Title The Study for Deployment and Improvement of Economic Appraisal Tool for Transport Project
Dept Transportation Planning and Land Transport Division
Year 2016
Month 8
Price
Summary The aim of this study is to propose a new version of estimation methodology and parameters of energy savings and carbon emission reductions, based on up-to-date knowledge of international literature and local practices, in order to enhance assessments of transport policy and project. It is a stockpile for the future revision of the Handbook of Economic Benefit Analysis for Transport Projects (2013/06 by IOT; below abbreviated as “the 2013 Handbook”) to better estimate benefits of efficiency improvement of highway system. Subsequently, benefits of energy savings and carbon emission reductions can become parts of driving forces of transport policy and project toward sustainability.

Local parameters derived from the series of IOT studies of on-board measurements of fuel consumption and greenhouse gas emissions of vehicles are introduced in order to represent on-road dynamics of in-use vehicles. Moreover, estimation inconsistency between fuel savings and carbon emission reductions is eliminated in the newly suggested methodology with carbon emission reductions estimated in line with the above fuel savings estimations.

It is suggested to take the yearly variations of the forecast real-price of Brent by the Energy Information Administration, Department of Energy, USA (EIA) as the reference proxy. Domestic dealer real-prices are estimated based on the proxy and the most-updated end-year local fuel prices. The retail real-prices are the above dealer real-prices tapped with taxes and environmental fees, whereas the nominal prices are calculated from the real prices with the recommended social discount rate of the 2013 Handbook.

The replacement with the newly suggested methodology is expected to rectify the unjustified estimations of fuel price of the 2013 Handbook which makes use of domestic index of consumer price as multipliers for forecasting fuel prices. For the reference proxy for carbon value it is suggested to apply a 5% social discount rate to the real-price estimations, the closest to the recommended social discount rate of the 2013 Handbook, latest reported by the Interagency Working Group on Social Cost of Carbon, United States Government (USG SCC).

Domestic social real-price of carbon is converted from the USG SCC with exchange rates and domestic inflation rates. Whereas the nominal prices are calculated from the real prices with the recommended social discount rate of the 2013 Handbook. However, 1,500 NTD/metric ton is set as the ceiling of nominal prices in compliance with the over-allowance monetary-penalty of the Greenhouse Gas Emission Reduction and Management Act which is launched in July 2015. It is further suggested to annually review estimations according to the most up-to-date references including the Annual Emission Inventory, IOT, Taiwan, the Annual Energy Outlook, EIA and the most recent end-year local fuel prices, updates of USG SCC if any, domestic long-term forecasts of fuel prices and carbon market prices, if available with credibility.

Finally, to display the operability and impacts of newly suggested methodology, the construction of Wu-Yang Viaduct of Highway 1 and the improvement of the Zhubei Interchange of Highway 1 were chosen as pilot cases for the new methodlogy. During two training sessions to promote awareness the newly suggested methodology, it was widely acknowledged that the suggested revision of this study to the 2013 Handbook are practically operable and helpful to equip professionals with methodology and parameters to better assess benefits of energy savings and carbon emission reductions of transport policy and projects.
Post date 2016/08/19
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