.07 30 Methylene Blue Lead 20 - 30 AASc Nitrogen dioxide 375 0.20 30 Greiss- Saltzman 260 0.14 60 Phenol 100 0.03 30 4-Aminoantiphyrine Sulfur dioxide 470 0.18 30 Colorimetric-Pararosaniline 340 0.13 60 SPM ・TSP 300 - 60 Gravimetric Note: *1 Pertinent ambient standards for Antimony, Arsenic, Cadmium, Asbestos, Nitric Acid and Sulfuric Acid Mists in the 1978 NPCC Rules and Regulations may be considered as guides in determining compliance. *2 Ninety-eight percentile (98%) values of 30-minute sampling measured at 250C and one atmosphere pressure. *3 Other equivalent methods approved by the Department may be used.

Source: Section 12, Clean Air Act

EMB issues Certificate of Compliance (COC) for automobile manufacturers, assemblers and importers to certify that their specific new vehicle or vehicle type compliance with national ambient air quality standard under the Clean Air Act. COCs are effective for 6 years after issuance date. At the same time, the Act stipulates that importers or owners of vehicles such as reassembled vehicles imported or used cars and unregistered retroffited vechiles with used engines shall apply for Certificate of Compliance to Emission Standards (CCES) from LTO.

As shown in Table 2.8, it was revealed that approximately 73% of 60,444 vehicles in Metropolitan Manila Region were not in compliance with emission standard according to emission test in year 2011.

Table 2.8 Result of emission test in Metropolitan Manila Region in year 2011 Office location Targeted vehicles for emission Vehicles in Compliance ratio test (cars) compliance (cars) (%) Quezon City 18,730 8,006 42.7 Pasig City 9,035 3,174 35.1 Manila City 10,193 2,789 27.4 Mandaluyong City 7,908 0 0 Muntinlupa City 3,433 84 2.4 MMDA 3,394 1,015 29.9 EMB-NCR 2,637 863 34.0 Makati City 5,214 0 0 Total 60,444 15,931 26.4

Source: EMB

DOTr, with objective of traffic congestion abatement and environmental pollution prevention, has prepared the National Environmental Sustainable Transport Strategy for the Philippines and the Philippines National Implementation Plan on Environment in the Transport Sector Low Pollution-Low Emission 2011-2016 (hereinafter referred to as “NIP”). This Sub-subchapter describes overview of national initiatives and programs including the said two documents. a. National Environmental Sustainable Transport Strategy for the Philippines (hereinafter referred to as “EST Plan”)

The EST Plan was prepared by DOTr with assigned numerous strategies for respective 12 topics as shown in Table 2.9. Also, the Strategy describes necessary concrete actions and budget procurement method for the strategies.

Table 2.9 Overview of the EST Plan Topic Strategy 1. Public health - Preparation and issuance of administrative orders - Partnership with institutions, groups and stakeholders related to PR campaign - Implementation and appraisal of sustainable trtansport programs 2. Ambiental air quality monitoring - Monitroing of progress of air pollutants emission reduction and survey - Installation of ambiental air pollutants monitoring equipment - Capacity building on monitoring and survey for local government, etc. 3. Noise - Revision and observation of noise regulation standards - Increased capacity in local governments and issuance of ordinances 4. Regulation, monitoring and - Revised regulations on appropriate driving and fuel economy management of emissions - Strengthened monitoring on roads - Mandatory inspection for public transport vehicles 5. Improved fuel quality - Promotion of fuel with good quality - Introduction of Euro4 standards - Improved CNG supply system 6. Public transport planning and - Integrated public transport system networks demand control - Preparation and reinforcement of appropriate freight transport policies - Preparation of measures related to appropriate TDM/ TSM - Introduction of mass transport system - Rationalization of public transport 7. Non Motorized Transport (NMT) - Preparation of policies and guidelines on pedestrians and bicycles - Facility development for NMT 8. Infrastructure development with - Transport-related infrastructure with environmental consideration consideration for environment and - Applied inclusive design in transport-related infrastructure and freight human vehicles - Seamless and safe public transport system 9. Social justice and gender - Scrutiny on existing laws and regulations from viewpoint of social justice and gender - Necessary support for users 10. Road safety and maintenance - Safety inspection for roads - Appraisal of cost of traffic accidents - Allocation of transport safety and traffic regulation zones 11. Land-use plan - Capacity building on integration of land use and transport policy - Land development for complex utilization 12. Knowledge database - Establishment of a research institute for environmentally-conscious development, dissemination and transport citizens participation - Establishment of award system - Organized information on public hygiene

b. Philippines National Implementation Plan on Environment in the Transport Sector Low Pollution- Low Emission 2011-2016 (hereinafter referred to as “NIP”)

NIP is the national action plan for the Philippines, based on ASEAN-Japan Action Plan on Environment Improvement in the Transport Sector as approved at ASEAN Transport Ministers Meeting plus Japan (ATM+J) in year 2009. The NIP includes strategies and plans for introduction of low carbon and green transport system. Compared to previously prepared EST Plan, the NIP is comparatively focused on low carbon and low pollution transport and guidance on the EST Plan is reflected on the National Climate Change Strategy 2010-2022.

Projects which was proposed under the EST Plan is not mandatory, however, the EST Plan requires concerned institutions to continue their effortsfor implementation of the projects in year 2016 and afte, though the target period of the EST Plan is until year 2016. The EST Plan describes 10 project pillars for road transport initiatives, and the second project pillars of Vehicle Technology refers to promotion of EVs including electric jeepneys in the Philippnies.

1. Emission control and standards 6. Freight and logistics 2.Vehicle technology 7. Cleaner fuels 3. Public transportation 8. Biofuels 4. Travel demand management 9. Behavioural change 5. Non Motorized Transport (NMT) 10. Environmental monitoring

In parallel of initatives under the NIP, there are various regulations and programs in enforcementor implementation in traffic congestion abatement and environmental pollution prevention in the Philippines. Regulatory measures and programs by Philippine governmental agencies in cooperation with other various stakeholders in field of abovementioned 10 project pillars under the NIP are summarized in Table 2.10.

Table 2.10 Regulations and countermeasures in the field of traffic congestion mitigation and pollution prevention Action Responsible organization in the Philippines Location for action implementation Action contents or objectives 1. Emission control and standards Euro4 standards DENR、DOTr Nationwide - Mandated compliance with Euro4 standards by new passenger vehicles - Regulation of CO, Hydrocarbon (hereinafter referred to as “HC”) +NOx and PM emissions from existing Euro-2/ Euro-3 compliant diesel vehicles. - Issuance of DAO-2016-23 for introduction of Euro 4 standards (effective since July 2016) Anti Smoke Belching Campaign - DOTr, LTO and DENR Nationwide - Air quality improvement and prevention of further - Philippine Business for Social Progress (Main focus on Metropolitan Manila deterioration of air quality - Businessmen-Bishops’ Conference Region) - Increased environmental awareness in private sector - Philippine Business for the Environment - Demonstration to promote the idea that business can - Philippine Medical Association (PMA) use its economic clout to force proper environmental performance. Motor Vehicle Inspection System (MVIS) LTO - East Avenue, Quezon City - Prohibition of operation of buses and school buses - Old MIA Road, Pasay City with life span over 15 years - San Fernando, Pampanga Province - Improved air quality conservation through abatement - Mandaue City, Cebu and mitigation of air pollution by vehicles which are - Alaminos, Laguna Province not in compliance with exhaust gas regulation 2.Vehicle technology Promotion of 4-stroke tricycles operation Local government units (hereinafter referred to Mandaluyong City and San Fernando City Reduction of air pollution from tricycles and motorcycles as “LGUs”) Promotion of EVs including electric DOTr, DOE and municipalities with support Makati City, Mandaluyong City and Mitigation of air pollution from automobiles jeepneys and motorcycles from the World Bank Surigao City 3. Public transportation Development of public transport planning DOTr Metropolitan Manila Region Capacity building support system for Metropolitan Manila Region Regulation on franchaise issuance for Land Transportation Franchising & Regulatory Nationwide Suspension of franchaise issuance to operators of public public transport services Board (hereinafter referred to as “LTFRB”), transport services DOTr Rationalization of public road transport DOTr, LTO, LTFRB and Metro Manila Bus Metropolitan Manila Region and Cebu City Increased effiency in public transport routes Operators’ Association (MMBOA) Metro Cebu BRT Demonostration Proejct DOTr and Government of Cebu City Cebu City Modal shift Enhancement of the Pasig River Ferry Pasig River Rehabilitation Committee (PRRC) Metropolitan Manila Region Modal shift Services Enhancement of operation of the nautical DOTr, The Maritime Industry Authority Nationwide Enhancement of development and promotion of an highway (RORO service) (MARINA) and Phlippine Port Authority effective and efficient intermodal/ multimodal (PPA) transportation network system in the Philippines Development of additional urban rail DOTr and Philippine National Railway (PNR) Metropolitan Manila, Panay and Mindanao Implementation of rail network development plan for

Action Responsible organization in the Philippines Location for action implementation Action contents or objectives services Regions Metropolitan Manila Region 4. Travel demand management Unified Vehicular Volume Reduction MMDA Metropolitan Manila Region Reduction of vehicular traffic volume Program (UVVRP) Implementation of traffic management MMDA, Department of Public Works and Nationwide - Travel time reduction measures e.g. restoration of signalized Highways (hereinafter referred to as “DPWH”) - Fuel consumption and pollutants emission reduction intersections and LGUs Travel demand and traffic system MMDA and LGUs Nationwide - Travel time reduction management - Fuel consumption reduction Truck ban MMDA and Truckers Association Metropolitan Manila Region Improved traffic efficiency Increased utilization of electronic DOTr and Toll Regulatory Board (TRB) Toll roads Inreased efficiency and reduced vehicle congestion at toll payment system (EPS) plaza Pedestrianization of commercial facilities Ayala Commercial Center Management Alaya-Makati Commercial Center Induction of walk by providing pedestrian facilities e.g.underpass and overpass with escalators and connection with various malls by elevated walways with 3 MRT stations 5. Non Motorized Transport (TNT) Development of bikeways DOTr and Department of Interiors and Local Marikina City and University of the Promotion of use of bicycles Government (DILG) Philippiners (UP) Conversion of roads to pedestrian haven UP and Marikina City Quezon City and Marikina City Pedestrianization 6. Freight and logistics Improved freight and logistics DOTr and Truckers’ Association Nationwide Efficient goods transportation management 7. Cleaner fuels Passage of the EV Incentive Bills Legislation Nationwide Tax subsidy and other fiscal/ non-fiscal incentives for production and importation of EVs and their components Natural Gas Vehicle Program for DOE, NGVPPT and accredited bus operators Manila - Promotion of compressed natural gas (hereinafter PublicTransport (NGVPPT) referred to as “CNG”) in transport sector in consonance with the goal of ensuring fuel supply diversification and supply security - 60 CNG bus units initially Alternative fuel program DOE and DOTr Nationwide Diversification of the country’s fuel sources and AutoLPG program for taxi services contribution to actions against air pollution from vehicles Operation of 5,000 CNG buses DOTr Nationwide Promotion of operation and use of environmentally friendly transport services and fuel 8. Biofuels The Philippine Biofuel Program DOE, Philippine Coconuts Authority Nationwide Promotion of biofuel use (Department of Agriculture) and National Biofuel Board (DOE) Mandatory requirement of 2% biodiesel DOE Nationwide Promotion of biofuel use blend

Action Responsible organization in the Philippines Location for action implementation Action contents or objectives Mandatory requirement of 10% ethanol DOE Nationwide Promotion of biofuel use blend 9. Behavioral change Car-less day, carpooling and auti-idling DOE and industrial establishments under the Nationwide Promotion of fuel conservation and reduction of pollution campaigns (Voluntary program) Partnership for Energy Responsive Companies/ and traffic congestion Ecozones Ecosafe driving awareness program MMDA Metropolitan Manila Region Promotion of fuel effcicient driving Introduction of bike lanes MMDA Metropolitan Manila Region Traffic efficiency and road safety 10. Environmental monitoring Identification of potential hotspots and National: EMB Nationwide prioritization of establishment of ambient Local: LGUs and Highly Urbanized Cities air quality monitoring stations (hereinafter referred to as “HUCs”) Identification of potential staff to be National: EMB, DOTr or LTO. Nationwide trained in HUCs Local: LGUs Trainings for governmental staff National: EMB, DOTr or LTO - Training on use of DENR mobile air quality Local: LGUs monitoring van - Impelmentation of action plan workshop on air quality management Update of baseline roadside noise level EMB、Housing and Land Use Regulation data by year 2010 Board (HLURB). DOTr and Bureau of Product Standards (BPS) under Department of Trade and Industry (DTI) Establishment of interagency technical EMB working group

Source: Revision of p.24-27, Philippines National Implementation Plan on Environment in the Transport Sector Low Pollution-Low Emission 2011-2016 based on information from Philippine governmental agencies during the F/S period

Among efforts on Table 2.10, regulation values under Euro 4 standards are summarized in Table 2.11.

Table 2.11 Regulation values under Euro 4 standards Targeted substance CO NOx HC+NOx PM name Gasoline Diesel Gasoline Diesel Gasoline Diesel Gasoline Diesel Regulation value 1.0 0.5 0.08 0.25 - 0.30 - 0.025

Unit: g/km Source: p.37, Final Report on Study on trends of Automobile Market in Asian Emerging Economies by Mitsubishi UFJ Research and Consulting Co., Ltd. (Commissioned study by METI in JFY2015)

Also, in relation to item of EV introduction on Table 2.10, sectoral target for energy efficiency improvement and target for introduction of CNG and LPG vehicles, electric tricycles and biofuel-driven (biodiesel/ bioethanol-driven) vehicles are shown in Table 2.12 and Table 2.13 respectively.

Table 2.12 Sectoral target for energy Table 2.13 Target for introduction of CNG, LPG, electric efficiency improvement tricycles and biofuel-driven vehicles Sector name 2020 2020 2030 Vehicle type 2020 2025 2030 Agriculture 20 25 30 CNG vehicles Industrial 283 408 583 CNG buses 6,900 units 9,200 units 15,000 units Commercial 241 345 482 CNG taxis 1,000 units 6,000 units 16,000 units Household 265 401 588 LPG vehicles 21,700 units 23,200 units 23,000 units Transport 689 894 1,169 Electric tricycles 106,000 units 150,000 units 230,000 units Total 1,499 2,072 2,850 Biofuel-driven vehicles Unit: Accumulated k-toe Bioethanol-driven 20％ 20％ 20％ vehicles Source: Philippine Energy Plan 2012-2030, DOE CME (Biodiesel)-driven 10％ 20％ 20％ vehicles Source: The same as Table 2.12

2.3 Climate change policy

2.3.1 National climate change policy by Government of the Philippines

National statistics of sectoral energy consumption in the Philippines show that transport sector was the largest energy consumer which consumes around 36.7% of overall energy consumption in the country at stage of year 20108. Furthermore, energy consumption in road transport subsector amounted for nearly around 80% of overall transport sector. Energy Supply and Outlook 2006 by APEC forcasted that energy demand in road transport subsector would be continue to increase by 4.6% on a yearly basis. Similarly, transport sector was the largest GHG emitter and their emission amounted for around 30%, and this fact shows importance of climate change policy countermeasures in the sector. In this situation, measures against air pollution and traffic congestion have been implemented as a part of climate change countermeasures. In this sub-subchapter, national policy and plan with focus on climate change policy countermeasures are described.

8 Key Energy Statistics 2010, DOE (https://www.doe.gov.ph/energy-consumption)

a. Climate Change Act 2009

Climate Change Act 2009 titled An Act Mainstreaming Climate Change into Government Policy Formulations, Establsihing the Framework Strategy and Program on Cliamte Change, Creating for this Purpose the Climate Change Commission, and for Other Purposes has following characteristics:

Under the Act, the Climate Change Commission was established with President of the Philippines as the Chairman and members from related governmental agencies including DOTr, DOE and DILG as well as other institutions including NGOs, as an independent and autonomous body with the same status as that of a national government agency. The Commission is tasked to coordinate, monitor and evaluate the programs and action plans of the government related to climate change, and receives support and technical advices from subordinate Climate Change Office and Panel of Technical Experts.

Also, the Act mandates formulation of national framework strategy on climate change with revision for every 3 years and national climate change action plan under the framework strategy one year after the formulation of the framework starategy. Under the Act, central and provincial governments shall provide technical and financial support to subordinate LGUs for their accomplishment of local climate change action plan, while LGUs shall be responsible for implementation of the action plan in respective fields.

In year 2012, the Act was revised to add clauses on increased involvement by departments related to finance and budget for importance of climate finance and an additional role on leading role of the Climate Change Committee in the field of international climate change negotiation. b. National Framework Strategy on Climate Change 2010-2022 (hereinafter referred to as “NFSCC”)

NFSCC was prepared in year 2010, with objective of building of adaptative capacity to climate change impacts, strengthened structure of natural ecosystem, appropriation of mitigation initiatives for sustainable development. The NFSCC shows 16 mitigation, adaptation and cross-sectoral strategies, and especially there is a description on transport sector as Environmentally Sustainable Transport as a key result area (KRA) of its mitiation pillar under the NFSCC. c. National Climate Change Action Plan 2011-2028 (hereinafter referred to as “NCCAP”)

NCCAP has objective of fusion of rationally achievable climate change mitigation and adaptation measures to materialize action programs under the national strategy. The NCCAP sets following 7 strategic priorities and the Action Plan stipulates that environmentally sustainable transport will be promoted and adopted in transport sector in the strategic priority of 6. Sustainable Energy.

1. Food Security 5. Climate-smart Industries and Services 2.Water Sufficiency 6. Sustainable Energy 3. Ecosystems and Environemntal Stability 7. Knowledge and Capacity Development 4. Human Security

Also, for promotion and introduction of sustainable transport, the NCCAP set target for promotion of environmentally sustainable transport through initiatives as shown in Table 2.14 during the target period of the NCCAP.

