copy the linklink copied!2. Main elements of the Clean Public Transport Programme

This chapter introduces the proposed Clean Public Transport Programme. The programme is designed to be implemented in two phases: Phase 1, a pilot phase that includes urban transport in two selected cities (Chisinau and Balti); and Phase 2, an extension of the programme to cover suburban areas of the pilot cities and inter-city public transport in Moldova. The chapter summarises the programme’s expected environmental and socio-economic benefits, the costs involved, as well as a possible financing strategy and optimal co-financing levels.

    

copy the linklink copied!2.1. What are the objectives of the programme?

The overall objective of the proposed Clean Public Transport (CPT) Programme is to reduce the harmful emissions responsible for creating smog in urban centres (so called emissions from “low”-level sources). These include emissions of carbon monoxide (CO), sulphur dioxide (SO2), nitrogen oxides (NOx) and particulate matter (PM). This objective meets one of the targets of Moldova’s Environmental Strategy 2014-2023, which aims to reduce air pollution levels to 30% of 1990 levels by 2023, and to create an integrated air quality management system (GoM, 2014[1]). The new Programme on Promotion of Green Economy in the Republic of Moldova for 2018-2020 (described in Chapter 1) brings this overall target forward to 2020, with a focus on developing sustainable transport (GoM, 2018[2]).

The CPT Programme is also designed to contribute to Moldova’s climate change mitigation efforts and its transition to a green economic model of development. The programme will help achieve the country’s goal of reducing greenhouse gas (GHG) emissions by 64-78% by 20301 compared to 1990 emission levels, as specified in the intended nationally determined contribution prepared by the Government of Moldova for the 2015 Paris Climate Conference (see Box 1.1 in Chapter 1) (GoM, 2015[3]).

The Environmental Strategy 2014-2023 foresees a general GHG emissions reduction of 20% by 2020 compared to the 1990 baseline, with reductions in the transport sector of 15% driven by support to alternative (fossil and bio) fuels and power use (GoM, 2014[1]). This reduction is in line with the National Energy Efficiency Programme 2011-2020 and its target of reducing energy consumption by 20% by 2020 (GoM, 2011[4]).

The 2007 Renewable Energy Law (No. 160 of 12 July) set a target of 20% of energy demand to be met from renewable energy sources by 2020, with bioethanol and biodiesel making up each 20% of petrol and diesel fuel sold. According to the National Energy Efficiency Programme 2011-2020 (GoM, 2011[4]), the Environmental Strategy 2014-2023 (GoM, 2014[1]), and Energy Strategy 2030 (GoM, 2013[5]), 10% of biofuels are to be produced from renewable sources by 2020.

Besides the national target mentioned above, the National Renewable Energy Action Plan 2013-2020, and the new 2016 renewable energy law (No. 10 of 26 February) outline Moldova’s obligation to the Energy Community (resulting from its accession in March 2010) to reach at least 17% of gross final consumption of energy from renewable sources by 2020. This target is echoed in the Programme on Promotion of Green Economy (GoM, 2018[2]). In 2015, the country had achieved 14.3% of final energy consumption and 5.4% of total electricity output from renewable energy sources.2

As the data in Figure 2.1 show, the transport sector experienced a 49% decline in direct GHG emissions in 1990-2015 (including road transport emissions falling by 55%). Nevertheless, as this report’s environmental review outlines (see Section 6.3) road transport is responsible for more than 98% of the country’s GHGs (Figure 2.1) and mobile sources of air pollution emit 96% of all the harmful substances stemming from the entire transport sector (see Section 1.1 and Figure 6.14). This is why road transport has been chosen as a focus of the CPT Programme.

copy the linklink copied!
Figure 2.1. Direct GHG emissions from transport in Moldova, 1990-2015
Figure 2.1. Direct GHG emissions from transport in Moldova, 1990-2015

Note: kt of CO2e: kilotonnes of carbon dioxide equivalent.

Source: (GoM, 2018[6]), Environmental Audit Report on Air Quality in the Republic of Moldova, http://lex.justice.md/UserFiles/File/2018/mo18-26md/raport_65.doc.

While 21.4% (Table 6.9) of vehicles in inter-city transport meet (or are below) Euro 1/I standards (see Annex A), these low standard (i.e. high emission) categories account for as much as 67.8% of the entire public transport fleet (Table 6.6). Therefore, the CPT Programme is primarily designed to cover major urban areas with public transport networks.

As of mid-2017, except for 414 trolleybuses (see Table 6.5) and two compressed natural gas (CNG)-powered public transport vehicles, the entire public transport fleet (i.e. 98%) was running on diesel (see Section 6.2).

copy the linklink copied!2.2. What will the programme involve?

In practice, the overall environmental objectives of the CPT Programme – i.e. the reduction of air pollutants and GHG emissions – will be accomplished by supporting investment in replacing the dominant diesel-powered bus and minibus fleet used in urban, suburban and inter-city public transport with modern vehicles either powered by cleaner fossil fuels, or by electricity generated by renewable energy resources or cleaner fossil fuels.

The study conducted a market analysis (see Chapter 3) which identified four groups of projects (“pipelines”) to replace the old urban, suburban and inter-city bus fleet:

  1. 1. Investment in vehicles fuelled by compressed natural gas (CNG)

  2. 2. Investment in vehicles fuelled by liquefied petroleum gas (LPG)

  3. 3. Investment in vehicles fuelled by diesel that meets Euro 5 and Euro 6 emissions standards

  4. 4. Investment in electricity-powered vehicles (trolleybuses and battery trolleybuses).

As Moldova’s bus fleet is ageing, the proposed “pipelines” are intended to support the purchase of new vehicles (buses/minibuses and trolleybuses) rather than the modernisation of existing engines. By renewing the bus fleet, the reliability and efficiency of public transport will be increased and the domestic market will be encouraged to produce, or at least assemble, modern buses and trolleybuses.3

The proposed investment pipelines should be accompanied by other investments in infrastructure, such as new trolleybus lines, CNG/LPG refuelling and electricity charging stations and other supporting activities to improve the transport system in urban centres (e.g. the creation of bus lanes, improvement of bus stops and smart traffic control).

In 2016, there were 892 000 transport units in Moldova (an increase of about 25 000 units from 2015). In major urban areas, the number of registered vehicles almost matches the number of inhabitants, causing severe traffic problems (GoM, 2018[6]) and creating challenges for urban public transport networks. Because the bus fleet in Moldova consists of too many minibuses, the CPT will give priority to replacing a part of the minibus fleet with regular buses.

The CPT Programme is designed to be implemented in two phases:

  • The first (pilot) phase will be launched in two cities (Chisinau and Balti) and will focus primarily on electric transport (trolleybuses). In total, 62 trolleybuses will be purchased: 31 will replace the old trolleybuses and the other 31 will extend the network by replacing old diesel buses. Also, a pilot replacement of a small number (15) of minibuses should be carried out during the pilot phase.

  • The second (scaling-up) phase will extend the pilot phase. There are two possible scenarios for this phase: Scenario 1 will extend it to the suburban areas of the pilot cities (735 new vehicles), while Scenario 2 will include inter-city public transport across the country (2 510 new vehicles).

