Prepared by: A. N. Gitau (Team Leader) J. A. Nyang aya (Coordinator), L. Ndahi, N. Owuor, T. Machogu, J. Gachanja Project Officers: R. Muriuki, P.
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1 Prepared by: A. N. Gitau (Team Leader) J. A. Nyang aya (Coordinator), L. Ndahi, N. Owuor, T. Machogu, J. Gachanja Project Officers: R. Muriuki, P. Kang ethe and R. Mathenge
2 Energy Regulatory Commission(ERC) Established under the Energy Act 2006 One of its Functions: Regulate electrical energy, petroleum and related products, renewable energy and other forms of energy. UNIVERSITY OF NAIROBI ENTREPRISES AND SERVICES LTD 2
3 United Nations Environment Program (UNEP) Established in 1972 as the voice of the environment within UN system. Acts as a catalyst, advocate, educator and facilitator to promote the wise use and sustainable development of the global environment UNIVERSITY OF NAIROBI ENTREPRISES AND SERVICES LTD 3
4 INTRODUCTION In July 2013, UNES consultancy was commissioned by ERC to conduct the GFEI study in Kenya for period. The study is to support the government of Kenya in the development of a cleaner, more efficient vehicle strategy, policy package and timelines for implementation. The study was based on a rigorous process of compiling, analyzing and synthesizing vehicle inventory for the period UNIVERSITY OF NAIROBI ENTREPRISES AND SERVICES LTD 4
5 T.o.R. of the GFEI Kenyan Pilot Project Develop vehicles inventory for Kenya during and assess the trend in average fuel economy and CO 2 emissions. Review existing national regulations/incentives to promote cleaner and fuel efficient vehicles. Establish the amount of green house gas emissions and the related social and health costs. Conduct a cost benefit analysis of various policy interventions / scenarios. UNIVERSITY OF NAIROBI ENTREPRISES AND SERVICES LTD 5
6 VEHICLE INVENTORY UNIVERSITY OF NAIROBI ENTREPRISES AND SERVICES LTD 6
7 Vehicle Registration Data and Projections Year 2010 (Actual) 2011 (Actual) 2012 (Actual) 2030 (Projected) 2050 (Projected) Light Duty Vehicles Cumulative (All vehicles in Millions) % of LDV registered 93,136 96, , , , % 48.6% 63.8% - - UNIVERSITY OF NAIROBI ENTREPRISES AND SERVICES LTD 7
8 GFEI 50 X 50 Targets. Year Item L/100Km 2005 Global Average 8.07 L/100km (12.4 Km/L) 2030 Global Average, all new cars 4 L/100km (25km/L) 2050 Global Average, All cars. 4 L/100km (25 km/l) UNIVERSITY OF NAIROBI ENTREPRISES AND SERVICES LTD 8
9 Fuel Economy and CO 2 emission standards Year Average fuel Consumption Metric combined(l/100km) Average CO 2 emission (g/km) Grand Average UNIVERSITY OF NAIROBI ENTREPRISES AND SERVICES LTD 9
10 CO 2 (g/km) and fuel consumption (L/100km) Vehicle Condition Average of Fuel Consumption (L/100km) Average of CO2(g/km) New Used Grand Total Year of vehicle Fuel Type registration Diesel Petrol Grand Average Grand Average UNIVERSITY OF NAIROBI ENTREPRISES AND SERVICES LTD 10
11 Fuel Consumption by Engine Displacement UNIVERSITY OF NAIROBI ENTREPRISES AND SERVICES LTD 11
12 Registration of Vehicles by Year of Production UNIVERSITY OF NAIROBI ENTREPRISES AND SERVICES LTD 12
13 Comparison of L/100km with select countries UNIVERSITY OF NAIROBI ENTREPRISES AND SERVICES LTD 13
14 Total number registered Registration of Motorcycles 160, , : 93,970 July 2013: 97, , ,000 80,000 60,000 LDVs Motorcycles 40,000 20, Year UNIVERSITY OF NAIROBI ENTREPRISES AND SERVICES LTD 14
15 REGULATIONS GOVERNING TRANSPORT SECTOR NTSA UNIVERSITY OF NAIROBI ENTREPRISES AND SERVICES LTD 15
16 Existing Transport Sector Regulations I. Traffic Act, Chapter 403 II. The Kenya Roads Act, 2007 III. Integrated National Transport Policy, 2009 IV. National Transport and Safety Authority Act, No. 33 of 2012 V. Standards Act, Cap 496 KS 1515:2000 Code of practice for inspection of road Vehicles KS 2060:2007 Motor Gasoline Specifications KS :2010 Diesel Fuels: Specification KS :1992 Specification for Engine Oils UNIVERSITY OF NAIROBI ENTREPRISES AND SERVICES LTD 16
17 COST BENEFIT ANALYSIS UNIVERSITY OF NAIROBI ENTREPRISES AND SERVICES LTD 17