Table 2.14 Iniittiiattiives on llow carbon ttransportt polliicy under tthe NCCAP Immediate outcome name Outputs Activities Environmentally Environmentally sustainable IImpllementt cllean fflleett prrogrram sustainable transport transport strategies and fuel Forrmalllly adoptt a ssociialllly equiittablle and iinttegrratted lland-use and promoted and adopted conservation measures ttrranssporrtt pllanniing prrocessssess att tthe nattiionall and llocall llevellss integrated in development Implement energy effffiiciiency llabelllliing fforr new vehiiclless plans Innovative financing IImpllementt apprroprriiatte iinnovattiive ffiinanciing tto encourrage new mechanisms developed and investments in EST promoted Source: National Climate Change Action Plan

Furthermore, the Climate Change Commiissiion was ttasked tto supporrtt fforrmullattiion off clliimatte changeaction plan by respective LGUs after approval of the NCCAP.

2.3.2 Low carbon city development action plan in Metropolitan Manila Region (e.g. sustainable transport)

MMDA, as a supervising authority over entire Metropolitan Manila Region, issued MMDA Resolution No.12-05, Series of 2012- Urging the Local Government Units in Metro Manila to Formulate a Climate Change Action Plan in January 2012 to urge subordinate cities and municipality to prepare their climate change action plan.

In this trend, Makati City, as a city in the Region, prepared the Carbon Reduction and Offseting Program (hereinafter referred to as “C.R.O.P.”) in year 2013. In this sub-subchapter, overview of the Sourrce:: MMDA C.R.O.P., as an example of initiative by a city in Metropolitan Fiigurre 2..5 Cover letter of MMDA Manila Region, is explained. Resolluttiion No..12-05

C..R..O..P.. shows guiidelliines fforr iimpellementtattiion off rrealliisttiic,, rresponsiive and ffeasiiblle countterrmeasurres and projects as a parrtt off GHG emiissiions rreducttiion efffforrtts att severrall llevells by Makattii Ciitty goverrnmentt and iin Makattii Ciitty arrea,, and tthe C..R..O..P.. made cllearr necessarry ffiinanciiall rresourrces and capaciitty devellopmentt supportt needs for futture iimpllementtattiion of clliimatte change countterrmeasurres..

Major activities under the C.R.O.P. are described as follows:

- Forrmall crreattiion off GHG Managementt Commiittttee underr tthe Enviirronmenttall Prrottecttiion Counciill of Makati City,

- Devellopmentt off comprrehensiive lland use pllan tto iincllude viiewpoiintt off GHG emission reduction efforts by each emitter in the City’s admiiniisttrrattiive prrocess iin tthe ffiielld off lland use wiitth pottenttiiall impact on GHG emission control in Makati City,

- Forrmullattiion off Makattii Ciitty Clliimatte Change Acttiion Pllan as mandatted by tthe NCCAP, and

- Implementation of short-term programs titled Rapid launch iin ffiiellds iinclludiing ellecttrriiciitty use iin

the fields including residential and commercial areas, transport, solid waste and wasterwater with target period of November 2012- June 2013 and formulation of long-term GHG emission management plan with various programs.

At stage of year 2011, proportion of GHG emissions in Makati City area in electricity (electricity use) and transport sectors amounted for 75% and 18% respectively.

Table 2.15 Initiatives in low carbon transport field under the Rapid launch Initiative field name Initiative items Community initiatives - Conversion of tricycles from 2-strokes from 4-strokes - Efficient traffic management Community awareness - Development of audit visual materials to be released and shown in key areas e.g. cinema houses and electric billboards - Inculusion of climate change mitigation and GHG management to regular information, education and communication (IEC) programs and activities - Development of incentive-based programs (competition) for Barangays to actively participate in this initiative Source: C.R.O.P.

Table 2.16 Strategic long-term initiatives for GHG management in low carbon transport field Item name Sub-item name Initiative contents Climate Smart 1. Reducing GHG - Prioritizing GHG emissions reductions in transportation Transportation emissions and planning (Policy coordination improving - Integrating planning at the local, metropolitan, and regional and promotion of low livability of levels carbon transport and planning - Applying principles of Smart Growth and Transit-Oriented introduction of processes Development (e.g. mixed use communities and car-free areas) incentives for direct - Promoting the expansion of the green canopy by encouraging fuel consumption street trees reduction for GHG 2. Promoting non- - Provision of bicycle lanes emissions reduction motorized - Implementing bicycle parking spaces, bike racks and public at city level) transportation and bicycle programs throughout the city, and especially adjacent moving to transit stations information - Giving priority access to public space and transit stations to pedestrians and bicycle riders - Expanding the number and quality of sidewalks along principal pedestrian routes - Rationalizing parking on public streets - Utilizing bicycles for police officers in urban centers 3. Utilizing public - Increasing the efficiency and connectedness of low capacity transportation and systems (bus, jeepney, and tricycle) high occupancy - Promoting education and incentive-based trip reduction vehicles programs - Promoting car-pooling, van-pooling, and car share programs for private vehicles - Introducing market-based instruments to reduce congestion and pollution 4. Improving - Improving the circulation of traffic transportation Improving traffic signal synchronization system efficiency Utilizing intelligent traffic management systems Promoting GHG inventories and mitigation planning for private sector - Improving the efficiency of the transportation fleet Promoting community purchases of compact and hybrid vehicles (Public Transportation) Purchasing fuel efficient (e.g. hybrid) and/or smaller fleet vehicles for the municipal fleet Utilizing fuel-efficient vehicles (e.g. scooters) for parking enforcement Improving vehicle inspection program and technical inspections of vehicles in the streets - Improving the integration of modes of transportation

Item name Sub-item name Initiative contents Funding for the Makati City Mono Rail program

5. Supporting the - Utilizing alternative fuel vehicles (biodiesel, ethanol, electric, adoption of compressed natural gas) for city fleet renewable fuels - Promoting the use of low carbon alternative fuels and clean energy - Formulation of incentive programs to encourage stakeholders to purchase alternative fuels Source: C.R.O.P.

Apart from the C.R.O.P., Makati City prepared GHG Management Framework Plan to set management of climate change management actions in the City in year 2009. The Framework Plan set agendas includingf identification of priority fields based on GHG inventory information, and promotion of regulatory and volunatary GHG emissions reduction efforts by City government and citizens, as well as GHG emissions risk management.

2.4 Support measures for introduction of battery swapping electric jeepney technology in the Philippines

In Government of the Philippines, a inter-agency working group for EV promotion is organized, and its members include BOI as a leading agency, DOTr, DOE and relevant agencies. DOE, in cooperation with DILG, had supported introduction of electric tricycles, while DOTr and DOE have jointly promoted electric jeepneys introduction in the Philippines. Also, BOI has implemented applicable incentive measures for EV promotion.

Also, aside from support measures by DOTr and BOI, EVAP, the Philippine EV industry and the business partner in the Philippines under this project, has made efforts for legislation of EV incentive bills with component of fiscal incentives for EV manufacturers, assemblers and importers and non-fiscal incentives including related inter-agency cooperation scheme and benefits for preferential measures under laws and regulations in the Philippines. The EV incentive bills are under process of negotiation with the Senate and House of Representatives of the country, with support from BOI and other relevant governmental agencies.

In this subchapter, overview of support measures by DOTr and BOI and latest situation of the EV incentive bills with initiative by EVAP is described.

2.4.1 Support measures by DOTr a. Exemption of franchaise regulations for EVs

LTFRB introduced suspension of issuance of franchaise certificate for bus operators in each province to reduce traffic volume in the Philippines including Metropolitan Manila Region in year 2000. Furthermore, LTFRB introduced an additional measure to suspend and regulate business franchaise issuance for every public transport service in pursuant to a nationwide regulation of Memorandum

Circular 2003-0289.

Later, DOTr issued administrative order No. 2011-16 for exemption of franchaise regulation for EVs including electric jeepneys for public transport service, in eye of promotion of EV transport including the Jeepney Modernization Program in the Philippines10. b. Jeepney Modernization Program

In addition to initatives related to NIP and MVIS by DOTr as decribed in previous Sub-subchapter 2.2.4, LTFRB has been promoting modernization of public utility vehicles including jeepneys. LTFRB considers gradual retirement of jeepneys with operational age of 15 years or more under Jeepney Modernization Program, and is aimed to promote safe and comfortable passenger services and mitigation of air pollution as result of operation of old engines.

The Program has faced severe objection by existing domestic jeepney operator associations including Alliance of Concerned Transport Organization, and coordination has been in progress between LTFRB and these associations. In this process, Mr. Winston Ginez, Chairman of LTFRB mentioned that old jeepneys would not be retired under the Program before the end of year 2016.

At present, consideration of Omnibus Franchaising Program by DOTr and LTFRB, with participation by EVAP and other representatives from Philippine EV industry, has been in progress. The Program cancels 350 thousand existing franchaise certificates for existing operators to update public utility vehicles with operational age of 15 years or more and re-issue franchaise only if they handle vehicles in compliance with latest standards including Euro 4 standards, Customized Local Road Vehicle and MVIS system11. It is expected that modernization of public utility vehicles will be promoted in combination with reform of business franchaise scheme and the Jeepney Modernization Program.

2.4.2 Promotion measures for automobile industry and tax incentive measures by BOI under Executive Orders a. New Motor Vehicle Development Program12

In the former Aroyo Administration, New Motor Vehicle Development Program (hereinafter referred to as “NMVDP”) was Source: EVAP Figure 2.6 Certificate on tax introduced under the Executive Order No. 156 in year 2002 incentive for PhUV Inc. by BOI based on EO156

9 p.7, Bus Transportation Sector in the Philippines- Presentation Note, CUTS Center for Competition, Investment & Economic Regulation http://www.cuts-ccier.org/crew/pdf/Note-Bus_Transport_Sector_in_the-Philippines.pdf 10 Department Order No. 2011-16 (Inclusion of Electric Motor Powered Vehicles in Item No.4 of DOTC Order No. 97-1997 “Providing Standard Classification for All Public Transport Conveyances” and the Exemption of All Electric Vehicles for Public Transport from the Moratorium on Franchise Applications) 11 Based on confirmation with EVAP. 12 Information on website of Government of the Philippines http://www.gov.ph/2002/12/12/executive-order-no-156-s-2002/

(hereinafter referred to as “EO156”). NMVDP is aimed to promote manufacture and knock-down of automobiles in the Philippines and is targeted for Philippine or foreign enterprises which were established under Philippine law. BOI is the supervising authority over the Program under DTI.

- NMVDP is applied for passenger vehicles, commercial vehicles and motorcycles, including commercial vehicles by PhUV, and

- Special custom duties are applied to production or knock down activities by targeted companies.

Also, NMVDP includes prohibition of import of used vehicles in regular situation and no specific tax incentive is set for EV industry in the Philippines under the NMVDP13. b. The Comprehensive Motor Vehicle Development Program14

The Comprehensive Motor Vehicle Development Program (hereinafter referred to as “CMVDP”) was introduced in the former Aroyo Administration, under Executive Order No. 877-A (hereinafter referred to as “EO877-A”) in year 2010. Introduction of the CMVDP had objectives of consolidation of MVDP and enhanced international competitiveness of Philippine automobile industry in perspective of establishment of ASEAN Economic Community (AEC) as well as scheduled tariff reduction after AEC establishment. Overview of the CMVDP is as follows.

- CMVDP is applied for three vehicle categories: namely, commercial vehicles including gasoline- driven, diesel-driven and electric vehicles and motorcycles including 2-wheel or 3-wheel gasoline-driven, diesel-driven and electric vehicles and other vehicles. Also, CMVDP is automatically applied for targeted companies of MVDP.

- Special custom duties for knock down automobile parts and components are continuously applicable, and assembly and parts/ components production of automobiles had been listed on the Investments Priority Plan by BOI until 13 June 2015.

- Prohibition of import of used vehicles is described in CMVDP as stipulated in NMVDP.

- Custom duty and excise tax reform is initiated in CMVDP and custom duty for automobile parts will be amended for comformity with custom duty rate of neighboring companies with similar automobile industry development program as the CMVDP. As to excise tax, excise tax taxation system reform were included for establishment of equitable, simple, transparent and stable taxation system and promotion of development of Philippine automobile industry.

- Introduction of packaged incentives for export of automobiles and their parts and compoents for increased and diversified import of automobiles from the Philippines.

- Establishment of the Motor Vehicle Industry Council under DTI, with DTI Seretary as the Chairman, as the major entity for policy coordination for enhanced automobile industry

13 For condition for authorized import of used vehicles, see JETRO website. https://static.jetro.go.jp/world/asia/ph/qa/01/04A-041107 14 Website of Government of the Philippines http://www.gov.ph/2010/06/03/executive-order-no-877-a/

development in the Philippines. The Council is composed by Secretarty and 2 Undersecretaries, Undersecretary of DENR, DOE and Department of Labor and Employment (DOLE), executives from DOTr (LTO Assistant Secretary and LTFRB Chairman), Commissioner of Bureau of Custom and 4 representatives from the Motor Vehicle Industry Association.

- Establishment of Industry Development Fund to provide fund for research and development of equipment and facilities, procurement, development and replacement by automobile exporters, under supervision of the Motor Vehicle Industry Council through BOI.

However, full-scale implementation of EO877-A was suspended and publication of rules and procedures for the EO877-A by Government of the Philippines was cancelled, due to domestic controversy in the Philippines. As its background, there was a tug-of-war within Philippine automobile industry over position of representative from the industry in Motor Vehicle Industry Council, and foreign companies and agent for automobile import and sales in the Philippines were against the CMVDP, claiming incentives for domestic automobile industry in the Philippine should be an obstacle for fair competition15. c. Comprehensive Automotive Resurgence Strategy Program16

Comprehensive Automotive Resurgence Strategy Progtram (hereinafter referred to as “CARS Program”) was introduced by the former Aquino Administration under the Executive Order No. 182 (hereinafter referred to as “EO182”) in June 2015, with objective of demand stimulation through inviting new investment for Philippine automobile industry after suspension of the EO877-A, as a roll-back against Thailand and other countries with advantage in automobile industry development in ASEAN region and development of the Philippines as the automobile manufacture hub.

- Targeted business activities of the CARS Program are 1) manufacture of 3 types of 4-wheel automobiles in maximum, 2) Manufacture of automobile type which has already been sold in Philippine market, 3) Body shells and large plastic parts assembly for the car types which have already been sold in Philippine market, 4) Manufacture of 4-wheel automobile parts except for parts for OEM production in the Philippines and 5) Activities at shared testing facility for automobiles and/ or their parts. Automobile and automobile parts manufacturers and shared testing facility are qualified under the CARS Program.

- Under the CARS Program, Inter-agency Committee on Automotive Industry Development was established for supervision and implementation of the Program. The representrative from DTI- BOI shall act as Chairperson of the Interagency Committee, with members from Department of Finance (hereinafter referred to as “DOF”), DOTr, DOST, Technical Education and Skills Development Authority (hereinafter referred to as “TESDA”), the Co-Chairman of the Industry Development Council and the Co-Chairman of the National Competitiveness Council. The Inter-

15 p.14, 16 and 17, Final Report for JICA project In the Republic of the Philippines, the Project for Developing Motor Vehicle Regulations and Certification 16 Website of Government of the Philippines http://www.gov.ph/2015/05/29/executive-order-no-182-s-2015/

agency Committee takes roles including review on application to the Program, supervision of implementation of the Program, research and consideration on revision of exisiting laws and regulations (if necessary) and advice on admonishment for withdrawal of support for Program participant entities in case of their incompliance to eligibility criteria for the Program.

Table 2.17 Eligibility and qualifications of Program participants Qualification Eligibility and qualification criteria category name Car manufacturers - An internationally-recognized Car Maker/brand owner and/or its authorized in (Car Makers) country licensed manufacturer acting jointly with an internationally-recognized carmaker/brand owner; - Proven global track record; and - Existing multinational operations. Parts manufacturers - Endorsed by the PCM to manufacture parts of its enrolled Model; (Parts Makers) - OEM automotive Parts Maker and/or its authorized in-country licensed manufacturer acting jointly with an internationally-recognized carmaker/brand owner; - Proven track record; and - A member of good standing of the Philippine Parts Maker Association. Shared testing - Collectively endorsed by the PCMs; and facilities - Proven track record.

Source: Website of Government of the Philippines http://www.gov.ph/2015/05/29/executive-order-no-182-s-2015/

- For qualification under the CARS Program, applicants shall meet eligibility and qualification criteria in Table 2.17 and other standards as required by BOI.

- The registered Participants may be entitled to 2 types of fiscal support during the enrolled Model Life, up to a maximum of 6 years, namely, Fixed Investment Support (FIS); and Production Volume Incentive (PVI), as shown in Table 2.18, provided, that the Participants satisfy the following qualifications

- Mitsubishi Motors Philippines Corporation, the overseas subsidiary for automobile manufacture and sales of Mitsubishi Motors, was qualified as the first program participant in June 2016. The company is scheduled to produce 200 thousand units of their small-car product called Mirage for the next 6 years17.

Table 2.18 Condition for support for participating companies under CARS Program Support type Conditions Fixed - New investments in the manufacture of Parts and/or establishment of Shared Testing Facility; Investment - Delivery of Parts to the PCM within the prescribed period as stipulated by the BOI; Support (FIS) - Introduction of the enrolled Model to the market using the Parts manufactured under this CARS Program; - Consistently meeting the criteria for enrollment of PCMs; and - Attainment of other conditions that the BOI has imposed at the time of registration. Production - Manufacture of at least 50% of the assembly by weight in the case of Body Shell Assembly; Volume - Manufacture of major components of the assemblies in the case of Large Plastic Parts Incentive (PVI) Assemblies; - Exceeds 100,000 units in production volume; and - Attainment of other conditions that the BOI has imposed at the time of registration.

Source: The same as Table 2.17.

