GEF Grant to Demonstrate Green Truck Technology to 500,000 Trucking Operators

Today the World Bank’s Board of Executive Directors has approved a grant of US$4.2 million from the Global Environment Facility (GEF) to demonstrate both the local and global environmental benefits of the green truck technology to more than 500,000 truck operators in Guangdong Province of China.

Road-based freight transport, which primarily comprises trucks, is a significant energy consumer and a major source of greenhouse gas (GHG) emissions in China. Particularly, as China’s manufacturing-based economy grows, the road freight traffic will continue to increase, which may further increase the energy consumption and GHG emissions. However, energy efficiency in road freight transport remains low in China. The fuel efficiency of Chinese trucks is about 30 percent lower than in the industrialized countries. A major obstacle to improved energy efficiency in this sector is lack of knowledge and confidence in the performance of fuel-efficient truck technologies so that trucking companies are reluctant to adopt them. The second obstacle is lack of modern logistics management and effective information sharing and coordination in the sector dominated by a large number of small and privately owned truck operators.

The Guangdong Green Freight Demonstration Project is designed to assist the government of Guangdong Province in addressing these challenges. “Through demonstration of green truck technology and green freight logistics, we hope that the energy-saving practices will be adopted more widely in the sector, so as to contribute to the government’s goal of reducing the energy intensity of the road freight sector by 12 percent by 2015 and 16 percent by 2020 from the 2005 level,” said Ke Fang, Senior Urban Transport Specialist of the World Bank and task manager of the project.

The project aims to provide better information on the performance of proved energy efficiency technologies and practices and demonstrate their environmental benefits so as to increase awareness and demand for them. It will facilitate communication and cooperation among energy-efficient vehicle technology suppliers, freight carriers, freight shippers, financial institutions, and other key stakeholders. Participating trucking companies will receive training and incentive packages, including a price rebate at the purchase of the technology and a performance-based award, to support the procurement, installation, and monitoring of verified energy-efficient technologies on eligible freight vehicles. The project will also support studies and pilot projects on low-carbon logistics operations, including feasibility of developing an advanced logistics brokerage information system and wide application of “drop-and-hook” transport in Guangdong. Capacity building is a critical part of the project, including green freight policy research to identify policies that support wide-scale implementation of green freight technologies and practices, training for government officials and enterprise managers, development and maintenance of a green freight website, organization of a green freight technology “trade fair”, and project promotion and information dissemination.

The project is expected to benefit more than 500,000 trucking companies registered in Guangdong that are seeking to reduce operating costs, as well as about 96.4 million residents in Guangdong, particularly those living in urban areas, suppliers of energy efficient technologies, and freight shippers seeking to reduce carbon footprints in their business practices and make their business more environmentally friendly. The total project cost is US$13.97 million, with the GEF grant financing 30 percent. Originated from a successful small pilot in Guangzhou in 2009, the project was prepared in collaboration with the Ministry of Transport of China, US Environmental Protection Agency, AusAid and Clean Air Initiative for Asian Cities.

Established in 1991, the GEF is today the largest funder of projects to improve the global environment. It provides grants to developing countries and countries in transition for projects related to biodiversity, climate change, international waters, land degradation, the ozone layer, and persistent organic pollutants.