18 Cost Benefit Analysis (CBA) The following tasks were done under CBA: Identification of policy interventions for achieving Fuel Efficiency targets. Estimation of policy impacts on L/100km and CO 2 (g/km) by year 2030 and 2050 Monetization of policy impacts and calculation of costs and benefits in KShs Fuel consumption costs monetized based on pump prices and annual Kilometers travelled Environmental-CO 2 based impacts monetized Public health costs monetized Economic CBA is based on public welfare perspective UNIVERSITY OF NAIROBI ENTREPRISES AND SERVICES LTD 18
19 CBA: Options on fuel and CO 2 emission controls Transport Sector Management Options Scenarios Option 1: Status Quo Option 2: All policies implemented Option 3: Vehicle Options Option 4: Fuel Tax Options Predominantly based on vehicle technology changes No enhanced enforcement of all regulations No inspection routines for all vehicles Current state of infrastructure Full regular inspection and enforced compliance to existing standards Improved infrastructure, high vehicle and tax options Increased population of hybrid vehicles Labelling of CO 2 emission of vehicles Enhanced restriction on age of imports Cost of vehicles based on CO 2 emision Tax and levies on fuel Taxation incentives on acquisition of fuel efficient vehicle UNIVERSITY OF NAIROBI ENTREPRISES AND SERVICES LTD 19
20 Category Specific policy interventions Fuel Vehicles Fuel Tax Fuel Tax differentiation Acquisition Tax Ownership Tax Import Restriction Intervention Level 1 Heavy fuel subsidy All fuels taxed the same way no vehicle tax, or vehicle tax not depending on fuel economy None None 2 5% subsidy to 20% tax Diesel 5-15% cheaper than gasoline 0-5% of average vehicle price between most and least efficient vehicle > 10 years Low % tax on fuel price Diesel 15-25% cheaper than gasoline 5-15% of average vehicle price between most and least efficient vehicle 5-9 years Medium % tax on fuel price Diesel 25-35% cheaper than gasoline 15-25% of average vehicle price between most and least efficient vehicle < 5 years High UNIVERSITY OF NAIROBI ENTREPRISES AND SERVICES LTD 20
21 Policy impacts OPTION If Status quo (gco2/km) (L/100km) OPTION All Policies Implemented (gco2/km) (L/100km) OPTION Vehicle Options (gco2/km) (L/100km) OPTION Fuel tax Options (gco2/km) (L/100km) UNIVERSITY OF NAIROBI ENTREPRISES AND SERVICES LTD 21
22 Monetized Policy Impact Results Policy Options Net Present Value (Ksh) Internal Rate Return Benefit Cost Ratio Present Value of Estimated Savings (Ksh) Option Billion 17% Billion Decision rule used discount rate of 10%. Net Present Value, Internal Rate Return criterion, Benefit Cost Ratio, Present Value of Estimated Savings by 2050 used. Option Billion 18% Billion Adopting policy mix to yield highest savings. Option Billion 17% Billion Option Billion 17% Billion UNIVERSITY OF NAIROBI ENTREPRISES AND SERVICES LTD 22
23 Fuel Economy Instruments Suitable for Kenya Nature Instrument Function of the instrument Agency Regulatory Import Restrictions Fuel Standards Fuels Sets limits on age, technology and emissions Sets national fuel consumption targets Alternative fuels such as bio-diesel and ethanol KRA ERC/KEBS ERC Traffic Control Priority Lanes To allow faster movement of passengers MOT & I/Police/County Governments Economic Fuel taxes and levies Fee bate Penalties Registration tax/fee Information Labeling Public Information Revenue for infrastructure and incentive for using fuel efficient vehicles and public transport Fee on efficient vehicle technology Fines on failure to meet consumption standards Levy on first registered vehicles For taxation and customer information Provision of information to customers for decision making ERC/KRB/KRA MOT & I/ MVIU/NTSA KRA KRA KEBS UNIVERSITY OF NAIROBI ENTREPRISES AND SERVICES LTD 23
24 Health Related Impact UNIVERSITY OF NAIROBI ENTREPRISES AND SERVICES LTD 24
25 Health Hazards Associated with Vehicle Emission Related Air Pollution in Kenya Objectives: To estimate the prevalence of illnesses related to vehicle emission pollutants To estimate the cost of illnesses related to vehicle emission pollutants UNIVERSITY OF NAIROBI ENTREPRISES AND SERVICES LTD 25