17 JETRO website https://www.jetro.go.jp/biznews/2016/06/4600d60809b1279d.html

d. Incentives under the Omnibus Investment Code of 1987 and Investment Priority Plan

BOI provides following incentives for registered enterprises under the Omnibus Investment Code of 1987 (Executive Order No. 226 of year 1987):

- Income Tax Holiday (hereinafter referred to as “ITH”),

- Additional exemption for labor cost (If proportion of employees to capital equipment cost exceeds a designated value, 50% of labor cost in response to increased direct labors can be additionally deducted from taxable earnings for the first 5 years after registration.),

- Unlimited use of OEM facilities,

- Employment of foreigners as supervisors, engineers or advisors for the first 5 years after registration (can be extended),

- Import of livestock for bleeding and genetic materials without custom duty for 10 years after registration date at longest,

- Tax deduction for domestic livestock for bleeding and domestic genetic materials for 10 years after registration date in maximum (Deduction of equivalent amount of 100% of duty tax and other costs in case of export of corresponding livestock and/or materials),

- Exemption of equilavalent amount of domestic taxes for raw materials, supply parts and semi- products for manufacture, processing and production of imported products and their components,

- Use of bond factories and warehouses,

- Exemption from quayages, export tax, levies and others.

- Simplified clearance process at the custom.

Among them, as stipulated in Article 17 of the Omnibus Investment Code, newly registered enterprises are certified as Pioneer enterprises, if they fulfill following conditions. For Pioneer enterprises, ITH is applied for the first 6 years.

- The enterprises are engaged in the manufacture, processing or production, and not merely in the assembly or packaging of goods, products, commodities or raw materials that have not been or are not being produced in the Philippines on a commercial scale, or - The enterprises use a design, formula, scheme, method, process or system of production or transformation of any element, substance or raw materials into another raw material or finished goods which is new and untried in the Philippines, or - The enterprises are engaged in the pursuit of agricultural, forestry and mining activities and/ or services including the industrial aspects of food processing, or - The enterprises produce non-conventional fuels or manufacture equipment which utilize non- conventional energy sources or uses/ converts to coal or other non-conventional fuels or energy sources in its production, manufacturing or processing operations. For certification of Pioneer enterprises, after application to BOI Industrial Group by the applicant

enterprises at stage of establishment of the enterprises, BOI make reference to DOST and concerned industrial associations for recommendation from the institutions for final approval by BOI. The applicant enterprises shall present concretre business plan for BOI. If the applicant enterprises fail in awarding as Pioneer enterprises, ITH is applied for the first 4 years.

Also, BOI publishes Investment Priority Plan (hereinafter referred to as “IPP”) every 3 years, and provides incentives including ITH under the Omnibus Code for new business in listed business field as Preferred Areas of Investment on each IPP. Applied period of ITH incentive for the business can vary depending on whether the business entity is certified as Pioneer enterprise. As IPP 2017-2019 is still under process of formulation, information on Preferred Areas of Investment on IPP 2014-2016 is listed in Table 2.19.

Table 2.19 Preferred Areas of Investment on IPP2014- 2016 Area name Included business categories 1. Manufacturing - Motor vehicle (based on Logistics Efficiency Index; excluding motorcycles, e-bikes and golfcarts) and motor vehicle parts and components - Shipbuilding including parts and components - Aerospace parts and components - Chemicals - Virgin paper pulp - Copper wires and copper wire rods - Basic iron and steel products, steel grinding balls, long steel products (billets and reinforcing steel bars), and flat hot/cold-rolled products - Tool and Die 2. Agribusiness and Fishery 3. Services - Integrated Circuit Design - Creative Industries/Knowledge-Based Services - Ship repair - Charging stations for EVs - Maintenance, Repair and Overhaul (MRO) of aircraft - Industrial waste treatment 4. Economic and Low-cost Housing 5. Hospitals 6. Energy 7. Public infrastructure and logistics 8. PPP projects Source: JETRO

Among Preferred Areas of Investment on IPP 2014-2016, there is a possibility that motor vehicle and motor vehicle parts and components in Manufacturing category and haring stations for EVs in Services category are applicable to this Project. Applied incentives for motor vehicle, motor vehicle parts and components and EV charging stations are listed in Table 2.20.

Table 2.20 Overview of applied incentives for automobile vehicles, vehicle parts and components and EV charging stations Area name Targeted business activity and incentive contents Motor vehicle (based on Logistics Efficiency Index; excluding motorcycles, e-bikes and golfcarts) and motor vehicle parts and components Motor vehicles Any of the new business for manufacture/assembly of alternative fuel vehicles (including include hybrid vehicles, and flexible-fuel vehicles) and EVs is qualified as Pioneer enterprise. Motor vehicle Any of new business handling Original Equipment Manufacturer (OEM) parts and components parts and related to Controller assembly, motor, and battery (other than lead acid) for EVs is qualified as components Pioneer enterprise. Charging stations - Etablishment of charging stations for electric vehicles is targeted business is targeted for EVs - Charing stations could refer to a ‘service station’ designed to simultaneously fast charge

Area name Targeted business activity and incentive contents multiple vehicles similar to gasoline/diesel stations or a network of at least 5 charging stands. *Application for registration must be accomplished by an endorsement from the Department of Energy-Investment Promotion Office (DOE-IPO). Source: EVAP

2.4.3 Discussion for introduction of further support measures a. Consideration for introduction of government’s guarantee for equipment procurement by electric jeepneys

DOTr has considered introduction of financial support measures in form of government’s guarantee for bank loan procurement by operators including jeepney operators, as a part of promotion of electric jeepneys under the Jeepney Modernization Program.

In the Philippines, the Small Business Guarantee and Finance Corporation was established for financial support to industries including manufacturing industry in year 1991, and the Guarantee Fund for Small and Medium Enterprises was established under the Office of President to provide guarantee for initial bank loan procurement by small and medium enterprises in year 1984. These two institutions are merged as the Small Business Corporation under DTI in year 2001.

According to DOTr, they are considering possibility for providing above financial support mesasures with financial source from the Small Business Corporation, in cooperation with the Transport Cooperatives and the Development Bank of the Philippines (DBP), due to lack of background of existing executive orders, laws and regulations.

- DOTr provides government’s guarantee for operators including jeepney operators without bank account for their procurement of private bank loan with commercial bank interest rate (6%).

- Operators who received loan guarantee from the Small Business Corporation, shall submit certificate of vehicle registration and certificate of the certificate issuance which are issued by LTO for every year to the Government Financial Institution (hereinafter referred to as “GFI”) after their procurement of vehicle(s) to prove fact of vehicle registration and proprietary of the vehicle(s).

Due to strong objection from the Commission of Audit (hereinafter referred to as “COA”) of the Philippines against the government’s guarantee, coordination has been in process among DOTr, COA and GFI for establishment of new mechanism to legally enable government’s guarantee for loan procurement by private companies. b. Utilization of Road Fund

A part of commission paid by vehicle owners in the Philippines for LTO for their annual vehicle registration is charged as the Road User’s Tax and accumulated as the Road Fund by DOTr. Expenditure of the Road Fund is limited to infrastructure development related to transport with permission by the Road Board under DPWH.

DOTrr has a pllan tto mobiilliize a parrtt off tthe Road Fund fforr prromottiion off EVs tthrrough rrellatted iinffrrasttrructturre devellopmentt and ttheiirr rrellatted efffforrtts fforr jjeepney moderrniizattiion.. Theiirr consullttattiion wiitth the Road Board was not successful due to objection from the COA. c. Efforts for legislation of EV Incentive Biilllls by tthe EV iindusttry associiattiion iin tthe Phiilliippiines

EVAP,, tthe busiiness parrttnerr underr tthe Prrojjectt and tthe EV iindusttrriiall associiattiion off tthe Phiilliippiines,, has lobbied nattiionall congrress ((Senatte and House off Reprresenttattiives)),, BOII,, DOE,, LTO and ottherr rrellatted goverrnmenttall agenciies fforr llegiisllattiion off EV IIncenttiive Biilllls iinclludiing ffiiscall and non-fiscal incentive measures for promottiion of EV iinttroducttiion iin tthe counttry,, siince tthe fforrmerr Acquiino Admiiniisttrrattiion period. The House off Reprresenttattiives has prriiorriitty overr diiscussiion on such iincenttiive measurres and ttheiirr Ways & Means Committee has taken initiatives for the discussion.

As shown iin Fiigurre 2..6,, biilllls iin tthe Phiilliippiines arre submiitttted tto botth Senatte and House off Reprresenttattiives durriing tterrm off congrress sessiion,, and afftterr 3 Readiings att each off Senatte and House off Representatives, the Incentive Bills are deliberated at the Bicamerrall Confferrence Commiittttee.. Afftterr diiscussiion att tthe Biicamerrall Confferrence Commiittttee and rrattiiffiicattiion by tthe Senatte and tthe House,, the Incentive Bills are llegiisllatted wiitth approvall by Presiidentt.. If tthe Presiidentt refers tthe IIncenttiive Biilllls back to the congress, additional 3 readings at the Senatte and tthe House arre necessarry.. IIn anottherr case,, tthe President uses the veto on the Incentive Bills. If the Incentive Bills arre nott apprroved by Prresiidentt durriing congress session, the Incentive Bills are not legislated.

Source: EVAP

Figure 2.7 Procedure for llegiisllattiion process iin tthe Phiilliippiines

Overrviiew off tthe llattestt EV IIncenttiive Biilllls underr diiscussiion att tthe ongoiing 18th Congress and previously submitted bills is summarized in Table 2.21.

Table 2.21 Overview of incentive measures in EV Incentive Bills (As of 8 February 2017) Congress Bill name Components of fiscal incentive measures Components of non-fiscal incentive measures Status name 18th Revised a) For manufacturers and assembling bussinesses a) Establishment of Creation of an Inter-Agency Task Force (ministerial) for the Deliberation in process Congress version of the 9-year exemption of excise and duties for manufacture Promotion of Electric and Hybrid Vehicles Including Charging Stations EV Bill and assembly of complete knock down (hereinafter The Task Force is chaired by DTI Secretary, with DOTr Secretary and DOE endorsed by referred to as “CKD”) parts of EVs including charging Secretary as Vice Chairpersons and MOF Secretary, DILG Secretary, DOST the Electric Vehicle stations and hybrid cars. (*1) Secretary and three representatives from EV and hybrid vehicles industriies as Alliance 9-year suspension of VAT for purchase and import of members. Representatives from other agencies of the government may be invited raw materials, spare parts, components and equipment as resource persons during the meetings of the Task Force. b) For Importers The Task Force is created to expedite identification, prioritization, and resolution 3-year exemption for import of completely built unit of of issues affecting the entire supply chain of the electric and hybrid vehicle EVs, hybrid cars and other alternative fuel vehicles (*2) industry by formulating a shared implementation plan and monitoring system. c) Others b) Incenticves for EVs and EV charging stations Exemption of payment of Road User’s Tax for LTO Priority in Registration and Issuance of Plate Number Priority in Franchise Application Exemption from the Unified Vehicular Reduction Program (hereinafter referred to as “UVRP”) Provision for Free Parking Spaces in New Establishments LGUs to allocate land and lot space for the construction of EV charging stations 18th Tax Reform The Incentive Bills initiate tax reforms including followings, None Deliberation in progress Congress Bills with net increased national tax revenue estimated as 368.1 billions Philippines Pesos: Increased excise tax for diesel oils, buncker oils and lead-free gasolines, and Increased excise tax for all vehicles but EVs 17th Electric, Exposion of VAT for additional energy demand with None Failed in legislation Congress Hybrid and objective of promotion of electric jeepneys and tricycles sales (Deliberation process Alternative and tax exemption for EVs for net increased national revenue was limited to 1st Fuel Vehicle by 10.23 billion Philippine Pesos through followings: reading of the Senate Incentives Act Increased income tax revenue due to new employment and the House during of 2016 Reduced governmental expenditures over pollution the Congress session period.) related health expenses Reduced payment of foreign currency due to reduced petroleum import amount

CO2 emissions reduction as result of conversion from

Congress Bill name Components of fiscal incentive measures Components of non-fiscal incentive measures Status name fossil-fuel driven vehicles to EVs, etc. 16th Electric, a) For manufacturers and assembling bussinesses a) Establishment of a Coordinating Council (ministerial) for the Promotion of Electric Failed in legislation Congress Hybrid and 9-year exemption of excise tax and duties for CKD and Hybrid Vehicles Including Charging Stations (Deliberation process Alternative manufacture and assembly of EVs, hybrid vehicles and The Coordinating Council is chaired by DTI Secretary, with DOTr Secretarty and was limited to 1st Fuel Vehicle reading of the Senate other alternative fuel vehicles including the conversion DOE Secretary as vice chairpersons, MOF Secreatary, DILG Secretary, DOST Incentives Act and the House during Secretary and elected 3 representatrives from EV and hybrid vehicle industry and of 2013 of vehicles into electric, hybrid and other alternative fuel the Congress session vehicles. (*1) the civil society by the Coordinating Council. Representatives from other agencies period.) 9-year suspension of VAT imposition for purchase and of the government may be invited as resource persons during the meetings of the importation of raw materials, spare parts, components Cooridnating Council. and capital equipment b) Incenticves for EVs and hybrid vehicles Priority in registration and issuance of plate number b) For importers Priority franchise application 9-year exemption from payment of excise tax and duties Exemption from UVRP for import of complete built completely built unit of Provision for free parking spaces in new establishments EVs, hybrid and other alternative fuel vehicles. c) Others Exemption of payment of Road User’s Tax for LTO

th 15 Alternative a) For manufacturers and assembling bussinesses Priority in registration and issuance of plate number Failed in legislation rd Congress Fuel Vehicles 9-year exemption of excise tax and duties for CKD parts Priority franchise application (3 reading of the Incentives Act Senate and the House manufacture and assembly including the conversion of Exemption from UVRP of 2011 was finished. vehicles into electric, hybrid and other alternative fuel Provision for free parking spaces in new establishments However, the House vehicles. (*1) leadership did not 9-year suspension of VAT imposition for purchase and appoint representatives importation of raw materials, spare parts, components fro the Bicameral and capital equipment Conference Committee b) For importers for fear of veto by the 9-year exemption from payment of excise tax and duties President, under situation that they are for import of complete built completely built unit of lack of support from EVs, hybrid and other alternative fuel vehicles. MOF.) c) Others Exemption of payment of Road User’s Tax for LTO Source: EVAP Note: (*1) CKD includes assembly of imported parts from numerous countries in the Philippines. (*2) The exemption period was shortened compared to previous bills in consideration of BOI’s consciousness of negative impact on Philippine domestic manufacturing industry.

For process of submission of above EV Incentive Bills, EVAP has closely collaborated with BOI for their following efforts.

- To address pressing concerns of EV industry under the Electric Vehicle Sub-Cluster Working Group, and

- To consider possible executive order to grant additional support to the EV Industry

Furthermore, METI Study Team confirmed with EVAP that they have made efforts for submitting bills which provide fiscal and non-fiscal incentives as a package and packaged tax reform bills for consideration of MOF in alart of fiscal incentive measures which may lead to preferential support to any particular industry sector18.

It is observed that fiscal incentives including excise tax exemption can lead to dissemination of battery swapping EV technology for the Project. Based on this understanding, METI Study Team has explained to stress importance of early legislation of these EV Incentive Bills, as well as consideration of project plan including financial plan under this F/S, for dissemination of the said technology, and set it as one of important agendas during the study period for mutual understanding in both Philippine and Japan sides.

2.5 Trend of EV market in the Philippines

2.5.1 Situation of introduction of electric trycicles and jeepneys in domestic market of the Philippines

Proportion of automobile volume in the Philippiens in year 2011 is 12% for private vehicles, 26% for 4-wheel vehicles for public utility services or utility vehicles, 51% for 2-wheel vehicles and 11% for other 4-wheel vehicles. Among them, most of public utility vehicles and 2-wheel vehicles are jeepneys and tricycles 19 . As EVs, electric jeepneys and tricycles have already been available in domestic Philippine market at a certain level, and their specification and situation of their introduction in the market are shown in Table 2.22 and Table 2.23 respectively.

Table 2.22 Example of specification of electric jeepneys and tricycles in Philippine market Electric jeepney Electric tricycle (Conventional type by PhUV Inc.) (Model for ADB Electric Tricycle Project) Battery type Lead-acid (7kWh) Lithium-ion (3kWh、chargable fir 2000 times) Maximum speed 65km/h 60km/h Crusing distance (full charge) Appox. 100km (for flatland) Approx. 30km Passener volume (except for a 20 passengers 5 passengers driver)

Source: E-Trike Project website by DOE, information from EVAP and ADB website

18 Based on information from EVAP 19 Electric 3-wheel taxis in the Philippines, NTT Data Corporation, 2014

Table 2.23 Situation of electric jeepneys and tricycles intoruduction in the Philippines (as of February 2017) Vehicle type Company name Situation Electric BEMAC - BEMAC was awarded as the initial production of 3,000 electric tricycles for tricycles (Subsidiary of pilot test of the Electric Tricycle Program by DOE under support from ADB. Uzushio Electric ADB under the Electric Tricycle Program aimed to introduce 100 thousand Co., Ltd. and a member company electric tricycles with finance amounting for 504 milion US Dollars. First of EVAP) tender was opened in May 2015 and BEMAC was awarded. However, the program was finished by DOE, due to lack of participant operators for fear of high production cost of electric tricycles in December 2016. - In year 2016, BEMAC conducted a test run of 10 electric tricycles in UP Diliman. The electric tricycles had a schedule to be handed over to the UP Diliman through local company after the test run.

K.E.A.Corporation K.E.A. produces electric tricycles in Cavite City and operates charging stations for (Member company the electric tricycles for commercial operation. of EVAP) EV Wealth EV Wealth provides mass transport package services for community in Corporation Mandaluyong City in Metropolitan Manila Region. (The same as above) Softbank Softbank is implementing a demonstration project titled The Mobility as a System (MaaS) including location data acquisition by in-vehicle equipment, in Intramuros district of Manila City in Metropolitan Manila Region, in cooperation with BOI under demonstration scheme of New Energy and Industrial Technology Development Organization(hereinafter referred to as “NEDO”). Under the project, 50 electric tricycles and 17 charging stations are introduced and installed for demonstration.