2.2.1. Phase 1 (pilot phase)

Two cities were identified for the pilot phase: Chisinau and Balti. The pilot phase in each of the two cities will last two years, including a one-year preparatory phase (see Section 2.5).

City of Chisinau

Being the capital and main industrial and commercial centre of Moldova, Chisinau also serves as the main transportation hub in the country due to its geographical position. As the largest and most populated city in Moldova (in 2018, the city’s population was 690 000 while that of Chisinau municipality was 825 9004), the city has the most developed public transport network. Since 2010, Chisinau has participated in a programme to renew part of the trolleybus fleet, co-financed by the European Bank for Reconstruction and Development (EBRD; see Sections 3.2.2 and 3.3.4).

In the pilot phase in Chisinau, the CPT Programme proposes purchasing 60 new vehicles for public transport. This will include:

  • replacing 25 old trolleybuses with the same number of new vehicles (including battery trolleybuses)

  • purchasing another 25 trolleybuses (including battery trolleybuses) to strengthen the existing fleet – these will replace diesel buses that are more than 15 years old (currently about 25)

  • replacing 10 diesel-fuelled minibuses with CNG-powered models

  • extending the trolleybus network to reach more remote areas where the trolleybus power-delivered network is not available (extending the trolleybus power-delivered network to cover the whole area would be too costly)

Even though trolleybuses have only small batteries, they are cheaper to buy than electric buses. While they can travel on battery for a limited number of kilometres (depending on battery capacity, which is proportional to the costs of the battery price), most of the journey is done using the typical electricity-supplied wire network in the city. The batteries can be charged while the trolleybus travels in the urban centre.

It is suggested that the pilot phase should financially support the purchase of minibuses powered by CNG rather than LPG (see Section 5.1.2). Although LPG is often used in Moldova, the emissions of carbon dioxide (CO2) from LPG-powered engines are higher than from CNG-powered ones (see Section 3.1 and Annex A to this report).

Since most diesel engines in Moldova do not meet Euro 6/VI standards (see Section 6.2), the introduction of Euro V and Euro VI diesel engines might also be considered as a step towards modernising public transport in the country. However, the fuel consumption of modern diesel engines is higher than older ones so beneficiaries would not see their operating costs reduce. Given the currently very low transport fares in Moldova (see Section 3.2.3), the amount of public support that will be needed to purchase Euro VI diesel buses will be very high. For this reason, it remains the least preferred option.

The key (financing) input and (environmental) output parameters of the pilot implementation are provided in Table 2.1. The total cost of the CPT Programme for Chisinau is estimated to be Moldovan leu (MDL) 280 million (USD 15.1 million), of which MDL 141 million (USD 7.6 million) will be co-financed from the programme and MDL 139 million (USD 7.5 million) is expected to come from investment by private or public bus operators.

copy the linklink copied!
Table 2.1. Key input and output parameters of the CPT Programme`s pilot phase in Chisinau

 

Unit

Total number of new trolleybuses

No.

50

Total number of new minibuses replaced

No.

10

Total costs of vehicles replaced

MDL mln

280

Of which co-financed by the programme*

MDL mln

141

Of which co-financed by private/municipal bus operators

MDL mln

139

Calculated using normative pollution factors**

Calculated using real pollution factors**

Total CO2 reduction

tCO2 /year

1 824

2 776

Total CO reduction

kg/year

5 440

5 440

Total NOx reduction

kg/year

24 422

24 422

Total PM2.5 reduction

kg/year

518

518

Total SO2 reduction

kg/year

473

473

Note: *Option 1 (see Section 2.3.3); **for a discussion of normative and real pollution factors, see Section 2.3.1.

Source: OECD calculations, OPTIC Model.

As shown in Table 2.1, the pilot phase could allow Chisinau to achieve a reduction of 1 824 tCO2/year. This CO2 reduction is low due to the small scale of the pilot phase (for details on CO2 emission factors, see Annex B). The largest decrease could be achieved in NOx emissions, which could be reduced by 24 442 kg/year (see Section 2.3.2).

City of Balti

Balti is the second largest city in Moldova by population (146 600 in 2018, and a further 4 900 people in the surrounding communes of Balti municipality5), and the only city other than Chisinau that has a trolleybus network and a well-developed public transport system. It is also located on the route of a natural gas pipeline going from the Russian Federation to the European Union (EU) via Ukraine. Similar to Chisinau, Balti has participated (since 2013) in the EBRD-supported programme to renew part of the trolleybus fleet (see Section 3.3.4).

In the pilot phase in Balti, the CPT Programme proposes purchasing 17 new vehicles for public transport. This will include:

  • replacing 6 old trolleybuses with the same number of new vehicles (including battery trolleybuses)

  • purchasing another 6 trolleybuses (including battery trolleybuses) to strengthen the existing fleet – these will replace diesel buses that are more than 15 years old (currently about 6)

  • replacing 5 old diesel minibuses with the same number of new vehicles running on cleaner fuels (CNG or LPG)

In Balti, as Table 2.2 shows, the total cost of purchasing 12 trolleybuses and 5 minibuses would amount to MDL 72 million (USD 3.9 million), of which the CPT Programme can support MDL 37 million (USD 2 million) and public and private bus operators could contribute MDL 36 million (USD 1.9 million).

copy the linklink copied!
Table 2.2. Key input and output parameters of the CPT Programme’s pilot phase in Balti

 

Unit

Total number of trolleybuses

No.

12

Total number of minibuses replaced

No.

5

Total costs of vehicles replaced

MDL mln

72

Of which co-financed by the programme*

MDL mln

37

Of which co-financed by private/municipal bus operators

MDL mln

36

Calculated using normative pollution factors**

Calculated using real pollution factors**

Total CO2 reduction

tCO2 /year

454

689

Total CO reduction

kg/year

1 359

1 359

Total NOx reduction

kg/year

6 243

6 243

Total PM2.5 reduction

kg/year

136

136

Total SO2 reduction

kg/year

122

122

Note: *Option 1 (see Section 2.3.3); **for normative and real pollution factors, see Section 2.3.1.

Source: OECD calculations, OPTIC Model.

As shown in Table 2.2, the expected NOx reduction is 6 243 kg/year following implementation of the pilot. In terms of CO2 emissions, the reduction is estimated to be 454 tCO2/year after the pilot phase (see Section 2.3.2).

Summary

The pilot phase will lead in all to the purchase of 62 new trolleybuses and 15 minibuses. This assumes that Moldova has the market capacity to supply the required quantity of modern vehicles on an annual basis, that private and municipal bus operators have the capacity to invest in new assets over a one-year period, and that the government has the capacity to invest in relevant infrastructure.

This phase will in a broader sense build on and add to the experience of previous (EBRD-supported) trolleybus replacements that began in 2010-2013. Also, both pilot cities have a large number of minibuses (usually diesel-fuelled) in their public transport fleets that are in urgent need of replacement.

The investment costs of the pilot phase of the CPT Programme would amount to MDL 353 million (USD 19.1 million), of which MDL 178 million (USD 9.6 million) would be needed in public support (Table 2.3).

copy the linklink copied!
Table 2.3. Key input and output parameters of the CPT Programme’s pilot phase

 

Unit

Total number of trolleybuses purchased

No.

62

Total number of minibuses replaced with CNG powered

No.

