1. Introduction
Latest data from Department of Energy (DOE) [1] in the Philippines on fuel consumption in road transport sector suggests that road transport energy consumption has slowed down over the past decade with an annual growth rate of only 0.5% from 2000 to 2010 (6.7 MTOE in 2000 to 7.1 MTOE in 2010) when compared with 11% growth between 1990 to 1996 (Figure 1). Further, it is interesting to observe varied behavior of gasoline and diesel consumption. Gasoline consumption over the same period has increased by nearly 1%, i.e. increase from 2.7 to 3 MTOE while diesel consumption has not shown any increase and has remained constant around 4 MTOE from 2000 to 2010.
This is in contrast to findings from Department of Transport and Communications (DOTC) and investigations
Figure 1. Transport sector and road sector fuel consumption based on DOE statistics.
done by other experts and agencies. Latest document on Clean Technology Fund Plan [2] for Philippines reports that road transport carbon emissions (or fuel consumption) have increased at 6% - 10% annually from 1990 to 2007 and this growth has resulted in relative doubling of transport share in the total emissions. Road sector dominates other modes in Philippines and accounts for nearly 88% share over the past decade.
Department of Energy of Philippines quantifies fuel consumption in road sector based on the top down approach or “Fuel Sold Approach”. The total fuel sold is considered as a balance of primary fuels produced, plus imports, minus exports, minus international bunkers and minus net changes in stocks. This consumption value relates to use for the transport activity itself and not for consumption by the transport company for non-transport purposes and off-road activities. The top down approach is generally considered more accurate than the bottom-up (A-S-I-F) approach for quantifying overall consumption. Top down assessment gives the consumption values but does not explain the reasons behind the consumption values [3] .
The main objective of this research is to correlate official fuel consumption data (i.e. top-down) with bottom up quantifications and provide relevant policy recommendations.
The structure of the paper is as follows: In Section 2, various bottom-up studies in Philippines are summarized and this discussion is followed by a review of road transport issues related to bottom-up modelling in Section 3. In Section 4, analysis is carried out to investigate possible implications of fuel price increase and implementation of sustainable transport policies and options on fuel consumption. This discussion is concluded by correlating top down fuel consumption data with bottom-up estimates and possible scenarios are tested to derive recommendations.
2. Bottom-Up Quantifications
Over the past decade, three major bottom-up studies have been carried out in Philippines road transport sector to quantify fuel consumption and CO2 emissions as summarized below.
World Bank led “A strategic approach to climate change in the Philippines: an assessment of low-carbon interventions in the transport and power sectors” [4] . This study estimated that the road transport GHG emissions have been increasing at an average growth rate of 3.1% and the diesel consumption from 2007 to 2010 was growing at 6%.
Asian Development Bank led “Transport and Carbon Dioxide Emissions: Forecasts, Options Analysis, and Evaluation” [5] . This study estimated increase in road transport CO2 emissions from 2005 to 2015 at around 2% and emissions from 2015 to 2035 to grow at 5.8%.
Clean Air Asia led “Accessing Asia: Air Pollution and Greenhouse Gas Emissions from Road Transport and Electricity” [6] . The annual average growth rate from 2000 to 2010 was estimated to be 3.3%. Diesel consumption was estimated to growing at around 3%.
Clearly based on the assessments, the fuel consumption and emissions between 2000 and 2010 are growing at higher rates when compared to top down assessments. This aspect is dissected in more detail in subsequent sections.
3. Road Transport Growth in the Philippines
Table 1 captures growth in some of the transport parameters in the Philippines [7] [8] .
Growing economy with increase in income levels coupled with existing low motorization rates is influencing high growth in vehicle ownership. Vehicle ownership over 2000 to 2010 has increased at 6%. Motorization Index i.e. vehicles for 1000 people increased from 48 to 72 within a decade. Among vehicles, the fastest growing mode was two wheelers with nearly 11% annual increase while buses increased only marginally (Table 2). This is a pointer towards public transport especially buses not being effective enough in Philippines to address growing demand for mobility. Increase in number of driving licences (3.6%) point towards increase in number of drivers in the Philippines road network.
Table 1. Transport indicators and data from Philippines.
Table 2. Vehicle growth rate in Philippines.