Electric PhUV Inc. - PhUV implements commercial operation of lead-acid electric jeepneys in jeepneys (Leading company Makati City and Muntinlupa City in Metropolitan Manila Region. In of EVAP) Muntinlupa City, they operate 12 electric jeepneys for city health care card holders and will increase their fleets up to 17 in year 2017. - PhUV has provided a lead-acid electric jeepney for a hotel in John Hay Special Economic Zone for shuttle service for hotel guests.

1 Team - 1 Team is an operator of diesel jeepneys in Quezon City, Caloocan City and Corporation Clark Freeport Zone. (Member company - In Quezon City and Caloocan City, they introduced Chinese lead-acid electric of EVAP) jeepneys to replace 150 of their 500 diesel jeepneys. - In Clark Freeport Zone, they provide passenger shuttle service in a operating route between Main Gate of the Freeport Zone and Clark International Airport, by lead-acid electric jeepneys (1.8kWh/ 12 batteries)

EVEEI (The same EVEEI operates 18 lead-acid electric jeepneys for transport service for office as above) employees and tourists in Filinvest Alabang area in Muntinlupa City in Metropolitan Manila Region. They are scheduled to increase their electric jeepney fleets up to 50 by end of year 2018.

Metro Express Metro Express operates lead-acid electric jeepneys in Bacolod City in Negros Corporation (The Occidental Province and Iroiro City in Iroiro Province. same as above) Source: - Confirmation during field surveys by METI Study Team and information from EVAP - LTFRB: New e-jeepney route up for approval, The Philippine Star, 8 January 2015 http://www.philstar.com/metro/2015/01/08/1410558/ltfrb-new-e-jeepney-route-approval

2.5.2 Potential of EV introduction in the near future

DOTr has taken intiative over Jeepney Modernization Program which consists of replacement and

selection of obsolete obsolete diesel jeepneys and introduction of electric jeepneys. During this F/S period, DOTr has showed their strong interest in our project at our meeting with their representatives as our project concept is in line with the Program.

The Program has faced objection from jeepney drivers’ association, and DOTr-LFFRB promoised about introduction of the Program after year 2017. Furthermore, DOTr, in parallel of preparation of the Program, has considered standards for modernized jeepneys including additional requirement for electric jeepneys for introduction in around year 2018, and the additional requirement includes followings:

- The traction system should be so designed to allow the vehicle to negotiate the Metro Manila drive cycle on a chassis dynamometer.

- The peak power of the motor controller, traction motor, battery management system and batteries should properly match each other unless controls are introduced to ensure that the system operates only at the least peak power among the said components.

- Traction battery shall be securely fixed to the vehicle where the place shall be well ventilated and has good heat dissipation. During the operation there shall be no hazardous gasses accumulated in any part of the vehicle20.

The consideration by DOTr has been in progress with participation by representatives from concerned parties including EVAP. In this context, there is an uncertainty over introduction of the Program before year 2018.

In this situation, potential of introduction of electric jeepneys including conversion from conventional diesel jeepneys or new introduction is expected to be 3 thousand units in Metropolitan Manila Region and 350 thousand units in the Philippines in the near future21.

Prevailed electric jeepneys adopt lead-acid batteries and there is a possibility that lithium-ion batteries will be adopted.

A part of Philippine society has a negative perception of safety and liablity of electric jeepneys due to burning and fire accident resulting from inproper operation and maintenance in the operators’ side including charging at closed compartments. On another hand, some candidate project site owners are in favor of or wish introduction of battery swapping electric jeepneys for conversion of their traffic mode to low carbon and environmentally friendly electric jeepneys. This shows that there is a certain degree of market potentials of the electric jeepneys from viewpoint of air pollution countermeasures and GHG emission reduction measures. Furthermore, on the basis of a considerable degree of cost reduction and utilization of incentive measures in sub-subchapter 2.4.2, conversion to battery swapping electric jeepneys and production and assembly of equipment of support equipment including battery swapping and charging stations can absorb a part of existing needs of EV introduction in amount of 350 thousand units, which can lead to new employment in the Philippines.

20 Based on material for Modern Jeepney Standards Industry Consultative Meeting by DOTr in 21 October 2016. 21 Based on information from EVAP. NIP does not include cumulative target for introduction of electric jeepneys and tricycles.

2.6 GHG emission trends in the Phililppines (Overall emission and transport sector)

According to the 2nd National Communications to the UNFCCC Secretariat in 2014, overall GHG emissions in the Philippines excluding that of land-use, land use change and forest (LULUCF) sector

amount for 126,879,000 t-CO2 (equivalent amount) at stage of year 2000. Breakdown of the country’s GHG emissions is shown in Table 2.24.

Table 2.24 GHG emissions in the Philippines (At stage of year 2000) Sector name Emission amount P roportion ratio (%) (t-CO2e/year) Energy 69,667,240 55% ※Breakdown Energy industry 21,219,450 30% of GHG Manufacturing and 9,142,210 13% emissions in construction energy sector Transport 25,935,780 37% Solid fuelds 33,600 0% Oil and natural gas 3496.29 5% Others 9,839,910 14% Industrial process 8,609,780 7% Agriculture 37,002,690 29% Waste 11,599,070 9% Source: pp.29-30, Second National Communications to the United Nations Framework Convention on Climate Change by the Philippines

GHG emissions in transport sector amounted for 25.93 million t-CO2e in quantity and 20% in proportion among overall GHG emissions in year 2000.

For forecasted GHG emissions in the scenario of “Business as usual” in which no emission reduction effort for long-term period of year 2005-2050 was made is analyzed by UP-NCTS under the Clean Air Initiatives. Their analysis result is shown in Table 2.25.

Table 2.25 Forecasted GHG emissions in transport sector in the Philippines (UP-NCTS scenario) Year 2005 2010 2020 2030 2040 2050

Emissions 27.25 36.11 55.47 87.31 135.32 206.27

Unit: Million t-CO2 Source: p.7, Summary of Studies: Philippines Transportation Sector Emissions, Alvin Mejia

Chapter 3 Result of consideration for Battery Swapping Electric Jeepneys introduction in Metropolitan Manila Region in the Philippines

3.1 Selection of potential project sites

3.1.1 Selection criteria

Appraisal of 10 candidate project sites on previous sub-subchapter 1.2.1 was made for potential project site selection based on following 3 evaluation criteria, and candidate project sites which fulfill all criteria were selected as potential project sites for battery swapping electric jeepneys technology under the Project.

- Possibility of financial procurement by site owner of the candidate project site

- Element(s) for technological demonstration to be examined during demonstration phase

- Potential of dissemination and expansion to other sites of the site owner in the Philippines in commercial operational phase after the demonstration phase a. Possibility of financial procurement

This F/S confirmed idea or capacity for necessary financial procurement for equipment acquisitionand continuous operation by owner of candidate project sites for selection of project sites for battery swapping electric jeepney technology introduction, based on needs for low carbon and green transport in the Philippines.

METI Study Team assumes examination of technical challenges for dissemination and expansion of the said technology in the Philippines after demonstration activities with experimental equipment of electric jeepneys and battery swapping and charging stations at selected project sites, after this F/S phase.

If the Project conducts demonstration Disposal of experimental equipment for demonstration under JCM Demonstration Program under under NEDO rule NEDO, experimental equipment for - Depreciation in demonstration phase shall be made demonstration will be transferred to the Straight-line method. By the end of asset’s statutory durable years, depreciation shall be made at a uniform Japan side (company/ institution which is rate until the depreciate value wil be as low as 10% of commissioned by NEDO) with depreciated acquisition cost of the equipment. cost after demonstration phase is finished, - Satutory duerable years are specified by the Ordience by Ministry of Finance, Japan, on statutory durable according to NEDO rule. In this case, years on assets for depreciation (Ordinance No.15, 31 separate consultation on concerned issues March 1965) including price for transfer to the Philippine 3 years for small-size vehicles (total emission is 2 liter or less) side needs to be made. Thus, the price for 5 years for large-size vehicles (total emission is 3 transfer needs to be fixed based on liter or more) consultation between the company/ 4 years for other vehicles 5 years for share-ride vehicles institution which procures the equipment Source: NEDO manual based on the depreciated cost and the

Philippine side.

This represents idea for procurement or utilization of own budget to cover the abovementioned depreciated cost for payment after NEDO demonstration phase by the site owner side is critically important for appraisal of potential for sustainable project implementation at each candidate project site after the demonstration phase by the site owner by METI Study Team.

b. Element(s) for technological demonstration

Under this Project, it is assumed that following technical elements for technological demonstration need to be examined during demonstration phase with experimental operation of equipment including electric jeepneys and battery swapping and charging stations.

- Safety and reliability of batteries

- Deterioration of batteries (battery cells)

- Durability of EV propelling system

- Durability of battery swapping mechanism

- Stable management of battery charging equipment

- Effectiveness of collected data

- Operation and maintenance

Therefore, it is necessary for METI Study Team to cover all potential technical challenges for dissemination and expansion of battery swapping electric jeepneys and equipment including battery charging and swapping stations in demonstration phase at all of selected potential project sites.

For reference of appraisal of each candidate project site, METI Study Team considered relationship between above 7 tehcnical elements for technological demonstration and candidate project site characteristics of 1) operational speed of electric jeepneys, 2) load for electric jeepneys for its operational process, 3) frequency in battery swapping, 4) road condition, 5) climate condition, 6) condition of related infrastructure and 7) management structure, based on result of meeting(s), based on information which was collected through meetings with owner of each candidate project site. The degree of relationship between these technical elements and the site characteristics is summarized in Table 3.1.

Table 3.1 Relationship between technical elements and site characteristics Aspect of site characteristics Speed Load Frequency Road Climate Infra- Management Technical elements of swapping condition condition strucuture strucuture 1. Safety and reliability of batteries B A C B C - C 2. Deterioration of batteries (battery cells) B A B - C - C 3. Durability of EV propelling system A A - A C - C 4. Durability of battery swapping mechanism B B A A C - C 5. Stable management of battery charging - - B - C A A equipment 6. Effectiveness of collected data - - C B B A A 7. Operation and maintenance - - B - - C A Note: A: Very high relevance, B: High relevance, C: Low relevance, -: Very low relevance Source: METI Study Team, based on meetings with candidate project site owners

Taking into account the above relationship, METI Study Team compared site characteristics of each candidate project site to avoid overlapping among combinations of technical elements for different project sites during demonstration at different project sites during site selection process. c. Potential of dissemination and expansion to other sites of the site owner

This Project has objective of dissemination and expansion of battery swapping electric jeepney technology in other areas of the Philippines after demonstration phase, in application of prepared countermeasures against technical challenges which are identified and considered at demonstration phase.

For technology dissemination and expansion in the Philippines, this Project applies prepared countermeasures to other project sites which are owned or managed by the site owner or their affiliated institution for dissemination of electric jeepneys and their equipment including battery charging and swapping stations in the Philippines. From this viewpoint, it is assumed that success at a project site of governmental institutions, universities and private companies will be disseminated and expanded to other sites of their supervising agency, other campuses of the universities, other areas under development by the companies, respectively.

In this viewpoint, METI Study Team and EVAP consulted with each other over candidate project sites which fulfill criteria of above a. and b. for appraisal of potential for technologydissemination, based on result of meetings with each candidate project site owner.

3.1.2 Result of site selection and technology introduction plan preparation for selected potential project sites

With three criteria in sub-subchapter 3.1.1, Clark Freeport Zone in Angeles City in Panpanga Province, John Hay Special Economic Zone in Baguio City in Cordillera Administrative Region and Filinvest Alabang in Muntinlupa City in Metropolitan Manila Region were selected as potential project sites from 10 candidate project sites.

After the F/S period, METI Study Team will continue consideration for entry into demonstration phase at these selected potential project sites. In the other hands, METI Study Team will continue information sharing and opinion exchange with other candidate project sites, in consideration of possibility of commercial operation after demonstration phase.

Background of site selection and overview of battery swapping electric jeeney technology introduction plan are summarized in Table 3.2 and Table 3.3.

Operational routes of introduced electric jeepneys at each potential project site are shown in Table 3.4, Table 3.5 and Table 3.6.

Table 3.2 Background of potential project site selection Candidate project site Site owner name Supervising authority name a) Possibility of financial b) Element(s) for technological c) Potential of dissemination Selection result name procurement demonstration and expansion to other sites of the site owner 1. Clark Freeport Zone CDC BCDA Yes Yes Yes Selected as project site (Possiblity of finance of a (Evaluation of impact on electric (Potential of expansion to other part of project cost) jeepney system and operational sites under control by BCDA) life under condition of high-speed and high intensity electric jeepney fleet operation) 2. John Hay Special JHMC BCDA Yes Yes Yes Selected as project site Economic Zone (Possiblity of finance of a (Information collection on impact (Potential of expansion to other part of project cost) of electric jeepney operation in sites under control by BCDA) hilly areas on vehicle system and demonstration at area with poor electricity supply) 3. University of the UP Diliman ― No ― Yes Not selected Philippines Diliman (Negative comment on (Potential of expansion to other (Negative comment on financial arrangement by the UP campuses) financial arrangement by the UP side) UP side) 4. Quezon City and 1 Team ― ― ― ― Not selected Kaloocan City (Private company) (Difficulty in site owner side for technology introduction due to high unit cost of electric jeepneys) 5. Tanauan City, Batangas Tanauan City ― ― ― ― Not selected Province (Difficulty in technology introduction from viewpoint of economic aspect of electric jeepney introduction in the City side at this stage.) 6. Subic Bay Freeport SBMA BCDA ― ― Yes Not selected Zone (Potential of expansion to other (Difficulty in technology sites under control by BCDA) introduction and necessity in further opinion exchange for consideration of technology introduction in the site owner side.) 7. Olongapo City, Olongapo City ― ― ― ― Not selected Zambales Province (Difficulty in collection of necessary information for project plan proposal from city side) 8. Muntinlupa City, PhUV Inc. Muntinlupa City ― ― Yes Not selected Metropolitan Manila (Private company) (Electric jeepney project as (Potential of expansion to other (Difficulty in technology Region city project) sites with PhUV projects) introduction due to less possibility of financial 45

Candidate project site Site owner name Supervising authority name a) Possibility of financial b) Element(s) for technological c) Potential of dissemination Selection result name procurement demonstration and expansion to other sites of the site owner procurement by project owner side) 9. Filinvest Alabang area, EVEEI (Private Filinvest Development Yes Yes Yes Selected as project site Muntinlupa City, company) Corporation (Possibility of financial (Appraisal of system operational (Potential of expansion to other Metropolitan Manila (Private company and real procurement for 20 electric life under low-speed and low sites under control by Filinvest) Region estate developer) jeepneys and a battery intensity electric jeepney fleet swapping and charging operation station.) 10. Ayala Alabang PhUV Inc. － ― ― Yes Not selected District, Muntinlupa City, (Private company) (Potential of expansion to other (Difficulty in technology Metropolitan Manila sites with PhUV projects) introduction due to less Region possibility of financial procurement by project owner side)

Table 3.3 Electeric jeepney introduction plan for project sites (As of 9 February 2017) Potential project site Introduction plan name

1. Clark Freeport 1.Travel distance: 25-27km/trip Zone 2. Number of trips: 12.57 trips/day in average （7 days a week） 3. Average speed: 38 -39km/h 4. Peak hours： 6:30-8:30am, 4:30-6:30pm 5. Introduced equipment： - 14 E-jeepneys - 28 battery sets (21kWh/set) - 14 charging units at 2 charging stations - A set of battery data collection system

2. John Hay Special 1.Travel distance: 5.6km/trip Economic Zone 2. Number of trips: 10 trips/ day in average (7 days a week) 3. Average speed: 11.2 km/h 4. Peak hours: - Sundays-Wednesdays:6:00-9:00am, 4:00-7:00pm - Thursdays-Saturdays:6:00-9:00am, 10:00am-3:00pm, 4:00-7:00pm 5. Introduced equipment: -10 E-jeepneys -20 battery sets (15kWh/net) -3 charging units at a charging station -A set of battery data collection system

3.Filinvest Alabang 1.Travel distance: 4.5km/trip area 2. Number of trips： Weekdays 24.79 trips/day, Saturdays 21.32 trips/day (6 days a week) 3. Average speed: 13.5km/h 4. Peak hours: - Weekdays 5:00- 11:00am, 12:00am-9:00pm (Small peak at 10:00- 11:00pm) - Saturdays 5:00-11:00am, 12:00am-8:00pm 5. Introduced equipment: - 19 E-jeepneys - 38 battery sets (15kWh/net) - 6 charging units at a charging station - A set of battery data collection system

Note: - Average speed without consideration of stopping time at jeepney stations on operational routes.