15

Total cost of vehicles replaced

MDL mln

353

Of which co-financed by the programme*

MDL mln

176

Of which co-financed by private/municipal bus operators*

MDL mln

177

Normative pollution factors**

Real pollution factors**

Total CO2 reduction

tCO2 /year

2 277

3 465

Total CO reduction

kg/year

6 800

6 800

Total NOx reduction

kg/year

30 665

30 665

Total PM reduction

kg/year

655

655

Total SO2 reduction

kg/year

595

595

Note: *Option 1 (see Section 2.3.3); **for normative and real pollution factors, see Section 2.3.1.

Source: OECD calculations, OPTIC Model.

2.2.2. Phase 2 (scaling-up phase)

Taking into account the significant potential for environmental improvements from modernising the public transport fleet, two scenarios for the second phase of the CPT Programme (which would last up to five years; see the timeline in Section 2.5) were costed using the OPTIC (Optimising Public Transport Investment Costs) model (Section 2.3.1):

  • Scenario 1: modernising the remaining old bus/minibus fleet in Chisinau and Balti, including those on the suburban routes. Scenario 1 would involve replacing all old buses (including minibuses), i.e. below Euro 5/V standard across the urban and suburban areas of Chisinau and Balti. This would mean purchasing 393 modern regular buses and 280 minibuses (including the 15 minibuses from the pilot phase) powered with CNG or LPG, or possibly modern diesel engines.

  • Scenario 2: modernising the remaining old bus/minibus fleet in Chisinau and Balti, including suburban routes, as well as the public transport fleet operating inter-city connections in the entire country. The inter-city routes were chosen since there is little urban transport in other cities in Moldova and they act as a substitute (i.e. covering suburbs and centres of towns on the route). Scenario 2 assumes replacing all buses (including minibuses) that are below Euro 5/V standard and which are providing public transport within and between cities in Moldova. This would involve purchasing 1 456 modern buses and 992 minibuses (including 15 minibuses from the pilot phase) that run on cleaner fuels.

The environmental cost-effectiveness of Scenario 1 is expected to be greater than Scenario 2 as the concentration of air pollutants is higher in urban and suburban areas than in rural ones. Urban areas of other cities will also benefit from improved inter-city connections, though to a lesser extent than the pilot cities. Therefore, it is advisable to start with Scenario 1 in the scaling-up phase.

The number of buses to be purchased in Phase 2 of the CPT Programme was calculated based on the number of old diesel buses (with engines of up to Euro IV standard) and minibuses providing public passenger transport services. This estimation also considers the possibility that the overall number of minibuses will be reduced and a certain share of these minibuses (about 50%) will be replaced with regular buses.

Public transport in Moldova is currently dominated by minibuses; regular buses (i.e. buses that are more than 10 metres long), which can carry up to five times more passengers, only service a small number of urban and inter-city routes. Therefore, the second phase of the programme would replace half of the old minibuses with minibuses powered by cleaner fuels (or sources of power), while the other half would be replaced by regular buses. For example, after Scenario 2 there would be 992 new minibuses, whereas 3 957 minibuses would be replaced (given the larger capacity of regular buses).

In total, the programme will result in 77 new urban public transport vehicles in the pilot phase (62 trolleybuses and 15 buses) (Table 2.4). After the scaling-up phase (Scenario 1), there will be 735 new urban and suburban vehicles (62 trolleybuses, 393 buses and 280 minibuses). Assuming the more ambitious scaling-up phase (Scenario 2) is implemented, Moldova will have 2 510 new urban, suburban and inter-city vehicles (62 trolleybuses, 1 456 buses and 992 minibuses). Their distribution between the pilot cities of Chisinau and Balti, and other regions of Moldova, is shown in Figure 2.2.

There are potentially 943 urban, 1 139 suburban and 7 135 intercity transport vehicles that need to be replaced in Chisinau, Balti and primary inter-city connections. Of these, the full implementation of the CPT Programme will involve replacing 328 urban (34.8%), 407 suburban (35.7%) and 1 175 inter-city (16.4%) transport vehicles.

copy the linklink copied!
Table 2.4. Key input and output parameters of the assessed CPT Programme scenarios

 

Unit

Phase 1 & Phase 2 - Scenario 1

(suburban routes in Chisinau and Balti)

Phase 1 & Phase 2 - Scenario 2

(Scenario 1 + inter-city connections in Moldova)

Total number of trolleybuses purchased

No.

62

62

Total number of buses purchased

No.

393

1 456

Of which modern diesel

No.

131

648

Of which CNG

No.

132

325

Of which LPG

No.

130

483

Total number of minibuses purchased

No.

280

992

Of which modern diesel

No.

133

489

Of which CNG or LPG

No.

147

503

Total costs of buses/trolleybuses/minibuses purchased

MDL mln

2 779

9 223

Of which co-financed by the programme (Option 1*)

MDL mln

783

2 394

Of which co-financed by private / municipal bus operators (Option 1*)

MDL mln

1 996

6 829

Of which co-financed by the programme (Option 2*)

MDL mln

1 593

5 542

Of which co-financed by private / municipal bus operators (Option 2*)

MDL mln

1 187

3 681

Total CO2 reduction**

tCO2 /year

20 812

73 944

Total CO reduction

kg/year

85 422

300 637

Total NOx reduction*

kg/year

403 752

1 444 075

Total PM reduction

kg/year

9 890

35 123

Total SO2 reduction

kg/year

8 391

29 463

Note: *For the two options, see Section 2.3.3; **normative pollution factors (for normative and real pollution factors, see Section 2.3.1).

Source: OECD calculations, OPTIC Model.

copy the linklink copied!
Figure 2.2. Renewed public transport fleet in Moldova after CPT Programme implementation
Figure 2.2. Renewed public transport fleet in Moldova after CPT Programme implementation

Source: OECD calculations, OPTIC Model.

copy the linklink copied!2.3. What will the costs and benefits be?

2.3.1. Using the OPTIC Model to estimate costs and benefits

The costs and benefits of the CPT Programme were estimated using an Excel-based model called Optimising Public Transport Investment Costs (OPTIC). This analytical tool has been developed by the OECD to help public authorities prepare and estimate, as precisely as possible, the costs and environmental benefits of green public investment programmes (Box 2.1). The model was first designed and tested in Kazakhstan (OECD, 2017[7]). The assumptions surrounding cost calculation and emission reduction factors are described in Annex B in the section “Programme costing for Phase 1 (pilot phase) and Phase 2 (scaling-up phase)”.

copy the linklink copied!
Box 2.1. The OPTIC model

The Optimising Public Transport Investment Costs (OPTIC) model was developed along with this study and is one of the main outputs of the project.

OPTIC’s spreadsheet-based model is a simple, easy-to-use decision support tool prepared exclusively to calculate and optimise total programme costs, as well as the potential CO2 emission reductions and reductions of other pollutants from urban public transport (CO, NOx, PM, SO2) that could be achieved by implementing the proposed project pipelines. The model also enables the optimal level of subsidy that can be offered to potential beneficiaries to be calculated.

Optimisation of costs and benefits implies achieving given targets at the lowest possible cost for the public financier. If underlying economic conditions in the country change over the programme period (e.g. tariffs are increased, interest rates on commercial loans are lowered) and/or available public financing is reduced or augmented, both targets and subsidy levels can be re-calculated (or optimised) and adjusted accordingly.

