Understanding Key Trends and Challenges in the Public Transport Sector
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Understanding Key Trends and Challenges in the Public Transport Sector
- 1. UNDERSTANDING THE PUBLIC TRANSPORT SECTOR Hilia Boris Iglesia Transport Economics Manager UITP - International Association for Public Transport
- 2. WHO ARE WE? UITP has 1,400 member companies from 98 countries and counts with 16 regional offices. UITP members are public transport authorities and operators, policy decision-makers, research institutes and the public transport supply and s service industry. UITP 2
- 3. URBAN MOBILITY TRENDS Transport demand increased, along with the modal share for public transport in developed cities, Private car ownership increase (particularly in developing cities) Transport is the second largest GHG producing sector (23%) – 50% being from urban transport Strong interdependence between transport and land-use policy (compact cities vs sprawling cities) UITP3 Mobility trends in cities: Increase in mobility demand due to population growth and economic development
- 4. FUNDING AND FINANCING CHALLENGES Higher demand on capacity and quality of PT: Increasing urban demographics Ageing population Broad agreement of PT on environmental and social issues New technological possibilites and customer demand UITP4 Need for investment in capacity and quality improvement for public transport
- 5. FUNDING AND FINANCING CHALLENGES Public finance constraint and investment gap: Financial crisis of 2008 putting pressure on public finance Contributions to PT operational budgets have been reduced Public sector debt has limited investment and led to investment gap UITP5 Need to find new funding sources for operations and investments
- 6. WHAT A RESILIENT TRANSPORT SYSTEM? There is no silver bullet, in a context of constrained available public funding, it is required: Cost effective service delivery Fares which reflect the quality expected by customers Development of other commercial revenue Creation of earmarking funding sources from indirect beneficiaries Ensuring a financially sound system enabling the longevity of the system and its capacity to resist to external shocks.
- 7. OVERVIEW OF STAKEHOLDERS CODATU 2014
- 8. ROLE OF CLIMATE FINANCE FOR TRANSPORT 0 5 10 15 20 25 30 China Colombia Mexico Ukraine Ethiopia Philippines Indonesia South Africa Bangladesh Costa Rica Malaysia Ecuador Nigeria Tunisia Ghana Lebanon Nicaragua Peru Serbia Climate Finance in Sustainable Transport Projects - By Country CDM CTF GEF IKI JCM JI NAMA NDF Slocat 2016 Features: Increasing presence of climate finance but still shy Additionality criteria hard to prove Difficulty in MRV tasks
- 9. GREEN BONDS FOR TRANSPORT Urban transport has a strong credit rating that allows them to issue debt. Rail, makes the majority of green bonds, due to the inclusion of a number of large rail issuers. Standards: Metro expected to abide with rail standards Bus Rapid Systems is currently assessing guidance UITP9 Company Rating City Transport for London (TfL) AA+ / A-1+ stable London Societe de Transport de Montreal (STM) AA+/A-1 stable Montreal Consorcio de Transportes de Bizkaia (CTB) A/A stable Bilbao Rheinbahn AG AA-/A-1+ stable Dusselsdorf Metropolitan Transportation Authority (MTA) AAA/A-1+ stable New York Source: S&P 2015 CBI 2014
- 10. GOTHENBURG TO PURCHASE NEW TRAMS 40 trams to be purchased for 2021 30 % less energy per passenger low noise levels, significantly lower than existing vehicles. UITP10
- 11. ENHANCING LOCAL REVENUES FOR PUBLIC TRANSPORT Raising funding tools at the local level is becoming increasingly paramount for the (re)investment of infrastructures. 1. Increased calls for devolution enabling the active participation of direct or indirect beneficiaries 2. New trends focusing on parking policies and payroll taxes have become of increasing interest 3. Interest in including indirect beneficiaries in the contributions for transport infrastructure 4. Much attention is now given to the synergies between land development and transport UITP11
- 12. Thank you!! International Association of Public Transport hilia.boris-iglesia@uitp.org (0032) 02 661 31 96 @HBorisUITP UITP12
Editor's Notes
- Economic arguments of PT Higher density of jobs and productivity Better connectivity drives higher job density and productivity gains for businesses. « Wider » economic benefits of large projects exceed initial investment. Strong impact on job creation Per amount invested, investing in public transport creates up to twice as many jobs as investment in other areas, such as highways. This is due to higher space efficiency (thus fewer resources required for land acquisition), complexity of projects and thus variety of competences required. Human capital Access to a larger variety of job and learning opportunities, enabling to build up skills and knowledge more quickly. Public transport is among the largest employers in cities such as Brussels, Barcelona, Paris, Amsterdam. It mobilises different skills from engineering, to IT and customer care. Physical capital Urban renewal and regeneration Resilience of property values to real estate crisis Global appeal Supporting tourism development Prime means for visitors to get around cities Attractiveness for business travellers Quality of Life Travel cost reduction (Significant savings on mobility expenditure when share of public transport is higher) Less congestion and more reliable travel times Health and road safety benefits Physical activity: if we double the share of public transport, daily mobility will provide 30 min. of physical exercise, which is correlated to less risk of coronary heart disease and obesity (-50%), less hypertension risk (-30%). CONCLUSION Public transport contributes to the competitiveness of the city. It generates value for citizens, businesses, and public authorities (higher tax revenues). Part of the value created by public transport can be captured for the development of local infrastructures and services. Benefits optimized when integrated into economic development strategies, urban development and housing policies, and other aspects of transport policy. Local governments should be empowered to carry out succesfully integrated urban strategies.
