Egypt tackles climate change through energy-efficient transportation

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A shorter version of this lesson has been featured on the booklet produced by the MDG-F Environment and Climate Change window "Seeds of Knowledge - Contributing to Climate Change Solutions". - Read more about the booklet or download it in English / Spanish / French / Arabic.

Contents

Summary

This significant lesson is related to the second component of the Egypt Joint Programme.

When introducing a new idea to any society or community, the most important question is how you will market this idea to gain the necessary support and to make the required change take place. The Clean Development Mechanism (CDM) Awareness and Promotion Unit (APU) faced this challenge when introducing CDM in Egypt. Many people were concerned about the presence of a non-profitable organization trying to assist project developers to reduce greenhouse gases (GHGs), especially since GHGs are not included within the Egyptian environmental compliance law.

The CDM APU was developed to become the a central hub to raise awareness of the benefits of carbon trading to industrial and political entities, to provide technical support to promote carbon trading in Egypt , to develop networks and partnerships, to help overcome the difficulties in the CDM registration process, and to think “out of the box”.

Through the experience of the CDM APU, a major lesson learned was the important role of awareness raising and promotion plays in in order to get such a new idea off the ground, and especially to gaining the political support necessary to successfully launch new Carbon Trading projects for success.

Through initial struggles in developing a “Vehicle Scrapping and Recycling Programme” as a CDM project in Egypt, the result was a well established and visible program (which was also the first CDM transport project worldwide). It should be noted that key to this success was the great solid cooperation of the stakeholders in creating a system for change and the technical expertise of the CDM APU in achieving final registration for the programme.

The visible success of the “Vehicle Scrapping and Recycling Programme” helped to further gain the political support of the national Supreme Energy Council (SEC) for approving an energy efficiency monitoring programme in two national sectors (housing and tourism). Although outside of the specific mandate of the CDM APU, together the SEC and the CDM APU are still working towards energy reform and mitigation of GHG emissions in Egypt. Thus, from this experience another key lesson learned is that political support in conjunction with tangible examples (e.g. pilot programs) can help to also gain support in similar areas of intervention, to achieve overall programme outcomes.

Purpose of the activity

The objective of the CDM APU unit was to expand the Egyptian Carbon Trading Market by providing technology and systems via financing provided by traded Carbon Credits to make projects economically feasible. This was linked to national priorities and the MDGS, as the one national priority is to reduce the burden of subsidies on the government of Egypt to reduce the deficit (energy in Egypt is highly subsidized). Another priority is to implement strategic policies to provide energy for the population of Egypt and to eliminate poverty, as articulated in the MDGs.

Original issue addressed by the activity

The first carbon reduction activity approached was targeted at the use of old and inefficient vehicles which are a significant source of carbon in Egypt. The transportation sector emits a large share (26%) of global GHG emissions. In the Greater Cairo area, there are more than 1.5 million vehicles which are high emitters of pollutants, and high consumers of fuel per km (i.e. low fuel efficiency). 68% of these vehicles are older than 15 years.

Another problem with older vehicles is that they often breakdown, causing traffic bottlenecks and increasing greenhouse gases emissions. Unfortunately, there are many old vehicles in Egypt that are inefficient and not upgraded due to the lack of financial ability of the vehicle owners and the low return on investment to associated with the purchase of new vehicles.

Strategy chosen to address the issue and its implementation

The Egyptian government approached the World Bank in the summer of 2008 requesting assistance in developing an Egypt “Vehicle Scrapping and Recycling Programme” as a CDM project, before the start of the Egypt JP.

Implementation of the strategy / chosen approach

The “Vehicle Scrapping and Recycling Programme” began in April 2009 with an application to the UNFCCC. The project aimed at reducing the equivalent CO2 emissions resulting from by the replacing of old inefficient vehicles with efficient vehicles.

The primary vehicles targeted in the “Vehicle Scrapping and Recycling Programme” were the taxis in Greater Cairo (approx. 80,000 old Taxis). After completion, there would be other phases for old taxis all over Egypt and then buses and trucks. The first two phases of the “Vehicle Scrapping and Recycling Programme” were implemented to replace a portion of the old taxis in Greater Cairo.