The model consists of seven modules: 1) assumptions; 2) emission factors; 3) transport sector overview with information on current bus fleet and age; 4) determining of the subsidy level; 5) cost calculation; 6) emission reductions calculation; and 7) programme costing and environmental effects.

2.3.2. Emission reductions

In order to estimate the environmental outcomes of the CPT Programme, the OPTIC model uses two different sets of pollution factors: normative and real. This was necessary as normative pollution factors are declared and checked in laboratory conditions and differ from actual pollution factors measured in the urban transport cycle. Normative emission factors take into account various modern emission standards for heavy-duty diesel engines and estimations for CNG and LPG-fuelled engines. The emission factors introduced by standards, however, are based on maximum emission levels according to specific norms. Real emissions may vary, mainly because normative emissions are tested in laboratory conditions and not in actual traffic. This is a concern mostly for diesel engines, where emission reduction depends on the installed emission reduction equipment. As for CNG and LPG, emissions are less problematic because their lower level mostly results from the use of cleaner fuels. In this case, the real level of emissions was also calculated from the results published by the International Council on Clean Transportation (ICCT)6 based on real-world exhaust emissions from modern diesel cars (Franco et al., 2014[8]). A detailed discussion of emissions factors is provided in Annex B.

Using the OPTIC Model, the CPT Programme costs and benefits (reduction of emissions of air pollutants and greenhouse gases) were calculated for the pilot phase and for both scenarios. While no sensitivity analysis for the scenarios was performed, changes in the programme’s cost-effectiveness might occur if the prices used for the costing change (e.g. passenger fares).

In terms of air pollution and CO2 emission reductions, the most significant achievements are expected to be in NOx emissions (under both scenarios). Under Phase 2/Scenario 1, NOx emissions are estimated to decline by 403 752 kg/year (Table 2.5), while under Phase 2/Scenario 2, the decline could be as much as 1 444 075 kg/year (Table 2.6). CO2 emissions are estimated to decline by 20 812 tCO2/year under Phase 2/Scenario 1, and 73 944 tCO2/year under Phase 2/Scenario 2.

copy the linklink copied!
Table 2.5. Key parameters of the assessed CPT Programme – Phase 1&2, Scenario 1
(normative pollution factors)

Type

New buses

Investment costs

Subsidy

Subsidy

Emission reductions per year

Bus

Minibus

Trolley bus

Option

1

Option

2

Diesel

CNG

LPG

Diesel

CNG

or LPG

MDL mln

MDL mln

MDL mln

CO2

(t)

CO

(kg)

NOx (kg)

PM2.5 (kg)

SO2 (kg)

Chisinau urban

42

42

43

43

52

50

1 063

336

597

8 839

33 071

154 976

3 711

3 183

Balti

urban

8

8

7

8

13

12

216

72

121

1 653

6 278

29 331

700

602

Chisinau suburban

71

71

70

71

71

0

1 307

327

762

9 072

40 305

192 002

4 790

4 027

Balti suburban

10

11

10

11

11

0

194

48

113

1 248

5 768

27 443

689

579

Chisinau inter-city

0

0

0

0

0

0

0

0

0

0

0

0

0

0

Balti inter-city

0

0

0

0

0

0

0

0

0

0

0

0

0

0

Other regions

0

0

0

0

0

0

0

0

0

0

0

0

0

0

TOTAL

131

132

130

133

147

62

2 779

783

1 593

20 812

85 422

403 752

9 890

8 391

Source: OECD calculations, OPTIC Model.

copy the linklink copied!
Table 2.6. Key parameters of the assessed CPT Programme – Phase 1&2, Scenario 2
(normative pollution factors)

Type

New buses

Investment costs

Subsidy

Subsidy

Emission reduction per year

Bus

Minibus

Trolley bus

Option

1

Option

2

Diesel

CNG

LPG

Diesel

CNG

or LPG

MDL mln

MDL mln

MDL mln

CO2 (t)

CO (kg)

NOx (kg)

PM2.5 (kg)

SO2 (kg)

Chisinau-urbn

42

42

43

43

52

50

1 063

336

597

8 839

33 071

154 976

3 711

3 183

Balti-urban

8

8

7

8

13

12

216

72

121

1 653

6 278

29 331

700

602

Chisinau-suburban

71

71

70

71

71

0

1 307

327

762

9 072

40 305

192 002

4 790

4 027

Balti-suburban

10

11

10

11

11

0

194

48

113

1 248

5 768

27 443

689

579

Chisinau-inter-city

185

185

184

185

185

0

3 413

853

1 990

26 771

112 134

531 843

13 140

11 101

Balti-inter-city

8

8

7

8

8

0

143

36

84

1 014

4 500

21 251

526

445

Other regions

324

0

162

163

163

0

2 887

1 875

1 875

98 580

487 229

11 567

9 526

324

TOTAL

648

325

483

489

503

62

9 223

2 394

5 542

73 944

300 637

1 444 075

35 123

29 463

Source: OECD calculations, OPTIC Model.

Figure 2.3 presents the possible GHG and air pollution reductions under both phases and scenarios in Moldova’s two major cities, including their suburban networks and main inter-city connections.

copy the linklink copied!
Figure 2.3. Aggregate annual emissions reductions resulting from CPT Programme, 2021-26
Figure 2.3. Aggregate annual emissions reductions resulting from CPT Programme, 2021-26

Source: OECD calculations, OPTIC Model.

Figure 2.4 projects environmental outcomes for the city of Chisinau, including the second (scaling-up) phase, which along with the pilot phase will take six years to implement. It shows that these investments can bring significant emission reductions. Whereas CO2 emissions will be reduced by 41.8% (24 950 tonnes/year), the combined reduction of air pollutants will be 82.2% (95 tonnes/year) after the scaling-up phase, compared to the baseline.

copy the linklink copied!
Figure 2.4. CO2 and air pollutant emissions following fleet modernisation in Chisinau, 2020-26
Figure 2.4. CO2 and air pollutant emissions following fleet modernisation in Chisinau, 2020-26

Note: The values reflect only emissions of the vehicles to be replaced (baseline value) and the new fleet (target value), not the total emissions from all public transport in Chisinau. Air pollutants include CO, NOx, PM2.5 and SO2 and the total emissions value is based on simple summation of individual pollutant emission weights.

Source: OECD calculations, OPTIC Model.

Figure 2.5 projects the environmental outcomes in Balti, including the second (scaling-up) phase. Whereas the CO2 reduction will be 41.2% (4 144 tonnes/year), the combined reduction of air pollutants will amount to 82.3% (15 tonnes/year) after the scaling-up phase, compared to the baseline.

copy the linklink copied!
Figure 2.5. CO2 and air pollutants emissions following fleet modernisation in Balti, 2020-26
Figure 2.5. CO2 and air pollutants emissions following fleet modernisation in Balti, 2020-26

Note: The values reflect only emissions of the vehicles to be replaced (baseline value) and the new fleet (target value), not the total emissions from all public transport in Balti. Air pollutants include CO, NOx, PM2.5 and SO2 and the total emissions value is based on simple summation of individual pollutant emission weights.