- Overview of trends Cities are engine of economic growth and social change, with annual economic activity of 62trn USD of global GDP in 2015. In 2030, this is expected to rise to 115trn USD or 87% of GDP. Urban growth encouraged in the shaped of compact cities creating accessibility and (1) Economies of scale, (2) Agglomeration effects and (3) Networking advantages The transport sector is already responsible for 23% of the GHG emissions and more than 60% of all kilometres are travelled in our cities - around 10 billion trips made every day private motorization making it the largest source of current transport emissions and local air pollutants. In developing countries private cars are a symbol of status Fuel subsidies – counter productive By 2050 it is estimated that two-thirds of the world’s population will live in cities. In the face of this increasing urbanization, demand for urban mobility will potentially rise by 160% over the next 40 years. Barriers Business models (and key stakeholders) in automotive, construction and real estate sector have proven resistant to change Strong consumer preference in developing cities towards private car On-going efforts to internalise externalities (and monetise them) - difficult: Fuel pricing and Congestion charging Vehicles constraint (vehicle plate auction, etc) Public transport’s carbon footprint has an inverse relationship to the global carbon footprint as illustrated by the graph opposite. This means that the world’s GHG emissions will go down if public transport’s footprint increases. UITP supports the ASI Framework: Avoid-Shift-Improve when tackling urban transport through enhance policies which encourages modal shift, congestion relief and considers land use factor (more density)
- Overview of funding tools: CODATU/CEREMA benchmarked that the funding o a metropolitan area’s of urban modes of transport requires annually between 1% - 2% to cover spending on urban road investment, public transport investment and operating needs. PA represent one of the key contributors to the funding of urban transport – both in terms of the investment and operating costs. TA – means that all resources can be chanelled towards medium- and long-term goals offering the guarantee of a stable structure Possible mechanisms for public funding of operating costs: Users of private modes contribute to the financing by paying tolls (congestion charging, parking charges, infrastructure tolls) if this revenue is allocated to the TA Users of PT contribute to the operating budgets by way of ticket and pass purchases Employers contribute to the purchase of transport tickets by way of direct direct aid to their employees Employers contribute by different local tax systems (payroll tax,etc), business owners contribute through the payment of rent Taxpayers pay state, regional and local taxes, direct and indirect charges Advertising companies pay part of the advertising revenue to the TA or to operators of the transport system Building owners, land owners and developpers, resident a,d retailers pay taxes on property value gains which can be allocated to the transport system PA can contribute directly to certain categories of users (low income households, unemployed, young people, etc) PA pay subsidies to balance the accounts of deficit-making transport companies Brief overview of tools for financing: Public Private Partnership: effective sustainable transport procurement methods allowing private sector participation and risk sharing, provided that they offer ‘value for money’ Land value capture tools: capturing the revenues from the indirect and proximity benefits generated by transport infrastructure to finance projects Grant and loans: traditional financial tools used to support private sector participation in large-scale sustainable transport infrastructure projects (rail/metro). Infrastructure banks or infrastructure funds can play a transitional role, Green bonds: tap into the debt capital market, which are currently underexploited for infrastructure investment, Currently, most of the bond market are used to finance rail infrastructure projects in Europe Carbon finance: still underdeveloped
- S&P default and recovery statistics indicate that credit worthiness of infrastructure is strong and expect this to continue Average annual default rate for all project finance is just 1,5% below the 1,8% default rate for corporate issuets in the same period Examples: TfL issues 400m GBP (610m USD) and published their green bond framework Ontario 500m CAD offering (2,4bn CAD in orders) to be earmarked to a rail extension Eglinton Crosstown LRT Sound Transit seattle offered 1bn USD (AAA/Aa2) for the extension of a 30m LRT among others MTA Paris Mexico Beijing
- The new trams are designated Type M33. The €140m firm order announced on October 11 includes 30 Type A unidirectional trams 33m long and 10 Type B bidirectional vehicles of the same length. Bombardier said its share of the contract is worth €97m. The order is being financed by the Västra Götaland region, with the vehicles to be owned by Kommunleasing AB and leased to operator Göteborgs Spårvägar.