Interestingly, growth in diesel vehicles (5.3%) is outpacing gasoline vehicles (4%). Diesel cars are growing at 18% while gasoline cars are growing at only 2%. Diesel Cars share in total cars has grown from 4% to 14% within a decade. This growth however contradicts the official diesel consumption values as the diesel consumption has remained stagnant.
Infrastructure growth in terms of road kilometres has been slow but the major emphasis has been on paving road rather than on capacity increase. The increase in road bridges length establishes that infrastructure supply improvements have been carried out with sustained investment to try to accommodate traffic growth. Infrastructure expenditure as a share of the Philippines’ GDP declined from 5.6% in 1998 to 3.6% in 2003 [9] and it has only averaged 2.7% of the GDP over the last decade.
In absence of subsidies, fuel prices especially gasoline has increased at 11% annually which can impact travel demand and vehicle ownership. This impact is discussed in more detail in the subsequent section.
4. Analysis
Based on the above overview, there could be now only two possible logical reasons which could explain the low reported growth of fuel consumption in Philippines road transport sector, 1) High increase in fuel prices and 2) impact of sustainable transport policies in reducing travel demand. Impacts of both these parameters are investigated below.
4.1. Impact of Fuel Price
Though, lot of research has been carried out in developed countries on fuel price elasticity, there is no literature available in Philippines on travel demand changes due to fuel price increase. Fuel price increase over a period of time will impact travel demand and fuel consumption in variety of ways i.e. change in origin or destination (relocation), increase in occupancy, increase in transit use, decrease in driving distance, increase in fuel efficiency, change in vehicle type (Ownership) etc.
Fuel prices have increased all across Asia though not in uniformity due to subsidies provided by the governments to artificially control the fuel prices. Philippines government passed the “Oil Deregulation Law” in 1998 and removed the subsidies in the fuel and deregulated the industry. With increased fuel prices, the cost of driving increased thereby having indirect influence on ownership. Economic linear regression of vehicle ownership with GDP per capita from 1981 to 2010 establishes impact on ownership of vehicles. The linear elasticity of ownership with GDP/capita decreased post 1998 as fuel prices started increasing at a faster rate as shown in below Table 3.
Clearly, the elasticity of car ownership with GDP/capita changes over the 1999-2010 period which means that with each unit increase in GDP/capita, the demand for car ownership has reduced in 1999-2010 period when compared with 1981-1998. It has been established that Car ownership growth rates rapidly accelerate at incomes around $3000 to $5000 per capita per year and then typically peak around $10,000, followed by a slow decline under business-as-usual approach [10] . Clearly, increased gasoline prices can be an important factor here. Interestingly, demand for diesel cars also increased over this period. Also, large increase in two wheeler ownerships can be directly attributed to higher fuel efficiencies and low ownership and driving costs. Faster economic growth over last decade has attracted higher increase in number of vehicles. In case the fuel prices would not have increased, the vehicle growth would have been higher.
In order to understand the travel behavior changes with fuel price, MRT ridership variation is considered as a proxy variable and compared with monthly fuel price. Main hypothesis here is that MRT ridership reflects two growth scenarios, i.e. due to annual increase in ridership and due to shift of people from motorized modes to MRT due to fuel price increase.
By observing daily ridership per month variation with fuel price increase over 6 years [7] [8] , no clear trend could be established which could support theory of low growth in fuel consumption in road transport sector due to high degree of shift to MRT. The peak gasoline price was observed in 2008 where it crossed 60 pesos. Ridership did not reflect drastic increase due to shift of people from private modes to MRT during high gasoline prices. Clearly, fuel price increase does not appear to make any significant reductions in travel demand (Figure 2).
4.2. Impact of Sustainable Transport Policies
Significant reduction in travel demand due to appropriate policy initiatives can lead to modest growth in fuel consumption. The Philippine National Energy Efficiency and Conservation Program is probably the most ambitious plan launched between 2000 to 2010 period. This plan launched in 2004 was targeted to contribute towards the achievement of 60% energy self-sufficiency by 2010 and the avoidance of cumulative 50.9 million tons of
Table 3. Elasticity of ownership with GDP/capita.
Figure 2. MRT3 daily ridership/month vs. gasoline fuel prices.