Table 3.4 Operational route map on introduction plan for Clark Freeport Zone (As of 9 February 2017)

Route 1 (Main Gate of Clark Freeport Zone- M.A. Roxas Avenue- Clark Freeport Zone Main Loop)

- 7 electric jeepneys - 14 battery sets (21kWh/set) - Route length: 26.75km/ round trip - Operational route (in red line): M.A. Roxas - J. Abad Santos - E. Quirino - C.P. Garcia - J. Abad Santos - C.M. Recto thru Commercial Area to the Airport - M.L. Quezon - Ninoy Aquino - E. Quirino - J. Abad Santos - M.A. Roxas Avenue back to Main Gate. - Location of battery swapping and charging station: Main Gate

Source: METI Study Team, based on information from CDC

Route 2 (Mabalacat Gate of Clark Freeport Zone- Prince Balagtas Avenue- Clark Freeport Zone Main loop)

- 7 electric jeepneys - 14 battery sets (21kWh/set) - Route length: 25.2km/ round trip - Operational route (in red line): Gil Puyat - Panday Pira to PSPC - Centennial Rd - Creekside Rd - C.M. Recto to Airport - M.L. Quezon - Ninoy Aquino - E. Quirino - C.P. Garcia - J. Abad Santos - C.M. Recto - Creekside Rd - Centennial Rd to PSPC - Panday Pira - Gil Puyat back to Mabalacat Gate - Location of battery swapping and charging station: Mabalacat Gate

Source: The same as above

Table 3.5 Operational route map on introduction plan for John Hay Special Economic Zone (As of 9 February 2017)

Route (Round trip on Ordonio Drive in John Hay Special Economic Zone)

- 10 electric jeepneys - 14 battery sets (15kWh/set) - Route length: 5.6km/ round trip - Operational route (in yellow line): Ayala Baguio Technohub- Le Monet Area- Historic Core Complex- Mile Hi Center- Baguio Country Club (*Return to Ayala Baguio Technohub after arriving at Baguio Country Club station) - Location of battery swapping and charging station: Corporate Center of JHMC

Source: METI Study Team

Table 3.6 Operational route map on introduction plan for Filinvest Alabang area (As of 9 February 2017)

Route (Circular route connecting Filinvest Alabang Shopping Mall North and North Gate Express Route)

- 10 electric jeepneys - 14 battery sets (15kWh/ set) - Route length: 4.5km/ round trip - Operational route (in green and orange dash line): South Station Terminal- Bridgeway Stop- North Bridgeway Stop- Fast Bytes- Studio 1&2- Vector Stop- West Park- West Gate- South Supermarket- Filinvest One- Capital One- Convergys- Asean Drive- Shopwise/ Festival Mall- South Station Terminal - Location of battery swapping and charging station: South Station Terminal

Source: METI Study Team, based on information from EVEEI

METI Study Team explained above electrc jeepneys introduction plan with each potential project site owner, and meetings a part of project sites (i.e. Clark Freeport Zone and John Hay Special Economic Zone) was conducted with attendance by representatives from BCDA as the supervising authority over these project sites. Comments and feedbacks from the Philippine side and approach for revision of introduction plan based on the consultation result are shown in Table 3.7.

Table 3.7 Approach for revision of introduction plan based on consultation with potential project site owners Potential project Comments on introduction plan contents Approach for revision of introduction plan site name (Site owner name) - Necessity in increased net project profit through increased - Revision of jeepney fare system for improvement in All project sites jeepney fare revenue or decreased project cost financial analysis contents

- High cost of battery with capacity of 21kWh/jeepney as an - Lower investment cost in battery component through equivalent cost as an electric jeepney without batteries, and decrease in battery capacity from 21kWh/jeepney to Clark Freeport - Necessity in confirmation on possibility of concession to 15kWh/jeepney for reduced financial burden in the Zone jeepney operator(s) for operation of electric jeepney project in CDC side, and (CDC) Clark Freeport Zone area due to legal constraint under - Revision of project implementation strucuture in Philippine law (Concern about direct management of electric assumption of comissionesd operation by jeepney jeepney project by CDC). operator(s).

- Necessity in confirmation of lawfulness of direct management - Revision of project implementation structure based of electric jeepney project by JHMC by BCDA side, and on result of confirmation by BCDA John Hay Special - Necessity in confirmation of possibility of electric jeepney Economic Zone operation in the Special Economic Zone area without (JHMC) franchaise acquisition in case of electric jeepney operation in the Special Ecobnomic Zone area as a private area of JHMC, for project operation by the Corporation, by BCDA side.

- Necessity in consideration of combinated operation of battery - Revision of introduction plan for reduced battery swapping electric jeepneys and lead-acid electric jeepneys of swapping electric jeepney volume in consideration of EVEEI to meet passenger demand for reduction of battery balance between fleet volume of battery swapping Filinvest Alabang swapping electric jeepney volume in original introduction plan and existing lead-acid electric jeepneys for reduction area to reduce project investment cost. of overall project cost, and (EVEEI) - Concern about high cost of batteries with capacity of 15kWh/ - Decrease in investment cost for battery component jeepney through reduction of battery capacity from 15kWh/jeepney to 9kWh/jeepney for reduction of operational burden in EVEEI side.

Photo 3.1 Consultation with CDC Photo 3.2 Conslutation with JHMC

Photo 3.3 Consultation with EVEEI Photo 3.4 Initial meeting with BCDA

3.2 Overview of battery swapping electric jeepney technology

3.2.1 Battery swapping technology

EVs need to replenish lost electricity for their continuous operation one way or the other. Ordinary EVs (e.g. Nissan Leaf) gain power through battery charging cable connecting battery chargers and EV batteries.

Another method for electricity supply is swapping of charged batteries and empty batteries. Characteristics include 1-10 minutes of short charging time, compared to 0.5 to 2-3 hours for charging by quick chargers and more than 8 hours for normal charging. As Source: Website of Advanced Lithium Electrochemistry Co, Ltd this result, battery swapping can contribute to Photo 3.5 Example of battery swapping buses shorter waiting time and increased operation availability of EVs.

There are examples of battery swapping EVs, and there have been development and demonstration activities. Some of such activities have resulted in a small-scale Source: Website of Gogoro commercial operation. Photo 3.6 Battery swapping motorcycles

Photo 3.5 shows an example of test run of battery swapping electric buses under development in Taiwan. The electric buses can load 4-6 battery packs with capacity of 25kWh/ bus unit and crusing distance of 100-150km. Battery swapping process requires a large-scale facility for operation of special swapping machine to handle battery packs with weight of around 300kg/ pack.

Photo 3.6 shows an example of electric motorcycles at early stage of its dissemination in Taiwan, and the electric motorcycles has already sold 10 thousand and more units. More than 100 battery swapping

stations have been located in Taipei City and other areas in Taiwan, according to the operating company. An electric taxi loads 2 battery packs with capacity of 1.2 kWh/ taxi unit and its crusing Photo 3.7 Example of battery swapping electric taxis distance is around 50km. The battery pack weighs around 12kg and can be swapped manually. The battery cells adopt circular cell 18650 for design of small and light batteries, and there is a concern of deteroriation of battery capacity after scharges and discharges. Battery deterioriation severely affects on economic feasibility and this issue needs to be considered for further expansion of battery swapping motorcycle technology. Further demonstration through battery information collection is expected.

Photo 3.7. shows example of battery swapping taxis by Better Place, and Better Place conducted demonstration in Tokyo with support from METI in year 2010. PUES has participanted in a demonstration component of development of battery swapping electric taxis and their swapping mechanism. Battery capacity of the electric taxis is 16kWh/ taxi unit, and battery charging process for the electric taxis can be finished in around a minute with special battery swapping equipment. However, considerably large-scale battery swapping equipment costed several ten thousand US Dollars or more for the demonstration activities in Tokyo. The company had implemented various experimental and project activities in Israel, Europe and their neighboring regions as well as Japan, and went bankrupt in year 2013.

Photo 3.8 Experimental activities on battery swapping EV by PUES

Photo 3.8 shows example of battery swapping technology development by PUES. In the Philippines, there have been efforts for electric jeepney introduction by various institutions; however, most of them have not been successful. Key factors for their insuccessful operation include use of cheap and prevailed lead-acid batteris or consumer lithium ion batteries instead of appropriate batteries for vehicles. Use of

such inappropriate batteries has resulted in problems of heavy jeepney body weight, lack of output energy and shorter battery life.

Batteries for battery swapping technology by PUES meet condition of 1) light battery weight, 2) easy enough for smooth battery swapping process, 3) long battery life and 4) safety as necessary requirement for economic operation of the battery swapping EV system.

Table 3.8 Advantage of battery swapping system by PUES Necessity requirement System solution by PUES Light battery weight Appropriation of battery capacity and weight and adoption of high energetic density can provide batteries with weight of 12-15kg to secure easy manual battery swapping.

Easy for battery Automatic battery connector connection and alighnment mechanisms can secure automatic swapping battery connector connection for easy battery desorption.

Long battery life Adoption of battery cells for EVs and battery management and charging technologies as by- product of EV technology can secure multiplied battery charging cycle life compared to cylindrical batteries and minimized demange to batteries.

Safety Battery management on the basis of EV technology as well as special charger and charger control for battery swapping system can secure increased safety and was proven to be safe in various safety certificate test (UN, UL and ECE, etc.)

3.2.2 Technology for vehicle control

Battery control under consideration takes approach for 2-stage control with battery management unit (hereinafter referred to as ”BMU”) for monitoring of battery packs and safety management and vehicle control unit (hereinafter referred to as “VCU”).

Signals within battery packs are processed internally under BMU and information exchange between battery packs and VCU is handled by Controller Area Network (CAN). Expected benefits from this approach includes reduced number of harnesses and reduced Figure 3.1 Overview of vehicle control technology burden of calculation in VCUs. Also, smooth response to any irregular condition of battery packs is secured under this approach. Furthermore, this 2- stage battery control can record control function and data information to preserve information on usage record, electricity current and voltage and temperature of each battery on each battery pack.

From another viewpoint, it is desirable to install VCU in an upper level of BMUs for overall vehicle control for safety of entire vehicle. In case of problem(s) in any of battery packs during vehicle operation, vehicle control system has to make decision whether to separate battery pack(s) in irregular condition to continue operation with other battery packs until the vehicle stopps at road side area with safety. The vehicle control unit at upper level in the vehicle control system controls also handles relay control within

battery packs after security verification of system after a vehicle driver starts up the vehicle motor.

3.3 Specification of battery swapping electric jeepneys for introduction in the Philippines

3.3.1 Electric jeepney body

METI Study Team assumes required specification of electric jeepney body as follows, based on result of this F/S and requirement of operational plan for each project site.

Table 3.9 Required specification of electric jeepney body Speicification item Specification Maximum spped Electric jeepneys have to join a stream of vehicles for their operation in each project site. In Clark Freeport Zone as a projectsite for demonstration activities, the road infrastructure is well developed and other vehicles sometimes operate in a high speed of around 60km/h on public roads in the Zone area. For demonstration, the maximum speed of electric jeepneys is set as 60km/h without consideration on operation on highways. Hill-climbing Hill-climing performance of the electric jeepney was set as more than 20% as an considerable value, in performance consideration of operation in mountainuous area, passage of uneven road area as well as entry into slopes. Crusing distance Route length of electric jeepney route in project sites is around 20km at longest. On this basis, METI Study Team set crusing distance as at least 40km or more to avoid risk of electricy shortage. As it is easy to adjust number of connected batteries, several patterns of crusing distance will be examined during demonstration phase to examine most appropriate specification on crusing distance in consideration of economic feasibility. Charging time Maximum charging time is set as 1 hour judging from electric jeepneys operation plan at each project site. This is to avoid queuing time for battery charging and to minimize negative impact on battery life. In demonstration phase, slow charging will be tried as much as there is no negative impact on battery operation performance.

Figure 3.2 Consideration on specification for electric jeepneys

With this assumption, METI Study Team considered specification of an electric jeepney for introduction in the project sites as shown in Table 3.10.

Table 3.10 Overview of specification of an electric jeepney body Specification item Specification Note Chassis Isuzu In coordination with Isuzu Overall length 4,590 mm Overall height 2,095 mm Overall width 1,695 mm Empty weight 1,495 kg Chassis only Gross weight 3,800 kg Designed value Capacity 21 passengers Planned value Transmission 5-speed manual transmission In consideration of use of transmission on chassis from Isuzu Motor outputs 15 kW In consideration Motor type Permanent-magnet synchronous electric motor Battery capacity 12 kWh 1.5 kWh/ battery * 8 batteries (In consideration of the details) System voltage 96 V In consideration Maximum speed More than 60 km/h Designed value Hill-climbing performance More than 20% Designed value Electricity economy 3.0 km/kWh Value based on simulation Crusing distance per charge 45 km/ charge Value based on simulation Energy efficiency equipment Regenerative brake Safety equipment Battery management system Time for battery swapping Within 5 minutes Designed value Certificate UN38.8、UL2580、ECE In consideration

3.3.2 EV batteries and chargers

Overview of EV battery packs and charging system for battery swapping station for introduction in the Philippines based on the F/S result and assumed operational plan is listed in Table 3.11 and Table 3.12.

Table 3.11 Overview of specification of a battery pack Specification item Specification Note Rated voltage 45.6 V Capacity 1.5 kWh Maximum current 100 A 66 A on a continuous basis 0 – 100 %, charge by special charger Charging time 1.0 hr for the battery pack Size 469 x 174 x 297 mm Recorded value by Sample B Weight 15.6 kg Recorded value by Sample B Ventilation Natural cooling Battery lifespan More than 80% of battery capacity after 3000 charging cycles In consideration Network CAN2.0B ISO 11898-2 compliant Overcurrent protection Recovery after reset Overvoltage protection Recovery after reset Protection feature Overdischarge protection Recovery after reset Overcharging protection Recovery after reset Overheat protection Recovery after reset

Table 3.12 Overview of specification of a charging system for electric jeepneys Specification item Specification Note Input voltage AC 170 – 260V / 1φ Input frequency 47 – 63 Hz Output voltage DC 30 – 60 V ±1.5 V Input current 30 A ±1.0 A Rated output 1.5 kW Ventilation Forced air cooling Ventilation by powered fans Network CAN2.0B ISO 11898-2 compliant Overcurrent protection Recovery after reset Overvoltage protection Recovery after reset Protection feature Overheat protection Recovery after reset Response to other innormaly Recovery after reset

Photo 3.9 Exterior of a battery pack for Photo 3.10 Exterior of a charging system for introduction in the Philippines introduction in the Philippines

3.3 Project implementation strucuture in commercial operational phase

3.3.1 Sales and leasing for operators in the Philippines

A business model for commercial operation of battery swapping electric jeepneys in the Philippines by PUES is shown in the figure below.

Figure 3.3 Buisiness model for electric jeepney project by PUES

One of characteristics of the business model is selective use of parts from Japan as shown in Table 3.13 for vital parts with large impact on specification of electric jeepneys especially quality, reliability and durability. On the other hands, procured and assembled products in the Philippines will be usedfor other parts and components for appropriation of product quality and costs.

Table 3.13 Japanese parts to be procured for electric jeepney project by PUES Parts name Parts manufacturer name Note Pack for batteries PUES Battery pack with high reliability and long lifespan for swapping developed based on Japanese EV technology Charger PUES Special design for prevention of accident and damage to batteries in battery charging process and high efficient charging process

Parts name Parts manufacturer name Note Motor controller - Domestic parts manufacturer in Secured quality of electric jeepneys and overall Vehicle controller Japan system safety - PUES Drive motor In consideration

These parts will be exported to the Philippines and will be loaded on electric jeepneys by a local body assembler (jeepney body manufacturer). Chasses for electric jeepneys will be basically procured in the Philippines.

PUES has already consulted with PhUV Inc. (Location: 2 Susano Road, Deparo, Novaliches, Source: Photo by METI Study Team Caloocan City, Philippines) as a candidate local Photo 3.11 Prototype lead-acid battery swapping partner for vehicle assembly, and both sides has electric jeepneys at factory of PhUV Inc. already reached broad agreement. PhUV Inc. has manufactured lead-acid electric jeepneys by themselves previously, and their electric jeepneys have been operated in Philippie domestic market for nearly 10 years. Also, the company has built truck bodies as their core business and METI Study Team considered that the company has sufficient technology and expertise for assembly of electric jeepneys for the Project.

Also, for purchase of chasses as basis of electric jeepney bodies, coordination with affiliate companies of Japanese truck manufacturers including Isuzu, Hino and Mitsubishi Fuso in the Philippines, and PhUV Inc. will make final selection in consideration of procurement cost and possibility of procurement of parts for maintenance.

METI Study Team assumes that PhUV Inc., as a local partner, will take role of a front company to sell and lease electric jeepney products for jeepney operators and other customers. On this basis, PUES will take charge of supply of core EV technology and parts for division of roles between PUES and PhUV Inc sides.

This approach has been taken by PUES for their efforts for introduction and expansion of electric buses in Malaysia.

3.3.2 Operation and maintenance

There are 350 thousand jeepneys in operational and the jeepneys undergo daily maintenance. Maintenance for electric jeepney bodies and chasses can be handled by existing maintenance factory in the Philippines without problem as they can for diesel jeepneys.

In constrast, it is said that maintenance of EV driving parts requires different knowledge and expertise from that of diesel vehicles. After this F/S period, there is a schedule for implementation of activities including preparation of tools and manuals preparation and technology transfer activities so that each of local jeepney operators can conduct daily exterior check and other miminal level of maintenance

activities.

On the other hand, such activities as maintenance and overhaul impacting on internal structure will be commissioned to specific service companies or conducted by PUES by themselves, in consideration of safety operation, necessity of special maintenance tools, necessity in appropriate use of protective equipment and other issues. Local service companies for commissioned maintenance service for the Project will be determined based on consideration result at future stage.

At this moment, PUES has internally requirement for their employees for assembly and maintenance of EVs that they have to attend a program of Special Education for Low-voltage electricity handling businesses, in addition to acquisition of certification related to vehicle maintenance.

3.3.3 Technology transfer and capacity development in the Philippines

During process of consultation with CDC, JHMC as potential project site owners and meeting with Climate Change Division of DENR, METI Study Team have received requests on implementation of technology transfer andcapacity development for the Philippine side in following fields for introduction and dissemination of battery swapping electric jeepney technology.

- Operation and maintenance (hereinafter referred to as “O/M”) of electric jeepney bodies and battery swapping and charging stations for local staff including personnel from JHMC, and

- Acvitity component of Monitoring, Reporting and Verification (hereinafter referred to as “MRV”) of GHG emissions during demonstration phase by the Philippine side.

For O/M component, PUES will consider capacity building support for Philippine stakeholders in cooperation with experts from DOTr, UP-NCTS and Philippine institutions, EVAP and manufacturers of electric jeepney components in the Philippines. In addition, technical transfer will be conducted for local stakeholders to enhance capacity of automonous daily O/M activities related to electric jeepney bodies and battery charging and swapping stations in the Philippine side. Furthermore, possibility for accepting trainees from the Philippine side at factories or facilities of PUES in Japan will be individually considered depending on training topics.