Source: OECD calculations, OPTIC Model.

Figure 2.6, Figure 2.7 and Figure 2.8 compare possible GHG and air pollution reduction resulting from the CPT Programme’s phases and scenarios with current levels of emissions from the ageing public transport fleet.

CO2 and NOx promise the greatest emission reductions. Obviously, significant emission reductions start accumulating with the implementation of Phase 2 of the CPT Programme. By the end of Scenario 2, CO2 emissions are estimated to begin to decrease by about 73 944 tonnes/year (meaning a reduction of 42.2% compared to the baseline), while in the case of NOx emissions, this reduction is estimated at about 1 444 tonnes/year (meaning a reduction of 83.5% compared to the baseline). These reductions are estimated using the normative pollution factors approach (Figure 2.6 and Figure 2.7).

copy the linklink copied!
Figure 2.6. Potential carbon dioxide reductions resulting from the CPT Programme
Figure 2.6. Potential carbon dioxide reductions resulting from the CPT Programme

Note: The values reflect only emissions of the vehicles to be replaced (baseline value) and the new fleet (target value), not the total emissions from all public transport in Moldova.

Source: OECD calculations, OPTIC Model.

In addition to NOx mentioned above, the CO emissions reductions will amount to 301 tonnes/year (meaning a reduction of 76.3% compared to baseline).

copy the linklink copied!
Figure 2.7. Potential carbon monoxide and nitrogen oxides reductions resulting from the CPT Programme
Figure 2.7. Potential carbon monoxide and nitrogen oxides reductions resulting from the CPT Programme

Note: The values reflect only emissions of the vehicles to be replaced (baseline value) and the new fleet (target value), not the total emissions from all public transport in Moldova.

Source: OECD calculations, OPTIC Model.

The greatest relative improvement would be in the emissions of small particulate matter – PM2.5 (Figure 2.8). This would be reduced by 98.8% (or 35 tonnes/year) after the end of Scenario 2 of the scaling-up phase. Sulphur dioxide emissions will decrease by 29 tonnes/year (a reduction of 88.9% compared to the baseline).

copy the linklink copied!
Figure 2.8. Potential particulates and sulphur dioxide reductions resulting from the CPT Programme
Figure 2.8. Potential particulates and sulphur dioxide reductions resulting from the CPT Programme

Note: The values reflect only emissions of the vehicles to be replaced (baseline value) and the new fleet (target value), not the total emissions from all public transport in Moldova.

Source: OECD calculations, OPTIC Model.

2.3.3. Investment costs and financing options

Analysis suggests that the total costs of the CPT Programme will be substantial. It is estimated that the pilot phase of the programme will amount to MDL 353 million (USD 19.1 million). The investment cost of Phase 1 and Scenario 1 of Phase 2 is estimated at MDL 2 779 million (USD 150.2 million) (Table 2.5), of which between MDL 783 and 1 593 million (USD 42.3 and 86.1 million) in public support will be needed, depending on the financing option selected. The investment cost of Phase 1 and Scenario 2 of Phase 2 is estimated at MDL 9 223 million (USD 498.6 million) (Table 2.4), of which between MDL 2 394 and 5 542 million (USD 129.4 and 299.6 million) in public support will be needed.

It will therefore be challenging for the public financier to cover all these costs alone. In order to address this challenge, public financial and guarantee support will need to be provided, including by international public financiers.

The analysis identifies two possible options for funding the CPT Programme pipelines: the first would be with the involvement of the local banking sector, while the second would not. The proposed combinations of financing instruments are as follows:

  • Option 1. Commercial loans, combined with public support in the form of loan guarantees and a relatively smaller subsidy (a grant) to help public transport operators to repay a portion of the loan (Figure 2.9).

  • Option 2. Public support in the form of a relatively larger subsidy (a grant) to motivate public transport operators to allocate more of their own financial resources to purchase cleaner vehicles – which generally require a higher initial investment (in terms of purchase cost) but are less expensive to operate (in terms of fuel costs) (Figure 2.10).

The provision of the loan guarantee (under Option 1) is a particularly important element in the CPT Programme financing. Although the overall financial support (in the form of subsidies) may not be that high, the Ministry of Finance (as the main guarantor of public debt) can issue guarantees on bank loans to overcome the lack of creditworthiness of smaller municipalities and private operators (in addition to municipal transport operators in Chisinau and Balti). Involving the Ministry of Finance (MoF) in programme design is therefore of crucial importance.

It is proposed that the loan guarantee consist of two components (Table 2.7 and Table 2.8):

  • a fixed cost for issuing the guarantee (equal to 0.5% of the loan)

  • cost of the guarantee in case of default by borrowers (equal to 5% of the loan provided by the bank).

These shares are based on similar international programmes. The 5% guarantee cost – although rather low – is achievable providing the government sets very strict conditions on loan provision that will result in a low default rate. In any case, should there be a need to change the rates, all major programme outputs (e.g. total programme cost, level of subsidy) will need to be recalculated.

The loan component will be provided through banks that sign an agreement with the Ministry of Agriculture, Regional Development and Environment (MARDE). The source of financing for the loans granted by the banks could include:

  • the banks’ own resources

  • loans to banks from international financial institutions (IFIs).

copy the linklink copied!
Figure 2.9. Option 1 – Financing from commercial loans
Figure 2.9. Option 1 – Financing from commercial loans
copy the linklink copied!
Figure 2.10. Option 2 – Financing from own sources and public grant
Figure 2.10. Option 2 – Financing from own sources and public grant

Figure 2.11 presents the overall CPT Programme costs for investors (i.e. private and municipally-owned public transport companies) and public sector financiers (both national and international) in the pilot phase and in the two scenarios of the scaling-up phase. Option 1 is represented in the table as “Public support minimum” (i.e. the lowest level of public support), whereas Option 2 is the highest level of public support (shown as “Public support maximum”). Conversely, the minimum required amount for the investor refers to Option 2 (i.e. the highest level of public support), whereas the maximum amount to Option 1 (i.e. smaller public support), where the investor will partly cover its contribution by commercial loans.

copy the linklink copied!
Figure 2.11. Overview of CPT Programme’s total investment costs
Figure 2.11. Overview of CPT Programme’s total investment costs

Note: *PTOs – public transport operators.

Source: OECD calculations, OPTIC Model.

The main difference between the two scenarios is that Scenario 1 foresees that only buses in Chisinau and Balti will be supported financially through the investment programme (i.e. urban and suburban public transport), while under Scenario 2, the CPT Programme will also support buses on inter-city routes (in cities other than Chisinau and Balti urban public transport de jure does not exist and is de facto provided by inter-city transport). The costs of both scenarios also include the estimated costs for the pilot phase.

Figure 2.12 shows the investment costs for public financiers (national as well as international) and investors (private and municipally-owned enterprises) broken down by pilot city and other regions.

copy the linklink copied!
Figure 2.12. Total investment costs of the CPT Programme in Chisinau and Balti
Figure 2.12. Total investment costs of the CPT Programme in Chisinau and Balti

Note: *PTOs – public transport operators.

Source: OECD calculations, OPTIC Model.

