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PHILIPPINES: MMDA Signs Carbon Finance Project with World Bank

January 21, 2010

MANILA, January 29, 2010—The Metro Manila Development Authority (MMDA) and the World Bank today signed an Emissions Reduction Purchase Agreement (ERPA) for a project designed to help address traffic congestion in Epifanio De Los Santos Avenue (EDSA), contribute to the reduction in greenhouse gas (GHG) emissions and curb air pollution along the country’s busiest and main thoroughfare.

Named “EDSA Bus Reduction Project,” the project aims to optimize bus traffic along EDSA. This is achieved by enhancing the existing organized bus route system of MMDA with electronic Radio Frequency Identification (RFID) technology to better manage the dispatch of bus units at terminals, limit dwell times at bus stops, enforce franchise and traffic rules, and ban arbitrary trip-cutting and out-of-line operations.

MMDA Chairman Oscar Inocentes explained that the project is one of the several measures implemented by MMDA to ease the traffic situation in EDSA. He said there is a need to modernize Metro Manila’s traffic management system through the use of new technology such as RFID to bring order to the bus operations. “The database to be accumulated by the system will also provide a platform for better urban transport planning and for the development of an effective public transport franchise management, which can be replicated in other urban centers in the country,” he said.

Judge Inocentes added that the project is also one of MMDA's contributions in protecting the environment by reducing harmful greenhouse gas emissions that have been blamed for climate change. "The project will also benefit other motorists. We will be able to plant several trees using one spade."

The newly signed ERPA is the eighth World Bank’s carbon finance operation (CFO) in the Philippines and the second engagement of the World Bank for Clean Development Mechanism in the transport sector globally. World Bank Country Director Bert Hofman and MMDA Chairman Oscar Inocentes signed the agreement at the MMDA office in Makati City today.

Under the project, each registered bus will be fitted with an electronic tag that will have a unique identifier code, which is associated in the computer database with the identification records of the bus unit to which the tag is attached. When RFID-tagged buses enter terminals, principal stops, and a number of other locations where tag readers are installed, they will be detected, including off-route running buses. The information is sent by the readers to the central server with software applications that interpret the data and support the headway management, dispatching, dwell-time management, violation-detection, and violation-reporting functions, which are all expected to help eliminate illegal operators and buses.

These measures are expected to reduce the number of buses in transit in EDSA, reduce queuing at bus stops, thereby alleviating congestion and increasing the average speed of travel. The resulting reduction in the number of bus trips and the time each bus spends on the road will reduce fuel consumption per passenger per kilometer traveled and thus to reduced emissions of carbon dioxide and local air contaminants.

An estimated 5,000 buses—including up to 1,500 operating illegally (referred to as colorums)—contribute to traffic congestion and air pollution on EDSA.

"Not only will the EDSA Bus Reduction Project improve the traffic situation in the country’s main thoroughfare and contribute to the global fight of reducing GHG emissions, it will also have significant local environmental, health and economic benefits for Metro Manila residents", stressed Mr. Hofman.

A majority of Metro Manila residents, Mr. Hofman explained, take public transport and many use EDSA each day for going to work, school, and doing business. “Better traffic flow along EDSA therefore would enhance the welfare of millions of Filipinos. The project will also reduce outdoor air pollution, which causes sickness affecting more than 1 million people and premature death of 15,000 people every year in urban centers, with an economic and health cost estimated at more than $20 million per year,” said Mr. Hofman.

The newly signed ERPA provides for the World Bank, on behalf of the Carbon Fund for Europe, to purchase from MMDA the GHG emission reductions over the period 2011 to 2013 worth €364,000 or more than PhP24 million. The project has a fixed 10-year crediting period under the Clean Development Mechanism (an instrument under the Kyoto Protocol of the United Nations Framework Convention on Climate Change, which promotes projects that reduce carbon dioxoide emissions).

The project is consistent with the Bank’s Country Assistance Strategy for the Philippines, which targets, among other results, a reduction of the country’s vulnerabilities by reducing GHG emissions through the expansion of climate change mitigation programs in key sectors (including power, transport, and waste management) and local government units.

A vital element of the World Bank’s effort, Mr. Hofman said, is ensuring that developing countries are key players in the emerging market for emission reductions. “The Bank promotes a market for emission reductions that reduces transaction costs, supports sustainable development and benefits the poorer communities of the developing world,” Mr. Hofman said.

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