For MRV component, OC Global, will provide support to Philippine stakeholders including potential project site owners in the field of prepration of necessary parameters to be monitored and documents preparation and management approach, with advice from Climate Change Division and Air Quality Management Office of DENR and experts from universities or research institutions in Japan and the Philippines with expertise in MRV field. Also, for technology transfer and capacity development related to operation of battery data collection system for monitoring of GHG, OC Global trains Philippine stakeholders, with support from experts from PUES, as described in detail in Subchapter 3.5.

3.3.4 Project implementation structure in Japan and the Philippine side for demonstration phase

Project implementation structure has not yet been fixed at stage of March 2017; however, METI Study Team will make necessary consideration for establishment of appropriate implementation structure, in

view of strengthened network at this F/S and future demonstration phases and condition for project implementation after demonstration phase.

3.4 Consideration on project cost and financial plan

3.4.1 Project cost estimation result

Based on electric jeepney introduction plan on Table 3.3, rough estimate for project cost at each potential project site is made as shown in Table 3.14.

For rough estimation of project cost, reference value on Table 3.15 was used, based on consultationwith EVAP.

Table 3.14 Electric jeepneys introduction plan for each potential project site (As of 9 Feburary, 2017) Potential project site name Project cost (Rough estimate for demonstration phase)

- Electric jeepneys 420,000 US Dollars 1,211,000 US - Batteries and chargers (including a set of Dollars in total 1. Clark Freeport Zone battery information collection system) 791,000 (0.14 billion US Dollars Japanese yens) 3,281,500 US - Electric jeepneys 300,000 US Dollars 713,500 US Dollars in 2. John Hay Special - Batteries and chargers (the same as above) Dollars in total total Economic Zone (0.08billion 413,500 US Dollars (0.37 billion Japanese yens) Japanese yens)

- Electric jeepneys 570,000 US Dollars 1,357,000 US Dollars in total 3. Filinvest Alabang area - Batteries and chargers (the same as above) (0.15 billion 787,000 US Dollars Japanese yens)

Note: - Project cost in Japanese yens is calculated by exchange rate of 1 US Dollar as 113 Japanese Yen. - Average speed without consideration of stopping time at jeepney stations on operational routes. - Project cost does not include demonstration activity cost, labor cost, travel cost, local construction cost, postal cost and taxes (duties and VAT, etc.)

Table 3.15 Reference value for rough estimation of project cost Item Reference value of unit cost 1. Electric jeepney body 30,000 US Dollars/ unit including EV components and body assembly (Batteries are not included.) 2. Battery charging and swapping system 2.1 Batteries 30,000 US Dollars/ 2 battery sets/ jeepney (*1) 2.2 Battery charging and swapping unit at charging station 4,500 US Dollars/ unit/ jeepney (*2) 2.3 Battery information collection system 10,000 US Dollars/ jeepney Note: (*1) 8 batteries/ set. 2 battery sets for operation of an electric jeepney. (*2) In a battery charging and swapping unit, an electric jeepney uses 4 slots (rows) for a charging. Each of battery slot can charge 2 batteries. Source: Estimation by METI Study Team

PUES assumes yearly production of around 500 electric vehicles at early stage of dissemination in the Philippines.

3.4.2 Financial analysis result

Based on rough estimate of project cost in Sub-subchapter 3.4.1, METI Study Team conducted financial analysis of direct operation of battery swapping electric jeepneys by each project site owner without commissioned operation by operators for the potential project site.

Payback years for overall initial invest cost for electric jeepney project at each potential project site are estimated in Table 3.16 in assumption of full payment of overall initial invest cost by project site owner to evaluate economic feasibility of project plan.

Table 3.16 Payback years of initial investment cost for electric jeepney project for each potential project site Potential project site name Payback years Clark Freeport Zone 6.35 years John Hay Special Economic Zone 4.86 years Filinvest Alabang area 7.41 years

3.4.3 Result of consultation with project site owners based on financial analysis result

Based on estimation and analysis in Sub-subchapter 3.4.1 and 3.4.2, METI Study Team explored possibility of financial procurement by the Philippine side for electric jeepney introduction, during consultations with each potential project site owner.

As result of consultation, site owner of Clark Freeport Zone and John Hay Special Economic Zone (i.e. CDC and JHMC) showed an interest in budget proposal to BCDA, their supervising agency. In parallel, METI Study Team and they agreed on necessity in improvement in original financial analysisl in Sub- subchapter 3.4.2 to increase revenue for each potential project site.

Separately, regarding Filinvest Alabang area, METI Study Team confirmed that EVEEI has a will to procure necessary financial resources for up to 20 electric jeepneys and a battery swapping and charging station from their investor. On this basis, METI Study Team has to revise project plan to reduce project investment cost and increase project profits for their continuous consultation for further proposal after this F/S period. Furthermore, based on the acknowledgement that EVEEI is a private company, METI Study Team will consider possibility of additional financial procurement through investor and financial institution networks under the Private Financing Advisory Network (hereinafter referred to as “PFAN”) for which ICETT had worked as secretariat since 2016JFY for finance for future project stage.

3.4.4 Project cost reduction

Based on understanding of financial analysis result in Sub-subchapter 3.4.1 and comments from the Philippines side in Table 3.7, METI Study Team will consider possibility of cost reduction through combination of following efforts in demonstration phase and beyond:

- Decrease in capacity of batteries on an electric jeepney for battery cost reduction,

- Cost reduction through reduced battery and equipment cost by improved operation efficiency

under condition of mimimum battery capacity for operation, (No spare battery capacity, and Consumption of electricity in a battery as much as possible, without spare battery capacity.)

- Reduction of cost for battery data collection system from 10,000 US Dollars/ jeepney at stage of March 2017 for entry into mass production phaseAt the end of this F/S stage, and

- Consideration on possibility of reduced electricity cost burden through solar power generation to meet a part of electricity demand at battery swapping and charging stations, based on larger amount of solar radiation in the Philippines and higher electricity tariff in comparison with Japan.22

Furthermore, for reduction of battery cost which consitutites a large proportion of project cost, it is estimated that the cost will be decreased by 30%-50% from the present level in view of decreasing lithium ion batteries cost in recent years.

Note: 1 US Dollar = 113 Japanese Yen Source: Battery RM2013, NEDO Figure 3.4 Roadmap of dissemination of secondary batteries

Also, it is forecasted, if market of battery swapping electric jeepney will be expanded from annual production of several hundered units to several thousand units at dissemination stage, cost reduction as result of mass production will be expected.

3.5 Appraisal of environmental impact of electric jeepney introduction

3.5.1 Approach for appraisal

During this F/S period, METI Study Team made an appraisal of environmental impact from electric jeepney introduction in the Philippines from following two aspects:

22Amount of solar radiation in Metropolitan Manila Region is 3.9-5.9kWh/m2, and is larger than Tokyo’s by 31- 82%, according to NEDO Standard Solar Radiation Database.

- CO2 emissions reduction through electric jeepney introduction to replace diesel oil (fossil fuels) consumption at diesel jeepneys for public transport services which can be introduced in the scenario of no electric jeepney introduction under the Project in the Philippines,

- Air pollutant emission e.g. NOx, CO from diesel jeepneys in case of no electric jeepney introduction under the Project in the country.

For evaluation of air pollutant emissions reduction, METI Study Team evaluated air pollutant emissions amount in case of no electric jeepney intrtoduction under the Project in the country.

3.5.2 Consideration of applicable MRV methodologies a. Situation of existing methodologies

METI Study Team conducted a literature survey on existing approved JCM methodologies and

registered CDM methodologies for evaluation of CO2 emissions reduction from introduction of battery swapping electric jeepney technology under this F/S.

As of March 2017, it is confirmed that following 2 methodologies are available:

- Approvied JCM methodology VN_AM001 under Vietnam-Japan JCM “Transportation energy efficiency activities by installing digital tachograph systems, Version 1.0”

- Approved small-scale CDM methodology AMS-III.S “Introduction of low-emission vehicles/ technologies to commercial vehicle fleets (Version 04.0)”

Result of appraisal of applicability of above methodologies to evaluation of CO2 emissions reduction from battery swapping electric jeepney introduction is summarized in Table 3.17.

Based on appraisal result, METI Study Team prepared MRV methodology for introduction of the technology in the Philippines.

Table 3.17 Result of evaluation of applicability of existing JCM and CDM methodologies JCM methodology Eligibility crirteria Terms and definitions, and Establishment and calculation of reference Calculation of project Data and parameters fixed ex ante name methodology summary emissions emissions VN_AM001 Partially applicable Partially applicable Applicable Not applicable Partially applicable ”Transportation energy efficiency (Only definition of target (The methodology mentions to (Following components are applicable to (No assumption of fuel (Approach for setting activities by installing activities and approach for required system specification and methodology preparation for electric switchfrom fossil fuel driven crusingdistance and fuel economy digital tachograph requirement of function for definition of introduced jeepney project: vehicles to EVs) of introduced vehicles in systems, Version 1.0” identification of fuel technology (digital tacograph Approach for setting conservative reference scenario under the consumption and travel system), which can be applicable to reference emissions compared to project can be applied to electric distance by vehicles in electric jeepney project. However, jeepney project.) BAU emissions scenario of no project the methodology does not assume implementation are fuel conversion to EVs and this Approach for calculation of reference applicable. However, it is methodology is regarded only emissions by multiplying overall difficult to apply other partially applicable to the project.) annual cruising distance under this criteria as they do not match project by fuel economy of with electric jeepney introduced vehicles and CO2 project.) emission factor of used fuels under the project,)

CDM methodology Scope, applicability, and Others (Introduction, Definitions, Baseline methodology (Baseline emissions) Baseline methodology Monitoring methodology (Data name entry into force etc.) (Project activity emissions) and parameters monitored) AMS-III.S Partially applicable Not applicable Partially applicable Applicable Partially applicable ”Introduction of low- emission vehicles/ (The methodology assumes (No description on GHG emissions (Approach for estimation of baseline (There is description on (This methodology requires technologies to of broad rangeof vehicle reduction approach for JCM emissions by multiplying overall annual approach for estimation of calculation of grid electricity CO2 commercial vehicle type including EVs, hybrid methodology.) crusing distance by CO2 emission factor project emission in case of emission factor as a parameter fleets (Version 04.0)” vehicles, LPG vehicles, under GHG emission reduction project is introduction of EVs and other with CDM Tool “Tool to but it is necessary to scope useful for electric jeepney project.) types of vehicles. This calculate baseline, project and/or application range to EVs methodology estimates leakage emissions from electricity for electric jeepney project emissions by consumption”. Other information project. Other criteria are multiplying overall annual on emission factor of fuels of not applicable as they do electricity consumption introduced vehicles and fuel not correspond to electric amount by CO2 emission economy can be applicable to jeepney project contents.) factor of electricity grid. For electric jeepney project.) electric jeepney project, it is necessary to adjust description for EV introduction only.) Source: VN_AM001, AMS-III.S

b. Establishment of eligibility criteria

Based on literature survey result, METI Study Team set eligibility criteria for battery swapping electric jeepney technology as follows:

- The Project installs a new electric jeepney system

- The Project purchases electricity from the national grid and covers electricity demand at electricity charging unit(s) at a potential project site.

- The net amount of travel distance, daily trips and operating days for electric jeepney system operation at the potential project site are measurable based on the monitoring plan.

- The electricity consumed for the Project is separately measured and assessed in a quantitative manner.

The electric jeepney system is defined as a collection of electric jeepney bodies, battery swapping and charging units and other necessary equipment for electric jeepney operation in a draft methodology in item e of Sub-subchapter 3.5.2, and it is secured that the draft methodology is surely applied to battery swapping electric jeepney technology.

c. Confirmation on appropriateness of reference scenario

METI Study Team confirmed and evaluated each of candidate reference scenarios on Table 3.18.

In addition to study in Japan, METI Study Team had a meeting with Climate Change Division under Environmental Management Bureau of DENR during F/S period to invite their comments and feedbacks on selection of reference scenario for the draft methodology. As result of the meeting, METI Study Team confirmed appropriateness of setting operation of Euro4-standards-compliant diesel jeepneys with B2 biodiesel (2% mix of bio fuels in diesel oils) under the existing Philippine law in the near future.

Table 3.18 Result of confirmation on appropriateness of candidate reference scenarios Candidate reference Applicability to Background of applicability scenario MRV methodology Euro4 diesel Yes DOTr issued their administrative order to mandate propulsion of internal jeepneys combustion engines of diesel vehicles to comply with Euro4 standard from January 2017. Under the administrative order, dissemination of Euro4 diesel jeepneys as reference scenario for this MRV methodology is expected. Conventional diesel - After introduction of Euro-4 standard, conventional diesel jeepneys e.g. Euro- jeepneys (Non- 2 diesel jeepneys can be operated, according to DENR. As DENR has a plan to Euro4) promote introduction of Euro4 standard under the Clean Air Act from viewpoint of emissions reduction from transportation sector at later stage, conventional diesel jeepneys are not assumed as reference scenario case. CNG-driven - At stage of December 2016, there is no CNG bus in the Philippines. jeepneys Furthermore, there is less possibility that CNG jeepneys will be popular enough to replace conventional diesel jeepneys in public utility transportation services, due to lack of infrastructure for CNG supply. LPG-driven - There is an effort for introduction of LPG jeepneys by a part of private jeepneys companies. However, unit calorific value of LPG is lower than that of diesel oil, and there is less possibility that LPG jeepneys will replace conventional diesel jeepneys. Biodiesel-driven Yes Republic Act No. 9367 “An Act to Direct the Use of Biofuels, Establishing for jeepneys this Purpose the Biofuel Program, Appropriating Funds Therefor, and for Other Purposes” in 2006 (RA9367) mandates all of new engines and motors in

Candidate reference Applicability to Background of applicability scenario MRV methodology the market of the Philippines in 2008 and after to use B2 biodiesel. In light of this situation, dissemination of biodiesel-driven jeepneys as reference scenario for this MRV methodology is expected. Bioethanol-driven - RA9367 mandates all of new engines and motors in Philippine market in 2010 jeepneys and after to use B10 bioethanol (gasoline with 10% of ethanol by quantity). (Gasoline jeepneys) However, due to following reasons, there is less possibility that B10 bioethanol jeepneys (gasoline jeepneys) will be popular enough to replace conventional diesel jeepneys in public utility transportation services in the Philippines: According to EV industry in the Philippines, gasoline-propelled jeepneys for public transportation have disadvantage compared to diesel jeepneys in output power. Furthermore, gasolines are much expensive than diesel oils, and jeepney manufacturers have had good access to used or redundant 4-cylinder diesel engines for jeepneys production in the Philippines. Therefore, gasoline jeepneys rarely exist in Philippine market. Abolishment of - Replacement of all of existing diesel jeepneys by bus transportation system jeepneys for public requires following costs, and there is less possibility that this replacement will transportation be possible as reference scenario for this MRV methodology: services (full - High amount of initial investment (including construction cost and replacement by buses) contingency cost related to compensation to local residents), - Training for conversion of vehicle type for jeepney drivers and support to the drivers for secured employment - Negotiation with jeepney association Abolishment of - LRT construction requires tremendous amount of cost including construction jeepneys for public cost, land procurement cost (including compensation for local residents). From transportation fiscal viewpoint, replacement of all of existing diesel jeepneys by LRT is not services (full considered feasible and possible. replacement by LRT

At a meeting with DENR, DENR side pointed out abolishment of jeepneys for public transportation services (full replacement by LRT) might be appropriate as well. However, METI Study Team did not select the scenario of jeepney abolition in replacement by LRT as most probable reference scenario, as they considered the scenario can only happen as a long-term trend of transport mode in the Philippines. In a short term, the scenario will only bring huge economic and social impact with abundant of LRT construction cost and unemployment/ re-employment of existing diesel jeepney drivers in the Philippines. d. Approach for MRV (Implemetation method, data parameters, appropriateness of GHG monitoring and estimation method)

METI Study Team considers use of battery information collection system. The system collects operational data recorded on embedded data tags on batteries for electric Figure 3.5 Concept of battery information collection system jeepneys, and collected data by the system are transmitted to collection system. Transmitted data types include operational distance for

each vehicle which uses the batteries per trip, number of vehicle operation on designated operational routes, yearly operational days of each vehicle and overall yearly charged electricity amount for each battery. Use of this system does not require manual calculation for entire monitoring process.

Frequency of monitoring on each data parameter is listed in Table 3.19.

Table 3.19 Monitoring by battery information collection system Monitoring item Approach Frequency Submitted working Number of diesel vehicles in entire diesel-driven records from electric Once a month transportation system (units) jeepney drivers Route length per trip for each electric jeepney (km/trip) Daily Volume of daily trips by a diesel jeepney at each operational Collected EV operational Daily route (Trips/ day) data from information Volume of yearly operating days by entire diesel-driven collection system Daily transportation system (Days/ year) embedded on electric Volume of annual net charged electricity at batteries in entire jeepney batteries Once a month electric jeepney system (kWh/year)

Also, following parameters needs to be fixed before project impelementation as shown in Table 3.20.

Table 3.20 List of parameters to be fixed ex ante Data parameter Parameter contents Approach for parameter setting EF CO2,B2biodiesel, y CO2 emission factor for B2- It is set based on maximum amount of CO2 emission biodiesel fuels in year y (t- factor of available B2-biodiesel fuels in domestic market

CO2/ ℓ) of the Philippines. ηREF Fuel economy of an Euro 4 It is set considering the specification of prevailed Euro4 diesel vehicle (ℓ/ km) diesel vehicles in the Philippines

EF CO2,electricity, y CO2 emission factor for National Grid Emissions Factor as demonstrated by IGES electricity grid in year y (t- in the Philippines in year 2012 (0.508t-CO2/MWh), as CO2/MWh) confirmed as the latest value by DENR. LOSSPJ, C, y Electricity loss at overall It is set based on confirmed maximum electricity loss of battery charging units in year available battery charging units in domestic market of the y (%) Philippines, from industrial association in EV sector in the Philippines. e. Preparation of draft methodology

Based on information on above item a.- d., METI Study Team prepared following draft methodology.