In terms of total investments (Phases 1 and 2), Scenario 1 assumes that almost MDL 400 million (USD 21.5 million) will be disbursed annually from both public and private sources – calculated as MDL 2 779 million divided by seven years (two years for the pilot phase and five years for the second phase). Scenario 2 assumes that the CPT Programme will require an annual expenditure of MDL 1 317 million (USD 71.2 million), i.e. MDL 9 223 million (USD 498.6 million) in total divided by seven years.

Table 2.7 below summarises the size, results and associated costs of the CPT Programme over the seven years, assuming that it is implemented through banks (Option 1 as in Figure 2.9).

copy the linklink copied!
Table 2.7. Summary of CPT Programme costs under Option 1, both Phases 1 and 2 (MDL)

Overall costs

Public co-financing

Total public co-financing

Year

1

2

3

4

5

6

7

MDL million

Scenario 1

Preparation costs (including fundraising)

0.2

0.2

0.1

0.1

Pilot phase

353

176

176

Implementation unit (operating costs)

0.6

0.6

0.1

0.1

0.1

0.1

0.1

Second phase

2 427

607

121

121

121

121

121

Costs of guarantees (0.5% +5%)

33

33

7

7

7

7

7

Total Scenario 1

2 814

817

0

176

128

128

128

128

128

Scenario 2

Preparation costs (including fundraising)

0.2

0.2

0.1

0.1

Pilot phase

353

176

176

Implementation unit (operating costs)

0.6

0.6

0.1

0.1

0.1

0.1

0.1

Second phase

8 871

2 218

444

444

444

444

444

Costs of guarantees (0.5% +5%)

122

122

24

24

24

24

24

Total Scenario 2

9 436

2 517

0

176

468

468

468

468

468

Source: OECD calculations, OPTIC Model.

The CPT Programme preparation costs (including fundraising) are estimated on the assumption that one person will be working full time on the programme during the first year and that this will cost approximately MDL 100 000 (USD 5 400), given an average monthly salary for administrative employees of MDL 6 144.2/person (according to the National Bureau for Statistics of Moldova)7 and 50% overheads (social security and other administrative costs).

Table 2.8 summarises the size, results and associated costs of the CPT Programme assuming that the programme is implemented directly by a government-established implementation unit (Option 2, Figure 2.10). The annual amounts are estimated by dividing the public co-financing required for a given scenario (excluding the pilot phase) by the five years of programme implementation in the second phase.

The CPT Programme preparation costs in this second financing option (including fundraising) assume that two people will be working during the first year and that this will cost approximately MDL 200 000 (USD 10 800), given an average monthly salary for administrative employees of MDL 6 144.2/person (according to the NBS) and 50% overheads (social security and other administrative costs). In addition, the implementation unit will consist of five people whose costs, including the costs of running the office, are estimated to amount to MDL 1.1 million annually (USD 59 500).

copy the linklink copied!
Table 2.8. Summary of CPT Programme costs under Option 2, both Phases 1 and 2 (MDL)

Overall costs

Public co-financing

Total public co-financing

Year

1

2

3

4

5

6

7

MDL million

Scenario 1

Preparation costs (including fundraising)

0.4

0.4

0.2

0.2

Pilot phase

353

178

178

Implementation unit (operating costs)

5.5

5.5

1.1

1.1

1.1

1.1

1.1

Second phase

2 427

1 415

283

283

283

283

283

Costs of guarantees (0.5% +5%)

0

0

0

0

0

0

0

Total Scenario 1

2 785

1 599

0

178

284

284

284

284

284

Scenario 2

Preparation costs (including fundraising)

0.4

0.4

0.2

0.2

Pilot phase

353

178

178

Implementation unit (operating costs)

5.5

5.5

1.1

1.1

1.1

1.1

1.1

Second phase

8 871

5 365

1 073

1 073

1 073

1 073

1 073

Costs of guarantees (0.5% +5%)

0

0

0

0

0

0

0

Total Scenario 2

9 229

5 548

0

178

1 074

1 074

1 074

1 074

1 074

Source: OECD calculations, OPTIC Model.

Table 2.9 and Table 2.10 mirror Table 2.7 and Table 2.8, but all costs are recalculated in US dollars.

copy the linklink copied!
Table 2.9. Summary of CPT Programme costs in Option 1, Phases 1 and 2 (USD)

Overall costs

Public co-financing

Total

Year

1

2

3

4

5

6

7

USD million

Scenario 1

Preparation costs (including fundraising)

0.01

0.01

0.01

0.01

0.00

0.00

0.00

0.00

0.00

Pilot phase

19

10

0

10

0

0

0

0

0

Implementation unit (operating costs)

0.03

0.03

0.00

0.00

0.01

0.01

0.01

0.01

0.01

Second phase

131

33

0

0

7

7

7

7

7

Costs of guarantees (0.5% +5%)

2

2

0

0

0

0

0

0

0

Total Scenario 1

152

44

0

10

7

7

7

7

7

Scenario 2

Preparation costs (including fundraising)

0.01

0.01

0.01

0.01

0.00

0.00

0.00

0.00

0.00

Pilot phase

19

10

0

10

0

0

0

0

0

Implementation unit (operating costs)

0.03

0.03

0.00

0.00

0.01

0.01

0.01

0.01

0.01

Second phase

480

120

0

0

24

24

24

24

24

Costs of guarantees (0.5% +5%)

7

7

0

0

1

1

1

1

1

Total Scenario 2

505

136

0

10

25

25

25

25

25

Source: OECD calculations, OPTIC Model.

copy the linklink copied!
Table 2.10. Summary of CPT Programme costs in Option 2, Phases 1 and 2 (USD)

Overall costs

Public co-financing

Total

Year

1

2

3

4

5

6

7

USD million

Scenario 1

Preparation costs (including fundraising)

0.02

0.02

0.01

0.01

0.00

0.00

0.00

0.00

0.00

Pilot phase

19

10

0

10

0

0

0

0

0

Implementation unit (operating costs)

0.30

0.30

0.00

0.00

0.06

0.06

0.06

0.06

0.06

Second phase

131

76

0

0

15

15

15

15

15

Costs of guarantees (0.5% +5%)

0

0

0

0

0

0

0

0

0

Total Scenario 1

151

86

0

10

15

15

15

15

15

Scenario 2

Preparation costs (including fundraising)

0.02

0.02

0.01

0.01

0.00

0.00

0.00

0.00

0.00

Pilot phase

19

10

0

10

0

0

0

0

0

Implementation unit (operating costs)

0.30

0.30

0.00

0.00

0.06

0.06

0.06

0.06

0.06

Second phase

480

290

0

0

58

58

58

58

58

Costs of guarantees (0.5% +5%)

0

0

0

0

0

0

0

0

0

Total Scenario 2

499

300

0

10

58

58

58

58

58

Source: OECD calculations, OPTIC Model.

copy the linklink copied!2.4. What is the optimal co-financing level?

Calculating the optimal level of public co-financing for the purchase of new, cleaner vehicles is an important element of the analysis. Our estimates suggest that the level of public funds should not exceed the rates provided in Table 2.11. These rates, which represent the optimal subsidy level per project pipeline, were calculated using the OPTIC model based on the net present value (NPV) of each type of investment.