The partnership that was set up to implement this CDM programme included many stakeholders. Each partner had a role in the programme, including: the Ministry of Finance (overseeing PoAs and providing loans for replacing vehicles); the banks (providing low-interest loans to eligible vehicle owners, and designating branch representatives for processing/scrapping sites); the Ministry of Interior (providing land for processing/scrapping and recycling sites, as well as managing vehicle inspection and new vehicle licensing); the auto dealers (buying old taxi licenses); insurance companies (providing insurance for the new vehicles); the World Bank (intermediary to securing partners willing to buy carbon credits); and advertising firms (using the taxis as advertising space, to help reduce owners’ payments).

Last but not least, the CDM Awareness and Promotion Unit, through the JP, provided technical support for the registering of the programme with the UNFCCC, which took about 2 years, and provided support for the project when the UNFCCC changed the approved methodology for emissions calculation. With the talent of the young staff in the CDM APU and the support of the MDGF programme, the UNFCCC made an exception and approved the registration of the programme as a CDM project.

Results and impacts

The pilot phase replaced 763 taxis in 2005 and is expected to reduce 25,686 tones of CO2 equivalent over a ten year period. With the success of the first phase, the Ministry of Finance set up a partnership with the Ministry of Interior, Banks, auto dealers, insurance companies and advertising firms. The Second phase involved 8,845 vehicles in 2009. The expected greenhouse gas reductions are about 300,000 tones of CO2 equivalent over a period of 10 years. Today, the streets of Cairo have old and new taxis and there is a higher demand to ride the new taxis. The old taxi owners are keen to upgrade their vehicles and many more old taxis are joining the “Vehicle Scrapping and Recycling Programme” to date.

Another exceptional impact of this programme was its visible success which helped to develop political support in other areas not anticipated at first. Another objective of the Egypt JP was to lead to a National Policy Reform for a more sustainable energy economy. The key body in this regard is the Supreme Energy Council (SEC), and through the positive example of the “Vehicle Scrapping and Recycling Programme”, political support from the SEC for developing an institutional structure for energy reform in two national sectors (housing and tourism) was effectively gained.

Evidence

The supporting evidence to the emissions reductions are provided by the actual yearly reports to the UNFCCC. Images of the taxi program are found in the photo section below.

Next steps

The first two phases of the “Vehicle Scrapping and Recycling Programme” were implemented for the old taxis in Greater Cairo. The remaining phase outs of old taxis in Greater Cairo are expected to upgrade 40,000 vehicles and are expected to reduce 1.4 Million tCO2e over a 10 year period. Afterwards, the Programme will work on other old taxis, buses and trucks in other regions in Egypt.

As for the SEC work, after monitoring and collating the experiences of the housing and tourism sectors’ energy efficiency measures for two years, it is hoped that similar measures can be implemented in other national economic sectors in the upcoming years.

Potential for replication

With regard to replication, the first key point is that the experiences of the CDM APU have shown that such energy programmes are feasible, through a centralized technical unit in the Ministry of State for Environmental Affairs that acts as a networking agent to promote Carbon Trading. Moreover, the CDM APU, the technical unit was not reliant on external support only – it was set up as part of the national governance framework, and now has a high level of expertise and domestic ownership.

The positive example of success showcased through the “Vehicle Scrapping and Recycling Programme”, not only helped to gain interest and support in further CDM projects, but also helped to gain political support in the SEC. Pilot projects are important in creating confidence and proving success, but pilot projects/tangible examples will not guarantee further replicability without having strong political support. Thus, this experience shows the need of having both.

Finally, in terms of energy goals, this lesson is very relevant to countries which have similar energy systems to Egypt – as energy is highly subsidized by the government, making it difficult to create interest in energy efficiency improvements. This experience showcases the need to create positive incentives on both demand and supply sides in order to encourage changes in behavior towards energy improvements.

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