(Methodology title)

Replacing diesel-driven public transportation system by electric jeepney system

(Terms and definitions)

Terms Definitions Diesel vehicle Diesel vehicle indicates a vehicle with diesel-powered internal combustion engine for its propulsion. Diesel-driven A fleet of diesel passenger vehicles for transportation services. transportation system B-2 biodiesel fuel Mixed fuel in which a vegetable oil or animal fat-based diesel fuel consisting of long-chain alkyl (methyl, ethyl, or propyl) esters is blended with diesel oil in concentration of 2 percent

Electric jeepney A jeepney that uses electricity stored in its on-board battery as the only power

Terms Definitions source to drive an electric motor for its propulsion. Electric jeepney A fleet of Electric jeepneys, their electricity charging and swapping unit(s) and system other relevant supporting equipment for their operation

(Summary of the methodology)

Items Summary GHG emission Electricity stored in its on-board battery as a power source of Electric jeepneys reduction measures replaces fossil fuels, such as diesel fuels, which emit CO2 for in combustion process for propulsion of diesel vehicles. While CO2 is emitted during process of generation of electricity which is transferred to and stored at electricity charging units at power plants, introduction of Electric jeepney system replaces diesel- driven public transportation system resulting in GHG emission. Calculation of Reference emissions are calculated by multiplying the emission factor of B2- reference emissions biodiesel fuel by the amount of monitored net B2-biodiesel fuel consumption by diesel-driven public transportation system. Calculation of project Project emissions are calculated by multiplying consumed electricity through emissions electric jeepney operation and considered value of battery charging loss by CO2 emissions factor of grid electricty to ensure net reduction of emissions by the project. Monitoring parameters - Number of Electric jeepneys in operation under the Project (unit) - Length of route k per trip (km/trip) - Volume of daily trips by an Electric jeepney at route k (trips/ day) - Volume of yearly operating days of Electric jeepney system (days/ year) - Volume of net charged electricity at batteries in entire Electric jeepney system in year y (kWh/year)

(Eligibility criteria)

Criterion 1 The project installs a new Electric jeepney system Criterion 2 The project purchases electricity from the national grid and covers electricity demand at electricity charging unit(s) at project site. Criterion 3 The net amount of travel distance, daily trips and operating days for electric jeepney system operation in the project site are measurable based on the monitoring plan. Criterion 4 The electricity consumed for the project is separately measured and assessed in a quantitative manner.

(Emission Sources and GHG types)

Reference emissions Emission sources Emission sources B2-diesel fuel consumption B2-diesel fuel consumption Project emissions Emission sources Emission sources Electricity loss at battery charging and swapping unit(s) at project site Electricity loss at battery charging and swapping unit(s) at project site

(Establishment of reference emissions)

Reference emissions are calculated by multiplying the CO2 emission factor of B2-biodiesel fuel by the amount of monitored net B2-biodiesel fuel consumption by diesel-driven public transportation system.

In order to ensure conservativeness, B2-biodiesel fuel consumption is assumed for propulsion of internal combustion engines of diesel vehicles in compliance with Euro4 Standard which was introduced

in January 2016 in the Philippines. Section 5 of the Republic Act (RA) 9367 titled An act to direct the use of biofuels, establishing for this purpose the biofuel program, appropriating funds therefor, and for other purposes in 2006 stipulates that use of a minimum of 2% blend of biodiesel into all diesel fuel was mandated within two years from effectivity of RA9367, i.e. from year 2008. This methodology assumes full-scale enforcement of national regulation for biodiesel promotion under RA9367 at national level.

(Calculation of reference emissions)

REy = FCy * EFCO2, B2Biodiesel, y (1)

FCy = DTREF,y* ηREF (2)

DTREF,y = n * DREF, k * TRREF, d * ODREF, y (3)

Where,

REy Reference emissions in year y (t-CO2/year)

FCy The net quantity of B2-biodiesel fuel consumed by diesel- (ℓ/year) driven public transportation system in year y, which is calculated by multiplying fuel economy of a diesel vehicle by overall yearly operational distances by entire diesel- driven public transportation system.

EF CO2,B2Biodiesel, y CO2 emission factor for B2-biodiesel fuels in year y. (t-CO2/ℓ)

DTREF,y Volume of yearly travel distance by entire diesel-driven (km/year) public transportation system

ηREF Fuel economy of a B2-biodiesel vehicle (ℓ/km) n Number of B2-biodiesel vehicles in entire diesel-driven (units) public transportation system

DREF, k Volume of length of route k per trip by a vehicle (km/trip/unit)

TRREF, k Volume of daily trip by a B2-biodiesel vehicle at route k (trip/day)

ODREF, y Volume of yearly operating days by entire diesel-driven (days/year) public transportation system

Note: Consumed electricity at battery swapping and charging units is supplied from national grid during maintenance period.

(Calculation of project emissions)

PEy = ECch,y * EFCO2, electricity, y * (1+LOSSPJ, C, y) (4)

Where,

PEy Project emissions in year y (t-CO2/year)

EC ch, y Volume of net consumed electricity at electric jeepneys in (kWh/year) entire E-jeepney system in year y EF CO2,electricity, y CO emission factor for electricity grid in year y. (t-CO2/kWh) 2

LOSSPJ, C, y Maximum electricity loss at overall battery charging units in (%) year y, which will be set ex ante

（Calculation of emissions reductions）

Emission reductions are calculated as the difference between the reference emissions and project emissions, as follows:

ERy = REy – PEy (5)

Where,

ERy Emission reductions in year y (t-CO2/year)

(Data and parameters fixed ex ante)

The source of each data and parameter fixed ex ante is listed as below.

Parameter Description of data Source EF CO2,B2biodiesel, y CO2 emission factor of It is set based on maximum amount of CO2 emission factor of B2-biodiesel fuels in available B2-biodiesel fuels in domestic market of the year y Philippines. ηREF Fuel economy of an It is set considering the specification of prevailed diesel vehicle in Euro-4 diesel vehicle the Philippines

EF CO2,electricity, y CO2 emission factor for National Grid Emissions Factor information published by electricity grid in year y Department of Energy, Republic of the Philippines LOSSPJ, C, y Electricity loss at overall It is set based on confirmed maximum electricity loss of available battery charging units in battery charging units in domestic market of the Philippines. year y Confirmation is made with industrial association in EV sector in the country.

(Calculation sheet for estimation of emissions reduction amount)

f. Estimated CO2 emissions reduction amount

METI Study Team estimated projected CO2 emissions reduction at each potential project site with prepared draft methodology.

REy = FCy * EFCO2, B2Biodiesel, y (1)

FCy = DTREF,y* ηREF (2)

DTREF,y = n * DREF, k * TRREF, d * ODREF, y (3)

Where,

REy Reference emissions in year y (t-CO2/year)

FCy The net quantity of B2-biodiesel fuel consumed by diesel-driven (ℓ/year) public transportation system in year y, which is calculated by multiplying fuel economy of a diesel vehicle by overall yearly operational distances by entire diesel-driven public transportation system.

EF CO2,B2Biodiesel, y CO2 emission factor for B2-biodiesel fuels in year y. (t-CO2/ℓ)

DTREF,y Volume of yearly travel distance by entire diesel-driven public (km/year) transportation system

ηREF Fuel economy of a B2-biodiesel vehicle (ℓ/km) n Number of B2-biodiesel vehicles in entire diesel-driven public (units) transportation system

DREF, k Volume of length of route k per trip by a vehicle (km/trip/unit)

TRREF, k Volume of daily trip by a B2-biodiesel vehicle at route k (trip/day)

ODREF, y Volume of yearly operating days by entire diesel-driven public (days/year) transportation system

PEy = ECch,y * EFCO2, electricity, y * (1+LOSSPJ, C, y) (4)

Where,

PEy Project emissions in year y (t-CO2/year)

EC ch, y Volume of net consumed electricity at batteries in entire E- (kWh/year) jeepney system in year y

EF CO2,electricity, y CO2 emission factor for electricity grid in year y. (t-CO2/kWh)

LOSSPJ, C, y Maximum electricity loss at overall battery charging units in (%) year y, which will be set ex ante

Estimation of emissions reduction for electric jeepney introduction in Clark Freeport Zone based on considered introduction plan in Table 3.3 is shown below, as an example of the estimation.

For estimation of emissions reduction from electric jeepney operation in each of two operational routes, METI Study Team assumed followings as parameters to be fixed ex ante:

- Yearly operational days of introduced electric jeepneys in the Zone are set as 365 days.

- METI Study Team prepared CO2 emission factor of B2 biodiesel (0.00267246t-CO2/kl) by 23 multiplying prepared CO2 emission factor of diesel oils (0.002727t-CO2/kl) by 0.98

- METI Study Team adopted 5km/kl as fuel economy of Euro4 compliant diesel jeepneys based on confirmation on existing old diesel jeepneys in the Philippines with EVAP. According to EVAP, the fuel economy of such old diesel jeepneys is around 5km/l.

- Based on confirmation with Climate Change Division of DENR in February 2017, METI Study

Team adopted the latest value of CO2 emission factor of domestic electricity grid in the Phlippines

(0.000508t-CO2/kWh), which were calculated and set in the country by IGES in year 2012. Emission.

- METI Study Team adopted 10% as a conservative value of electricity loss at battery charging component of battery swapping and charging units. This is based on the fact that electricity efficiency of EV battery charging unit by Japanese manufacturers was more than 90% (e.g. Nissan Leaf). For estimation during this F/S period, METI Study Team used value of amount of overall supplied electricity for batteries under electric jeepney system as followings, based on prepared introduction plan in Table 3.3. Electricity economy of an electric jeepney is tentatively set as 0.322kWh/km.

Route 1(Main Gate of Clark Freeport Zone- M.A. Roxas Avenue- Clark Freeport Zone Main Loop): 7 (jeepneys)* 26.75 (km/trip) * 12.57 (trips/day)* 365 (days/year)* 0.322 (kWh/km) ＝276,666(kWh/year)

Route 2 (Mabalacat Gate of Clark Freeport Zone- Prince Balagtas Avenue- Clark Freeport Zone Main loop): 7(jeepneys)* 25.2(km/trip)* 12.57(trips/ day)* 365(days/ year) *0.322(kWh/km)＝260,635(kWh/year)

23 36.8 MJ/l [Net calofic value of diesel oils] / 1000 * 0.0741 t-CO2/GJ [CO2 emission factor of diesel oils] = 0.002727t- CO2/kl

Route 1 Route 2 REy＝7(jeepneys)* 26.75(km/trip/jeepney)* 12.57 REy＝7(jeepneys)×25.2(km/trip/jeepney)* 12.57(trip/

(trips/day)* 365(days/year) *0.0026725(t-CO2/ℓ)* day)* 365(days/ year)* 0.0026725(t-CO2/ℓ) * 0.20 (l/km)* 0.98 0.20(l/km)* 0.98

＝450 (t-CO2/year) ＝423 (t-CO2/year)

PEy＝276,666(kWh/year)* 0.000508(t-CO2/kWh)* (1+ PEy＝260,635 (kWh/year)* 0.000508(t-CO2/kWh)* (1+ 10/100) 10/100)

＝155(t-CO2/year) ＝146 (t-CO2/year)

ERy＝295 (t-CO2/year) ERy＝277 (t-CO2/year)

As result of above calculation, yearly CO2 emission reduction from electric jeepney introduction at

Clark Freeport Zone is estimated as 572 t- CO2.

Using the same approach, estimated yearly CO2 emission reduction at all of 3 potential project sites are listed in Table 3.21.

Table 3.21 Esimated CO2 emission reduction from electricity jeepneys introduction for potential project sites Estimated CO emission Potential project site name 2 reduction (t- CO2/year) Clark Freeport Zone 572 John Hay Special Economic Zone 141 Filinvest Alabang area 248 Total 961

3.5.3 Estimation of air pollutant emissions reduction

Under identified reference scenario as confirmed in Item c. of Sub-subchapter 3.5.2, METI Study Team estimated air pollutant emissions reduction amount under situation of replacement of Euro4 compliant B2-biodiesel-driven diesel jeepneys in absence of electric jeepney introduction in the Philippines under the Project.

For estimation, METI Study Team made an assumption that emission of each air pollutant from Euro4-compliant B2-biodiesel-driven diesel jeepneys with same weight of that of battery swapping electric jeepneys is equal to emission limit under Euro4 standards.

Estimated emission reduction of each air pollutant was calculated by multiplying projected annual operational distance of electric jeepneys under the introduction plan for each potential project site by value for each air pollutant under Euro4 standards on Table 2.11.

Estimation result is shown in Table 3.22.

Table 3.22 Estimated air pollution emissions reduction from electric jeepney introduction at each potential project site Pollutant name CO(t/year) NOx(t/year) HC+NOx(t/year) PM (t/year) [*Reference] Annual Site name operational distance (km/year) Clark Freeport Zone 0.834 0.417 0.501 0.042 1,668,634 John Hay Special 0.123 0.062 0.074 0.006 246,332.8 Economic Zone Filinvest Alabang area 0.324 0.162 0.194 0.016 647,959.5 Total 1.281 0.641 0.769 0.064 Source: Calculation by METI Study Team based on information on Table 3.3

3.6 Roadmap for battery swapping electric jeepneys introduction in the Philippines including Metropolitan Manila Region

3.6.1 Schedule for project implementation in the Philippines a. Dissemination of battery swapping electric jeepney technology in consideration of character and market trends of the Philippines (including MRV and related support for capacity building)

On the basis of study by METI Study Team, PUES has a plan for technology introduction in nationwide in the Philippine after technological verification at selected 3 project sites with different characteristics.

i. Expansion to development area under BCDA

PUES considers project implementation at other former US base sites under conversion and development under BCDA, based on project activities in Clark Freeport Zone and John Hay Special Economic Zone in demonstration phase. At present BCDA has jurisdiction over 9 areas and each of them has potential for further development. These sites face challenges for development of public transport system. METI Study Team, during this F/S period, confirmed from a part of site owners among the areas that they are conscious of environmental performance of introduced public transport system, in view of insufficient ambiental air quality and traffic congestion in other areas including Metropolitan Manila Region as negative examples at this stage. With this background, it is expected there are strong demands of electric jeepney introduction to such areas, and it is considered potential of electric jeepney introduction in the areas are very high.

ii. Expansion within Metropolitan Manila Region

PUES considers project implementation in other areas within Metropolitan Manila Region, based on success in Filinvest Alabang area in demonstration phase. Possible projects by PUES in the Region cover replacement of conventional diesel jeepneys by battery swapping electric jeepneys. The Projects will meet a part of demand for replacement of around 20 thousand old jeepneys for every year, instead of new introduction, in the Region.

PUES will promote electric jeepney technology introduction through demonstration of its advantage in environmental and economic performance such as zero emission of GHG and air pollutants, in

comparison with Euro4-compliant diesel jeepneys. b. Roadmap for development of electric jeepneys (including prototype manufacture)

After this F/S period, PUES has consulted with PhUV Inc. about possibility of appraisal of primary technology elements and promotion to potential users in preparation of demonstration test by manufacture of 1-2 prototypes, as it is found difficult for Japan and Philippine sides to quick entry into demonstration phase.

After appraisal and data collection with prototypes, PUES will embark on demonstration test for vehicle development and manufacture. Demonstration activities are scheduled for a year, in cooperation with OC Global and ICETT.

In parallel of demonstration activities, PUES will start their preparation for commercial operation including on-demand sales for owners of project sites other than Clark Freeport Zone, John Hay Special Economic Zone and Filinvest Alabang area and business launch.

Through demonstration test, PUES will inspect technical challenges and engage in transfer of Japanese technology pertaining to electric jeepney manufacture to the Philippine side. The technology transfer activities need to cover technologies and knowledge in the fields including handling of high-voltage parts or components and quality management during manufacture process. In parallel, partnership with local partners in maintenance and service fields and implementation strucuture in these fields will be establishment, along with necessary technology transfer. c. Collaboration with PFAN and Commercial Section, Embassy of the Philippine in Tokyo

During this F/S, METI Study Team considered electric jeepney introduction plan including financial plan in collaboration with Mr. Charles Cole B. Navarro, the PFAN Area Coordinator in the Philippines. At the same time, they received liaison and advisory supports from Commercial Section, Embassy of the Philippine in Tokyo for implementation of field survesy under this F/S.

METI Study Team considers collaboration with PFAN and the Comercial Section after this F/S period as shown in Table 3.23.

Table 3.23 Collaboration with PFAN and Commercial Section, Embassy of the Philippines in Tokyo after this F/S phase Collaboration approach

PFAN - Preparatory phase for JCM Demonstration Introduction of PFAN network on investors and financial institutions (governmental and private banks) for promotion of financial procurement for commercial operation, Transfer of knowledge on relevant tips including documentation for presentation and loan application to domestic investors and financial institutions in the Philippines

- Commercial operation phase after demonstration

Request of support from or cooperation with PFAN or its experts depending on progress at project sites at this stage

Collaboration approach

Commercial - Preparatory phase for JCM Demonstration phase Section, Consideration on possibility of periodical opinion exchange by EVAP, the Commercial Section, Embassy of the OC Global, PUES and ICETT in support of efforts for legislation of EV Incentive Bills by EVAP Philippine in in the Philippines, and Tokyo Consideration on possibility of advisory support in relation to law system development for promotion of battery swapping electric jeepney technology introduction in the Philippines from the Commercial Section. - JCM Demonstration phase Consideration on possibility of continuous advisory support from the Commercial Section in above item. Consideration on possibiility of introduction of stakeholders of candidate project sites, including 7 project sites which were not selected us project site for demonstration, for electric jeepney introduction at commercial operation phase by the Commercial Section.