26 Prevalence and cost of treatment Prevalence of respiratory diseases related to air pollutants was > 90% in 2010, 2011 and 2012 Approximate cost of treating a client per year 197 US dollars (Ksh 16,800)-KNH/Urban estimate Disability Adjusted Life Years (DALYs) = 20,639,387 UNIVERSITY OF NAIROBI ENTREPRISES AND SERVICES LTD 26
27 Estimated costs of vehicle emission pollutants related illnesses seen at KNH S/No. ITEM Average approx cost/year (Kshs) Average approx cost/year (USD) 1 Outpatient charges including drugs/patient Laboratory costs; Baseline investigations/ patient 1, Logistical costs (e.g. bus fare/taxi etc.) X -ray Ultra Sound screening CT scan Hospital fee( Bed charges ( 800../day) for 5 days(hospitalization in severe cases)plus drugs and procedures 4, Follow up visits after admission/patient Total 16, UNIVERSITY OF NAIROBI ENTREPRISES AND SERVICES LTD 27
28 DISCUSSIONS AND RECOMMENDATIONS UNIVERSITY OF NAIROBI ENTREPRISES AND SERVICES LTD 28
29 Discussion Absence of electric/hybrid vehicles is attributable to insufficient general public awareness on fuel efficiency. Increase of motorcycles has high social cost implications: increased accidents, crime and environmental degradation. Mass transit (Bus/Train) to enhance a shift from private car dominance; MoT & I has initiated a project for efficient transport system in Metropolitan Nairobi. Diesel engines produce less CO and HC, have greater fuel economy and produce less CO 2 per km. Petrol engines produce no PM, more CO 2 per km and have higher emission of the regulated pollutants. UNIVERSITY OF NAIROBI ENTREPRISES AND SERVICES LTD 29
30 RECOMMENDATIONS Vehicle Inspection: The Motor Vehicle Inspection Unit to develop capacity to do the following: Conduct regular inspection inclusive of monitoring of emissions for all vehicles. (short term) Increase capacity of the Unit or license credible garages to provide the inspection services to all vehicles and motorcycles (short term) UNIVERSITY OF NAIROBI ENTREPRISES AND SERVICES LTD 30
31 Taxes: Recommendations Cont... The state to establish mechanisms to consider the following: Fuel tax options / tax rebate systems in relation to CO 2 emissions and fuel efficiency levels (Medium term). Reduce per capita annual kilometers travelled through travel demand management strategies (Short term) UNIVERSITY OF NAIROBI ENTREPRISES AND SERVICES LTD 31
32 Health surveillance: Recommendations Cont... The state to establish a framework to carry out the following: Continuous surveillance of total suspended particulate (TSP) matter and elemental concentrations.(short term / Continuous) Conduct periodic estimation of economic burden of vehicle emission related illnesses to plan and implement control and prevention policies and programs. (Short term / Continuous) UNIVERSITY OF NAIROBI ENTREPRISES AND SERVICES LTD 32
33 Recommendations Cont... Vehicle and fuel Standards: The state to establish a framework to do the following: Phase out motorcycles with two stroke engines on account of high pollution and fuel consumption. (Short term) Implement all existing standards. (Short term and Medium term) Ensure competency of motorcycle riders, enforce proper loading and regular assessment for road worthiness. UNIVERSITY OF NAIROBI ENTREPRISES AND SERVICES LTD 33
34 Recommendations Cont... Public Awareness: The state to establish mechanisms to do the following: Public awareness on vehicle usage and vehicle efficiency implications to environment. (Short term) Improve competencies to screen diseases related to air pollutants. (Short-term / Continuous ) Implement vehicle labeling for consumer information. (Short-term) Public awareness of social costs associated to motorcycles in the form of accidents and increased pollution. (Short term) UNIVERSITY OF NAIROBI ENTREPRISES AND SERVICES LTD 34
35 END Thank you for listening UNIVERSITY OF NAIROBI ENTREPRISES AND SERVICES LTD 35
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