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Development of low-emission mobility policies and financing proposal for Cambodia

Cambodia’s reliance on road transport has increased throughout the country’s economic development. Cambodia mainly relies on fossil fuel vehicles. Power generation in Cambodia is dominated by hydro-power and coal with a very small share of renewable energy (100 MW from solar energy).

The transport sector is expected to account for an increasingly larger share of greenhouse gas (GHG) emissions in Cambodia.  In 2000, the transport sector, accounted for 709Gg of CO2eq in 2000 rising to 4,752.35 Gg CO2eq in 2016.  With the rise in the number of vehicles on the road, Phnom Penh’s air pollution is a growing concern as most vehicles are imported used with no age limits or emission standards.

The Government of Cambodia recognizes that the high level of dependence on imported fossil fuel poses a number of challenges in their transition to a sustainable development pathway and reducing GHG emissions and air pollution in the country. In its Intended Nationally Determined Contribution (INDC), Cambodia shared their intention to promote hybrid cars, electric vehicles and bicycles among its mitigation actions.However, in order to successfully transition to a low-emission pathway, Cambodia must address a number of barriers including: 1) Lack of information; 2) Policy and planning barrier 3) Institutional capacity barrier; 4) Investment and market barrier; 5) Economic barriers; and 6) Technical barriers.

Several barriers have been identified which would potentially hinder the uptake of low-emission mobility in Cambodia. These barriers can be categorized as following:

  1. Lack of information – Consumers, policy makers and vehicle manufacturers are not fully aware of the environmental and economic benefits related to cleaner fuels and vehicles. In many middle and low-income countries, introducing low-emission transport is still perceived as an expensive policy measure that is not adapted to local conditions. As a result, the long-term benefits of using low-emission vehicles from reduced energy use, CO2 and air pollutant emissions are often overshadowed.
  2. Policy and planning barrier – Many low and middle-income countries have no dedicated fiscal or regulatory policies to incentivize the uptake of cleaner fuels and vehicles. In fact, counterproductive policy measures are in place where many countries still subsidize petroleum fuels or have disadvantageous fiscal policies in place, which complicate the import of cleaner and more efficient vehicles, including electric vehicles.
  3. Institutional capacity barrier – Decision makers in government lack the capacity to develop national electric mobility projects. The development of policies to foster the uptake of low-emission mobility most often includes stakeholders from various ministries and requires thorough analysis and understanding of the national transport sector. There is a whole suite of options to incentivise low-emission vehicles and a tailored set of interventions needs to be developed based on national circumstances. Decision makers need technical support during all stages of low-emission transport policy development.
  4. Economic and market barrier – Large scale investment in electric mobility is hindered by the unbalanced timing of market uptake of electric vehicles versus charging infrastructure development. To address this all fiscal policies to support investments in transportation and promote uptake of more sustainable transport technologies need to be considered. This also includes the set-up of new business models which involves cross border actions between all stakeholders to spread the needed investment as well as the economic risk.

The objective of this Technical Assistance is 1) to provide Cambodia with a policy action plan for low-emission vehicle policy options to reduce emissions and energy use from the road transport sector, and 2) to assist Cambodia in accessing global environment funds to promote sustainable and low-emissions transport.

To meet these objectives, the project will:

  1. Develop a policy action plan for sustainable and low-emission policies for Cambodia including an action plan for cleaner and efficient fuels and vehicle policies.
  2. Develop a sustainable and low-emissions transport proposal in Cambodia for possible submission to global environment funds including Green Climate Fund and/or Global Environment Facility
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Response project