The rate of financial assistance (subsidy rate) should be set to ensure that it does not replace, but instead leverages, beneficiaries’ spending. The economic significance of this calculation is that the subsidy will encourage potential beneficiaries to participate in the CPT Programme without aiming to make a profit based on the subsidy. Therefore, the level of the subsidy should be kept at the absolute minimum, especially given the scarcity of public resources. This optimal minimum can be defined as the rate of assistance that makes environmentally and economically important projects financially viable (see Annex B to this report).

The calculation takes into account current fare prices and the daily distances covered by operators (which are not optimal). If the CPT Programme is financed with bank loans and the programme provides a loan guarantee (i.e. Option 1), part of the costs will include providing these guarantees. In addition, beneficiaries will enjoy additional benefits due to the lower interest rates associated with the loan guarantee. This is why it is proposed that a fixed average grant rate of 25% of the vehicle purchase costs (a single value is used for the sake of simplicity) should be provided by the programme and the grant should be used to reduce the loan repayment (Table 2.11).

copy the linklink copied!
Table 2.11. Summary of public support for the CPT Programme

Programme pipeline

Estimated public co-financing for Option 2

Estimated public co-financing for Option 1

Trolleybus

50%

25% + loan guarantee

Buses and minibuses with engines fuelled by CNG

60%

25% + loan guarantee

Buses and minibuses with engines fuelled by LPG

55%

25% + loan guarantee

Buses and minibuses with engines fuelled by modern diesel (Euro V and Euro VI)

75%

25% + loan guarantee

CNG stations

Provided by the private sector

LPG stations

Provided by the private sector

Side investments

Provided by cities

Note: Percentage values denote the level of public support in the bus purchase costs.

Source: OECD calculations, OPTIC Model.

Two issues need to be noted regarding the calculation of this optimal subsidy level. First, once a public transport operator modernises its fleet, the operator will not need to replace buses for some time (in particular, considering that buses that are more than 15 years old would need to be replaced in any case). Thus, only the price difference between modern (low-emission) buses and traditional buses is taken into account when calculating the subsidy level.8 Second, some fuels will be cheaper than diesel. For example, CNG and LPG are cheaper than diesel and result in lower driving costs per kilometre, even when their increased consumption per kilometre compared to petrol fuel is taken into account (as they similarly use internal-combustion-engines). These savings in fuel costs for public transport operators are also taken into account when calculating the subsidy level.

Figure 2.13 and Figure 2.14 contrast purchase price and fuel cost for the different types of buses, as an aid in the decision-making process. As seen in Figure 2.13, while the purchase price of (or the initial investment in) cleaner fuel buses is significantly higher than for a traditional diesel engine bus, the much lower fuel costs over the useful lifetime of the cleaner bus allow for additional savings.

copy the linklink copied!
Figure 2.13. Relationship between purchase price and fuel costs for diesel and cleaner buses
Figure 2.13. Relationship between purchase price and fuel costs for diesel and cleaner buses

Source: OECD calculations, OPTIC Model.

Similarly, Figure 2.14 shows that CNG fuel is cheaper than diesel, and the consumption of CNG-powered buses per 100 kilometres is lower than for old diesel buses (for exact fuel consumption values, see Table B.1 in Annex B). While electricity consumption by trolleybuses is very high, the unit cost of electricity is the lowest of all fuels. The potential savings from using storage batteries and the low pollution levels from electric transport make trolleybuses a particularly attractive option for investment.

copy the linklink copied!
Figure 2.14. Relationship between consumption and fuel price for diesel and cleaner buses
Figure 2.14. Relationship between consumption and fuel price for diesel and cleaner buses

Source: OECD calculations, OPTIC Model.

It is essential to monitor market developments regularly (e.g. changes in bus/trolleybus and fuel/electricity prices, development of the market for new engines/technologies, and availability of other financing sources) and how they interact with the CPT Programme design (see Chapter 3). Such market changes need to be reflected in the programme, and the state subsidy level adjusted accordingly. The section on “Programme costing for Phase 1 (pilot phase) and Phase 2 (scaling-up phase)” in Annex B provides an indicative calculation of the optimal subsidy level based on current (around mid-2017) bus and fuel prices. These, however, are offered more as an illustration of how the subsidy level needs to be calculated, rather than as absolute values. The model provides an opportunity to adjust and optimise the programme assumptions and its effects by changing the basic data as appropriate.

copy the linklink copied!2.5. What will the timeframe look like?

Given that the CPT Programme will be co-financed with public funds, a preparation period will be needed before the first phase to include the programme provisions in the state budget process as well as to identify and apply for funding from additional financing sources (including donors).

Once project financing is agreed, the rollout of the programme in the two selected pilot cities will be relatively rapid, as it involves purchasing 62 trolleybuses and 15 minibuses and no construction of infrastructure. The major constraint will be procurement procedures. The pilot phase could thus take up to a year. The implementation of the second phase will take about five years (Figure 2.15).

In addition, annual evaluations of the CPT Programme should be conducted to see whether the selected and implemented projects are helping to meet government objectives and to revise the programme, if necessary. Since the programme is designed to be co-financed through the state budget, any update should be co-ordinated with the existing multi-year budget and its requirements. On this basis, annual financial plans for financing through the regular annual budget should be prepared.

The experience of other countries with similar publicly supported investments suggests that programmes are best implemented over the medium to long term (namely, 5-10 years) and linked to government targets. The results of the first phase will be evaluated to decide whether to continue with the second phase. If this is the case it is proposed that the second phase of the CPT Programme be carried out over a period of five years and then reviewed in detail. A decision can then be made as to whether it should be extended or brought to a close, reflecting possible new policy objectives and government goals or market developments.

copy the linklink copied!
Figure 2.15. Proposed timeline (in years)
Figure 2.15. Proposed timeline (in years)

copy the linklink copied!2.6. What is the proposed implementation set-up?

The programme implementation will require institutional arrangements that ensure entail transparent and cost-effective decision-making. The report analyses several institutional options. The institutional set-up proposed in this study includes three levels: i) programming entity, ii) implementation unit and iii) a technical support unit. Their roles and responsibilities are presented in detail in the report.

The analysis suggests the Ministry of Agriculture, Regional Development and Environment (MARDE) to perform the role of the programming entity (supervisory body). Programme implementation, which should be a separate and distinct function from the programming role, could be performed by local banks that sign a cooperation agreement with the MARDE Ministry based on a successful public tender bid to provide this service. Regardless of the choice, the implementing entity should have a degree of independence to ensure that decisions are made using rules and criteria in line with the programme objectives, and not subject to undue political influence.

Inter-ministerial co-operation is vital for the successful implementation of the programme. Such a programme can help increase the profile of the environment and climate on the transport policy agenda. In transitioning to clean public transport, the MARDE Ministry would benefit from closer co-operation with other ministries, in particular the Ministry of Economy and Infrastructure and the Ministry of Finance, in order to mobilise existing funds and potential external financing sources in order to achieve low-carbon mobility in the country.

copy the linklink copied!2.7. Conclusions

As the OPTIC model calculations have shown, the total cost of implementing the CPT Programme will be substantial. Since new technologies are more expensive before they reach market maturity, public financial support will be necessary to help the public transport operators (both municipal and private) upgrade to a modern and environment-friendly fleet.