3.6.2 Application to various support programs and incentives

METI Study Team will consider application to following support programs and incentives in Japan and the Philippines for project implementation at later stages after this F/S, on the basis of result of confirmation in the F/S period.

Table 3.24 Applicable support programs and incentives for project impelementation Program or incentive Support contents

JCM Demonstration - Full support of initial investment cost (*Procurement at the price of depreciated Japan Program under NEDO cost at the stage after demonstration period by the program applicant)

- Exemption of corporate tax (*ITH for targeted investment project under the IPP. Possibility of extension of ITH period up to 8 years if registered as Pioneer enterprise under EO226) Incentives from BOI for - Exemption of duties, VAT and other taxes registered companies under EO226 - Exemption from quayages, export taxes and levies. - Additional exemption for labor cost - Simplified clearance process at the custom, etc.

- Following preferential measures for locators in Clark Freeport Zone area after regislation as registered companies of the Freeport Zone (in condition of The successful registeration after preliminary examination and examination on Philippines project feasibility by CDC)

Preferential measures Exemption of national and regional taxes as special taxes duties and VAT from CDC for business in (Imposion of 5% of gross income tax in exchange of this exemption) Clark Freeport Zone area Exemption from quayages, export taxes Additional exemption of labor costs Simplified clearance process at the custom Issuance of special visas, etc.

Subsidy from DOST and - Support on manufacture cost of prototypes other departments

Program or incentive Support contents

EV Incentive Bills (To be - Exemption of excise taxes for EV manufacturers legislated) - Incentives for operators, etc.

In addition to above programs and incentives, METI Study Team will consider possibililty of application to PFAN for which ICETT, a member institution of METI Study Team had worked as the Secretariat, Japan Fund for Joint Crediting Mechanism (hereinafter referred to as “JFJCM”) and Green Climate Fund (hereinafter referreed to as “GCF”) as candidate financial source for project implementation at later stages.

Among them, METI Study Team has identified advantages and disadvantages of JFJCM and GCF, and found out there is a necessity in further consideration on application to these two schemes as result of their meeting with staff in charge of both schemes in ADB, as shown in Table 3.25.

Table 3.25 Characteristics of JFJCM and GCF schemes Scheme name Advantage Disadvantage

JFJCM - Financial and technical support for ADB loan - Necessity in loan application to ADB as Soverign or projects for their project implementation aunder Non-Soverign Projects in prior to application to the JCM (Financial support in amount of around JFJCM 10 million US Dollars in maximum and technical Loan application as a Soverign Project requires support on MRV) prior consultation with ADB and contact with - Subsidy to the Soverign Projects with national DOF through ADB. central government (especially MOF) as Loan application as a Non-Soverign Project borrowing institution from ADB needs loan application to ADB which requires - Interest subsidy to decrease ADB loan rate for long time. Non-Soverign Projects by private sector - Eligibility criteria for proposed projects - Advanced low carbon technology for reduction of Every proposed project shall pass cost efficiency GHG with energetic origin with record of test based on the value which divide its overall introduction in countries other than the project cost by the product of its annual GHG Phillippines. (*According to another ADB expert, emission reduction amount and its project period. it is confirmed battery swapping electric jeepney The value shall be 40 US Dollar or lower. (4520 technology can be eligible as EV technology has Japanese Yens, if 1US Dollar= 113 Japanese been introduced in Malaysia.) Yen) It is necessary for electric jeepney project to consider applicability of this scheme, in consideration of condition for project implementation, cost reduction for commercial operation phase.

GCF - Finance for both mitigation and adaptation - Financial support for projects in amount more projects with financial support in amount of than 10 million US Dollars by ADB (*Electric around 0.25 billion US Dollars jeepney projects in selected three potential project sites are not eligible due to lower amount of - Possibility of support to large-scale projects project cost in total) which have wide-range, irrevasible, unpredecendted and serious impact on - Necessity in payment of cost for due diligence environment and society process in prior to procurement under GCF scheme through ADB, in amount of around 0.1- 0.4 million US Dollars by project proponents (*Additional payment for the due diligence)

Scheme name Advantage Disadvantage - Fixed cost share among project proponent, ADB, bank loan from financial insittutions including private banks and GCF as 25% for each.(*High risk of additional payment of 25% for ADB by project proponent or financiail institutions due to possibility of withdrawal by ADB)

Source: Information from ADB officers

Regarding PFAN, METI Study Team assumes advisory support and individual lectures for loan application to private financial institutions for battery swapping electric jeepney technology introduction by private small and medium enterprises among project site owners. This is based on understanding of activity objective of PFAN that they support private financial loan procurement by project owners and entreprenurs in field of clean energy, renewable energy and energy efficiency improvement fields for promotion of technical transfer to developing countries and transitional economies as its ultimate goal.

Also, PFAN covers 9 project fields including renewable energy use (e.g. solar, wind), waste energy generation/ recovery and clean transport, and electric jeepney introduction is included within scope of clean transport project fields. Furthermore, requirement of intial investment cost of targeted project amounts for 1-50 million US Dollars (or equivalent foreign currency) and overall project cost of the electric jeepney project is 3.28 million US Dollars within scope of PFAN program.

3.6.3 Challenges to be overcome

In order to secure project implementation after this F/S period, METI Study Team will continue consultation and considertation on countermeasures against following 4 challenges with Philippine stakeholders including EVAP.

Firstly, it is necessary to revise project and financial plans, business model and plan for demonstration phase, watching carefully trends of JCM support program budget of METI and NEDO.

Secondly, it is necessary for METI Study Team to confirm necessity in acquisition of franchaise certificate for operation in Clark Freeport Zone and John Hay Special Economic Zone in demonstration phase.

Thirdly, METI Study Team will communicate with local operators at preparatory phase for demonstration and demonstration phase, based on understanding that establishment of close partnership with local operators is vitally important for commercial operation in potential project sites especially Clark Freeport Zone after demonstration phase.

Fourthly, it is vital for METI Study Team to involve local electric companies and local private companies which may take charge of equipment of battery charging station in project implementation structure for each potential project site area for establishment of operation scheme for battery swapping and charging stations at commercial operation phase after demonstration phase.

Chapter 4 Result of Seminar on Battery Swapping Electric Vehicles Technology and the Joint Crediting Mechanism

4.1 Seminar overview

METI Study Team and EVAP jointly organized a seminar titled Seminar on Battery Swapping Electric Vehicles Technology and the Joint Crediting Mechanism for stakeholders in governmental agencies and EV industry in the Philippines in Makati City in the afternoon of 9 February 2017. At the seminar, presentation topics included outcomes of this F/S, and the seminar overview was shown in Table 4.1.

Table 4.1 Seminar overview Seminar name Seminar on Battery Swapping Electric Vehicles Technology and the Joint Crediting Mechanism Date and time 1:30p.m.- 4:20 p.m., Thursday, 9 February 2017 Venue Cicely Hall, 8th Floor of City Garden Grand Hotel, Makati City, Metropolitan Manila Region Participants 46 participants (BOI: 2 participants, DENR/ Climate Change Commission 3 participants, DOTr: 2 participants、DOE: 1 participant, BCDA 2 participants, DOST-PCIEERD 3 participants, CDC 1 participant, JHMC 3 participants, Muntinlupa City 3 participants, UP-NCTS: 1 participant, MERALCO: 3 participants, EVAP 5 participants, EVEEI 1 participant, local companies in Philippine EV industry 7 participants, Embassy of Japan in the Philippine: 1 participant., JETRO Manila: 1 participant, JICA Philippines Office: 1 participant, METI Study Team: 6 participants)

Seminar Opening remarks by Ms. Ma. Corazon Halili-Dichosa, Executive Director, contents 1:30p.m.- 1:40 p.m. Industry Development Group, Board of Investment, Department of Trade and Industry Welcome remarks by 1:40 p.m.- 1:50 p.m. - Mr. Rommel T. Juan (President, EVAP) - Mr. Masahiko Fujimoto, Team leader of METI Study Team, OC Global Presentation 1: Overview of JCM scheme by METI 1:50 p.m.- 2:15 p.m. by Mr. Kentaro Ofuji, OC Global Presentation 2: Outcomes of METI Feasibility Study 2:15 p.m.- 2:40 p.m. by Mr. Masahiko Fujimoto Presentation 3: Overview of Battery Swapping EV Technology 2:40 p.m.- 3:05 p.m. by Mr. Izumi Miyashita, PUES Presentation 4: Result of Financial Analysis for E-jeepney project and Available Financial Schemes for Introduction of Battery Swapping EV Technology in the 3:05 p.m.- 3:30 p.m. Philippines at later stage by Mr. Charles Cole B. Navarro, ICETT Presentation 5: Desirable financial/ non-financial incentives by Government of the Philippines for introduction of Battery Swapping E-jeepneys in the 3:30 p.m.- 3:55 p.m. Philippines by. Mr. Mark Anthony Delumen, Deputy Executive Director, EVAP 3:55p.m.- 4:25 p.m. Opinion exchange Closing remarks by. Mr. Junichiro Suzuki, Trade and Commercial Attachè, 4:25 p.m.- 4:30 p.m. Embassy of Japan in the Philippines

Overview - Overview of JCM, i.e. JCM scheme overview, situation of registerd JCM projects and approved methodologies and support programs by Government of Japan, - Site selection result, introduction plan and MRV plan for each potential project site and roadmap for battery swapping electric jeepney technology introduction in 2017JFY and after, - Overview of battery swapping EV technology, i.e. technology concepts and characteristics, examples of technology introduction in other countries, characteristics of technology by PUES (battery equipment and battery management technology), overview of technology appraisal result and plan for demonstration phase based on the F/S result,

- Comparison on costs and benefits between electric and conventional diesel jeepneys, assumed financial

flow in demonstration phase, composition of financial model for battery swapping electric jeepney projects, financial model for battery swapping and charging station operators as an example of project financial model and applicable financial schemes for technology introduction e.g. PFAN, - Overview of legislation efforts for introduction of fiscal and non-fiscal incentives for EVs promotion in the Philippines, overview of EV Incentive bills and previously submitted bills to the Congress and overview of applicable incentive measures for EVs promotion in the Philippines.

Overview of comments and feedbacks from seminar particpants are listed in Subchapter 4.2.

Also, METI Study Team displayed a full-scale battery for battery swapping electric jeepneys for introduction in the Philippines based on the F/S result at seminar venue for introduction to seminar participants.

Photo 4.1 Opening remarks by BOI Photo 4.2 Welcome remarks by team leader of METI Study Team

Photo 4.3 Overview of seminar venue Photo 4.4 Presentation by METI Study Team

Photo 4.5 Presentation by EVAP Photo 4.6 Q&A session between presentations

Photo 4.7 Closing remarks by Embassy of Photo 4.8 A full-scale mockup of battery for Japan in the Philippines battery swapping electric jeepneys

4.2 Comments and feedbacks from seminar participants and revision of project plan

METI Study Team received several comments and feedbacks on topics including JCM scheme, F/S outcomes, battery swapping electric jeepney technology and incentives for EVs promotion from seminar participants, as shown in Table 4.2.

Table 4.2 Overview of comments and feedbacks from seminar participants Item name Contents

JCM scheme - Possibility of acceptance of unilateral JCM project(s) under the Philippine-Japan JCM, - Possibility of utilization of existing CDM methodologies for JCM, - Inquiry on Philippine members of the Joint Committee for the Philippine-Japan JCM, and - Inquiry on limitation of volume of registered projects under respective JCM between Japan and each partner country

F/S outcomes - Concern on higher cost of electric jeepneys compared to existing diesel jeepneys and necessity in incentive measures including preferential measures by BOI and use of carbon credits by Government of the Philippines for reduced burden in the Philippine side, - Inquiry on O/M cost in demonstration phase, and - Inquiry on frequency of replacement of electric jeepney bodies and batteries

Battery swapping - Inquiry on background of selection of lithium ion batteries and battery swapping system for electric electric jeepney jeepneys, and technology - Concern on inefficiency of battery charging in peak periods.

Technology - Inquiry on concept of estimation of battery swapping cost, introduction plan including - Inquiry on volume of loaded batteries on an electric jeepney, financial plan - Possibility of revenue from advertisement fee by another institutrion to be included in project financial plan, - Possibility of fnd procurement from financial institutions and battery industry for reduced burden of invest on equipment by operators under project business model,

- Concern on battery swapping cost as a barrier from viewpoint of jeepney drivers, - Inquiry on appropriate standard of jeepney fare to gain sufficient revenue to cover expenditures for equipment cost and driver’s salary in the operator side under situation of project management by project site owner in contract with operators, and

Item name Contents

- Possibility of inclusion of environmental budget concept in consideration of zero exhaust gas and noice emission from electric jeepneys for development of more practical financial model.

Incentives for - Inquiry on approach for submission of bills which were not legislated during previous congress EVs promotion sessions to the congress by EVAP, - Necessity in commitments including support to component of equipment procurement after NEDO JCM Demonstration phase by the Philippine side, - Necessity in support for legislation of the EV Incentive Bills from seminar participants from the Philippine side, and - Concern on lack of incentives for operators of EVs including electric jeepneys in the latest version of the EV Incentive Bills in consideration at the Congress, and possibility in inclusion of such incentives in the Incentive Bills.

METI Study Team will revise electric jeepney introduction plan based on following remarks, among listed comments and feedbacks in above chart, at later stages after this F/S period:

- METI Study Team will discuss possibility of advertisement on electric jeepneys and consideration on financial plan including advertisement fee revenue with each potential project site owners. In parallel of financial plan consideration, METI Study Team will consider appropriate standard of battery swapping cost in the operators’ side.

- METI Study Team will consider possibility of fnd procurement from financial institutions and battery industry for reduced burden of invest on equipment by operators under project business model with Philippine stakeholders including each potential project site owner and EVAP. METI Study Team will also consider possibility of introduction of environmental budget to consider positive impact on CO2 emissions reduction and ambiental air quality improvement through implementation of project of battery swapping electric jeepneys as clean and low carbon transport mode, for invester relations activities.

- METI Study Team will observe overall situation of legislation process of EV Incentive Bills by EVAP, for further consultation with Philippine stakeholders including potential project site owners for introduction of battery swapping electric jeepney technology. In detail, METI Study Team will consider cumulative impact of the possible introduction of incentives under the Incentive Bills, including possible incentives for operators, on reduction of project costs in to revise project financial plan with reduced overall invest cost in the Philippine side; with this effort, METI Study Team will make best efforts to obtain consent from the Philippine side for technology introduction.

Chapter 5 Policy proposal for battery swapping electric jeepney technology introduction under the JCM

As summarized in Chapter 2, preparation of several policies, laws and regulations for EVs promotion has been in steady progress in the Philippines, and there still have a room for further efforts, from viewpoint of EV promotion and introduction of battery swapping electric jeepney technology under the policies, laws and regulations at this stage.

Based on this idea, METI Study Team made policy proposals to Government of the Philippines with EVAP to promote introduction and promotion of battery swapping electric jeepney technology from Japan in the Philippines under the JCM, during the F/S period.

5.1 Policy proposal

5.1.1 Introduction of tax exemption for import of battery swapping electric jeepney bodies and parts

METI Study Team identified higher cost of electric jeepney bodies, batteries and equipment of battery swapping and charging system in local governments and private companies including operators as users of the technology as a great challenge for technology introduction and dissemination through this F/S. These costs are higher compared to costs of existing diesel jeepneys.

As an action for reduction of this barrier, lobbying of legislation of EV Incentive Bills including tax burden reduction in field of import tax for importers of EV and battery swapping and charging system parts from Japan and other countries in the Philippines has Photo 5.1 Meeting with officer in charge of EV Incentive Bills been in progress.

In this situation, METI Study Team strongly urged Government of the Philippines to make actions for legislation of the Incentive Bills during upcoming JCM Demonstration period.

Furthermore, at Seminar on Battery Swapping Electric Vehicles Technology and the Joint Crediting Mechanism on 9 February 2017, EVAP made a presentation on the EV Incentive Bills for seminar participants from governmental institutions in the Philippines and requested their support for legislation of the Incentive Bills. As result of discussion at the seminar, EVAP will continue their efforts for legislation of the Incentive Bills based on remarks from seminar participants.

5.1.2 Manufacture of prototype of battery swapping electric jeepneys and battery swapping and charging system

Battery swapping electric jeepneys has not yet manufactured and operated in the Philippines, resulting in low visibility in the side of potential users i.e. local governments and private companies including operators, as a barrier for their decision for purchase of electric jeepney system equipment by the users’

side.

Based on understanding of this barrier, METI Study Team requested Government of the Philippines for their support to manufacture of prototypes of battery swapping electric jeepneys. It is expected that, with the prototypes, stakeholders in the potential users’ side can confirm their performance, getting in touch with full-scale vehicles to Government of the Philippines.

METI Study Team is with a goal of production of the prototypes for promotion for the said stakeholders including exhibition and introduction of their features, in parallel with possible entry into JCM Demonstration phase for technology introduction in the Phiilipines.

5.2 Contribution to preparation of standards for modernized electric jeepneys under future Jeepney Modernization Program in consideration by Government of the Philippines

During the F/S period, METI Study Team conducted several meetings with EVAP and confirmed that preparation of standards for modernizaed jeepneys by DOTr in consultation with EV Industry stakeholders including EVAP is in progress. METI Study Team confirmed the standards include additional requirements for ethe electric jeepneys including safety standards and requirements on specification.

During future process of introduction of the Jeepney Modernization Program, as well as battery swapping electric jeepney technology introduction and dissemination based on the F/S outcomes, it is assumed that duplicated investment on equipment for compliance with numerous overllaping standards and concern on safety of modernized jeepneys including electric jeepneys under the Program in the potential users’ side can be barriers for technology introduction.

The consultation process on modernized jeepney standards has been in progress, and early preparation of the standards is expected. In this situation, METI Study Team will make efforts to propose DOTr to incorporate knowledge and expertise which are acquired from actual operation of battery swapping electric jeepney bodies and equipment during demonstration phase into the standard preparation process through EVAP.