Office Evaluation

Sector Analysis of Transportation and Climate Change

The transport sector is a growing source of Greenhouse Gas (GHG) emissions and also highly vulnerable to the effects of climate change. In its evaluation, the Office of Evaluation and Oversight (OVE) examined how the IDB has worked with Latin America and Caribbean (LAC) countries to respond to climate change in the area of transportation. 

GHG emissions from transportation have more than doubled since 1970 and are the largest and fastest growing source of energy-related emissions in LAC

In addition, climate change is predicted to place significant stress on already insuficient transport infrastructure, through increased climatic events such as flooding, tidal waves, and rising sea levels, leading to several adverse health and economic impacts.

The Bank has reinforced its commitment to Climate Change by aligning its 2013 IDB Infrastructure Strategy with its 2011 Climate Change Strategy. Both promote the adoption of sustainable and resilient transport in urban and nonurban areas as a means to support the construction and maintenance of socially and environmentally sustainable infrastructure that enhances the quality of life of all citizens. Specifically, the Climate Change Strategy called for the Bank to develop instruments to measure and report on GHG emissions.

In its evaluation, Climate Change and the IDB: Building Resilience and Reducing Emissions, OVE examined how the IDB has worked with LAC countries to respond to climate change in the area of transportation.

Growth in emissions due to energy consumption in LAC, 1990-2010

Source: IEA, 2013b.

While the Bank’s commitment to address climate change in the transport sector is reflected in its policy documents, progress towards mainstreaming climate change at the corporate and project levels has been uneven

At the corporate level, the Bank has reinforced its commitment to Climate Change by aligning its 2013 IDB Infrastructure Strategy with its 2011 Climate Change Strategy. Both promote the adoption of sustainable and resilient transport in urban and non-urban areas as a means to support the construction and maintenance of socially and environmentally sustainable infrastructure that enhances the quality of life of all citizens. Specifically, the Climate Change Strategy called for the Bank to develop instruments to measure and report on GHG emissions generated by Bank- financed projects.

However, the methodology developed for GHG accounting has several shortcomings for transport projects. First, it only calculates emissions from the operation of vehicles used to build and maintain the road and not from vehicles expected to use the road following the first year of operation. Second, estimates of emissions compared to a business as usual (i.e., do nothing scenario) are not used to inform project design. Finally, the Bank has yet to define a clear goal for measuring and mitigating GHG emissions from transport projects. Projects are not required to estimate their potential GHG emissions vis-à-vis a business as usual scenario during design and, as a result, are not encouraged to analyze alternatives to achieve the same development objective while producing lower GHG emissions over the life of the project.

At the project level, in the ten years covered by the evaluation from 2004 to 2013, the IDB’s lending portfolio in transportation consisted of 125 loans totaling nearly US$15 billion. Only one-third of the loans and about US$4 billion dollars were targeted directly or indirectly at climate change issues; 94% of these resources financed projects to mitigate GHG emissions, while only 6% were directed at adaptation issues. Climate change was a more dominant theme in the Bank’s support through non-reimbursable technical cooperation projects. Nearly 50% of the technical cooperation projects approved over the period of the evaluation were related to climate change, mostly to finance activities related to mitigation of GHG emissions.

Climate change related loans to the transport sector, 2004-2013

Source: OVE.

OVE completed 20 in-depth project assessments and found mixed results

OVE’s in-depth analysis of 20 transport projects showed that the vast majority of climate change related projects lacked sufficient analytical depth to properly diagnose climate change problems. They also lacked appropriate mechanisms to ensure effective monitoring and reporting.

OVE estimated emissions resulting from four urban mass transport projects, including two bus rapid transit systems (BRT) and two metro lines, and found significant emission reductions. However, several issues limited these benefits in the case of the BRT projects, including slow and incomplete removal of old and polluting transit vehicles, flawed contractual arrangements with private bus operators, financial sustainability issues of bus companies, and implementation delays. In addition, none of the projects included strategies for land use planning around stations and parking regulations, which could have strengthened their emissions mitigation impact.

Climate change as a percentage of the total transport portfolio

Source: OVE.

OVE also estimated emissions resulting from 4 roads projects and found significant short-term reductions in emissions relative to the business as usual scenario. However, the medium to long-term effects of these projects were not so clear as new roads and/or improvements that reduce travel times and cost, and in the absence of complementary travel demand measures, this may result in increased urban sprawl, more traffic and congestion, thus increasing the level of GHG emissions.

Finally, the evaluation found that Bank action on adaptation in the transport sector is still in its infancy. Notwithstanding, the few projects with explicit adaptation objectives that have been approved since 2008 were found to be highly relevant, and the Bank’s ongoing efforts to improve transport infrastructure maintenance and design standards can have adaptation co-benefits.

Mitigation related loan amounts by type of intervention, 2009-2013

Source: OVE.

 

For the Bank to fully implement its vision of incorporating climate change considerations into transport projects, OVE made four suggestions:

1. Develop policy guidelines so that (i) all transport projects estimate emissions against a business as usual scenario as part of project design, using a methodology that accounts for all stages of project operation; (ii) for projects with significant emissions, consider lower-carbon alternatives or incorporate mitigation and/or compensation measures into project design.

2. Strengthen the underlying analysis of climate change related transport projects; include sufficient data and information to clearly identify the mitigation or adaptation problems to be addressed, establish a baseline to track progress, and include systematic monitoring and reporting mechanisms to measure progress and results.

3. Strengthen the design of Climate Change related projects by systematically incorporating policy dialogue with governments around demand-side measures in addition to infrastructure solutions.

4. Strengthen Bank action on adaptation measures, which lag far behind mitigation-related projects. Consider all possible interventions, and develop a set of core indicators for proper diagnostics and efficient monitoring and reporting of results.