The investment programme foresees public grants, commercial and preferential loans and public loan guarantees as the most targeted support options. The financing sources are available, and can be provided by several actors – national public authorities (grants and loan guarantees), national commercial banks (commercial loans) or international/development financial institutions (preferential loans and grants).

When calculating the optimal level of public support (subsidies in the form of grants), the programme analysis takes into account several contributory factors – such as lower running costs (as alternative fuels are less expensive), lower operational and maintenance costs (due to higher reliability of new vehicles) or the overall need to replace the vehicles that have been fully depreciated.

For these reasons, it is not necessary for the CPT Programme to be completely grant-financed. The programme is designed to increase investments by public transport operators in the vehicle fleet without making the replacement too profitable (or support purchases that would/could take place without public support).

In any case, applying a robust methodology – to estimate the costs of the investment programme, set the optimal level of subsidy and forecast the expected environmental benefits – can make the CPT Programme more credible for both national and international public financiers.

Currently there is no clean bus production in Moldova largely because there is no demand for new buses. As the EBRD project in Chisinau has shown (discussed in Chapter 3), when demand is created by public investments, such as the CPT Programme, this may encourage domestic vehicle production in co-operation with a bigger producer, or at least the local assembly of such vehicles.

References

[8] Franco, V. et al. (2014), Real-World Exhaust Emissions from Modern Diesel Cars, A Meta-Analysis of Pems Emissions Data from EU (Euro 6) and US (Tier 2 Bin 5/Ulev II) Diesel Passenger Cars, International Council on Clean Transportation, Berlin, http://www.theicct.org/sites/default/files/publications/ICCT_PEMS-study_diesel-cars_20141010.pdf.

[6] GoM (2018), Environmental Audit Report on Air Quality in the Republic of Moldova (in Romanian), Government of Moldova, Chisinau, http://lex.justice.md/UserFiles/File/2018/mo18-26md/raport_65.doc.

[2] GoM (2018), Programme on Promotion of Green Economy in the Republic of Moldova for 2018-2020 (in Romanian), Government of Moldova, Chisinau, https://gov.md/sites/default/files/document/attachments/intr05-1_0.pdf.

[3] GoM (2015), Republic of Moldova’s Intended National Determined Contribution, Government of Moldova, Chisinau, https://www4.unfccc.int/sites/ndcstaging/PublishedDocuments/Republic%20of%20Moldova%20First/INDC_Republic_of_Moldova_25.09.2015.pdf.

[1] GoM (2014), Environmental Strategy for the Years 2014-2023, Government of Moldova, Chisinau, http://green.gov.md/download.php?file=cHVibGljL2ZpbGVzL0Vudmlyb25tZW50YWxTdHJhdGVneWZvcnRoZXllYXJzMjAxNC0yMDIzLTIwMTRNb2xkb3ZhRW52aXJvbm1lbnRhbFN0cmF0ZWd5MjAxNC0yMDI4MmNiMi5wZGY=.

[5] GoM (2013), Energy Strategy of the Republic of Moldova until 2030, Government of Moldova, Chisinau, http://www.serviciilocale.md/public/files/Energy_Strategy_2030_Final.pdf.

[4] GoM (2011), National Energy Efficiency Programme 2011-2020 (in Romanian), Government of Moldova, Chisinau, http://lex.justice.md/index.php?action=view&view=doc&lang=1&id=340940.

[7] OECD (2017), Promoting Clean Urban Public Transportation and Green Investment in Kazakhstan, Green Finance and Investment, OECD Publishing, Paris, https://doi.org/10.1787/9789264279643-en.

Laws and regulations

(Listed by most recent date of adoption – all are in Romanian/Russian)

Government Decision No. 160 of 21 February 2018 on Approval of the Programme on Promotion of Green Economy in the Republic of Moldova for 2018-2020 and the Action Plan for its Implementation, Official Monitor No. 68-76 of 2 March 2018, Art. 208, http://lex.justice.md/viewdoc.php?action=view&view=doc&id=374523&lang=1.

Court of Auditors Decision No. 65 of 30 November 2017 on Environmental Audit Report on Air Quality in the Republic of Moldova, Official Monitor No. 18-26 from 19 January 2018, Art. 4, http://lex.justice.md/index.php?action=view&view=doc&lang=1&id=373833.

Government Decision No. 301 of 24 April 2014 on the Approval of the Environmental Strategy for the years 2014-2023 and the Action Plan for its implementation, Official Monitor No. 104-109 of 6 May 2014, Art. 328, http://lex.justice.md/index.php?action=view&view=doc&lang=1&id=352740.

Government Decision No. 102 of 5 February 2013 on Energy Strategy of the Republic of Moldova until 2030, Official Monitor No. 27-30 from 8 February 2013, Art. 146, http://lex.justice.md/md/346670.

Government Decision No. 833 of 10 November 2011 on Approval of the National Energy Efficiency Programme 2011-2020, Official Monitor No. 197-202 from 18 November 2011, Art. 914, http://lex.justice.md/index.php?action=view&view=doc&lang=1&id=340940.

Law No. 160 of 12 July 2007 on Renewable Energy, Official Monitor No. 127-130 of 12 August 2007, Art. 550, http://lex.justice.md/md/324901.

Notes

← 1. Moldova’s unconditional reduction target varies between 64% and 67% depending on the scenario selected – either self-sufficient power system development (the former share) or 30% import of electricity (the latter). The reduction targets have been set for the January 2021-December 2030 emission budget. The conditional target is set at 78% (GoM, 2015[3]); Box 1.1).

← 2. See renewable energy consumption (% of total final energy consumption) in Moldova at: https://data.worldbank.org/indicator/EG.FEC.RNEW.ZS?locations=MD; and renewable electricity output (% of total electricity output) in Moldova at: https://data.worldbank.org/indicator/EG.ELC.RNEW.ZS?locations=MD.

← 3. Currently there is no (clean) bus production in Moldova because there is no demand for the purchase of new buses. However, a European Bank for Reconstruction and Development (EBRD) project in Chisinau (which brought about a follow-up project for the licensed assembly of Belarusian trolleybuses) has demonstrated that creating demand through the CPT Programme may help start domestic production in co-operation with a bigger producer, or at least local assembly (see Sections 3.2.2 and 3.3.4).

← 4. Figures as of 1 January 2018. See NBS on resident population by cities and districts at: http://statbank.statistica.md/pxweb/pxweb/en/20%20Populatia%20si%20procesele%20demografice/20%20Populatia%20si%20procesele%20demografice__POP010/POP010300reg.px/table/tableViewLayout1/?rxid=b2ff27d7-0b96-43c9-934b-42e1a2a9a774.

← 5. Ibid.

← 6. International Council on Clean Transportation (www.theicct.org).

← 7. National Bureau of Statistics (www.statistica.md).

← 8. Given that most public transport operators would rather buy used motor vehicles, the price of a used bus served as the basis for the calculation.

Metadata, Legal and Rights

This document, as well as any data and map included herein, are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area. Extracts from publications may be subject to additional disclaimers, which are set out in the complete version of the publication, available at the link provided.

https://doi.org/10.1787/31925aae-en

© OECD 2019

The use of this work, whether digital or print, is governed by the Terms and Conditions to be found at http://www.oecd.org/termsandconditions.

2. Main elements of the Clean Public Transport Programme