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Electric buses offer Latin American and Caribbean transport a green and profitable future

March 17, 2020 por Benoit Lefevre - Maria Margarita Cabrera Botero Leave a Comment


Electric buses are beginning to replace diesel fleets across Latin America and Caribbean cities with the aim of making public transport more attractive for commuters while meeting global climate goals. 

As part of a region-wide effort to align with the Paris Agreement objectives, generate growth, create jobs and ensure a just transition, local and national transportation departments and private operators are investing in and now delivering clean public buses.

As well as reducing greenhouse gas emissions, these efforts aims to improve quality of life for commuters as electric buses are significantly quieter, more comfortable, and will reduce deadly air pollution which afflicts urban areas.

In capital cities like Bogotá, Lima, and Santiago, there are very high concentrations of PM 2.5; tiny suspended particles which can cause premature death, respiratory diseases, and cancer. Electric buses on the other hand release zero tail-pipe emissions.

There are over 400,000 electric buses around the world – 98% run in China, while India, the US and Europe are also ramping up electric fleets. In Latin America and the Caribbean, electric buses currently number in the few hundreds but with enormous potential for expansion.

That’s why the Inter-American Development Bank has been working with public and private actors since 2017 to identify appropriate business models to mobilise investment in clean public transport.

Working through the NDC Accelerator Fund and the UK Sustainable Infrastructure Programme Fund, the IDB has been helping to develop a common approach to structure sustainable financial schemes to deliver electric buses in Latin America and Caribbean and mobilise the private sector.

The technical cooperation, Accelerating NDC implementation, unlocking clean buses in LAC, offers a ‘one-stop shop’ package that includes market assessment, technical support, financial advice, and training.

This integrated effort where various IDB Divisions (e.g. transport, energy, cities, capital market and climate change) and our private sector entity, IDB Invest, are participating is rare, but vital to be able to bring a full set of technical expertise to stakeholders.

Vast amounts of urban transport in the region are run by private operators where economic profitability is the determining factor. With large fossil fuel subsidies and a lack of disincentives like carbon taxes and/or tax cuts to electrify their fleets, mobilising the private sector is difficult.

One challenge is the heavy upfront costs of new electric vehicles and the lack of charging infrastructure. There is also little opportunity to access long term financing. One of the largest hurdles is the inaccurate perception that decarbonising multiple sectors of the economy, including transport and energy, will bring financial instability.

A lack of technical knowledge in the performance of electric buses, and low economic understanding in terms of lifecycle costs and maintenance, leads to the perception of risk. Private actors will often take the safe route to secure consistent profits.

The IDB is focusing on robust and tailor-made business models to target the individual challenges of each city. This requires a focus on identifying and structuring viable sustainable business models to help deliver electric buses, ensuring economic financial and fiscal sustainability and unlocking the potential benefits.

The clean bus technical cooperation has a triple-win approach. Imagine a Venn diagram – to find the hot spot between benefiting private operators, the state’s fiscal sustainability, and everyday bus users. With technical assistance and financial guidance, as well as now additional funding from the UK’s Sustainable Infrastructure Programme for continuous future support, that intersection can be met.

Overall this is about rebuilding confidence in public transport at a time when Latin America’s private vehicle fleet and related emissions is growing rapidly.

For citizens, new electric buses have air conditioning, Wi-Fi, and charging plugs for personal devices. They also reduce vibration and increase overall air quality. For private operators, it’s an opportunity to invest in new technology which will keep demand high and continue to make good profits. For the government, it’s a way of offering a quality service to citizens, protecting the public transport service from fossil-fuel price volatility and achieving global climate goals.

The IDB has participated in assisting with over 500 clean buses since the beginning of the project, in 14 cities, including Bogotá where the first-in-the-region bidding process by the Integrated Public Transport System (SITP) is taking place to increase the size of the electric fleet.

Along with the efforts of the Inter-American Development Bank, other partnering funds, and the leadership of public and private sectors in the region, interest in electrifying public transport in Latin America and the Caribbean is gathering pace.

 

Photo: A new electric bus in Chile. (Photo: Ministerio de Transportes y Telecomunicaciones)

This article was originally published at Climate Home.

 

Further reading:

Getting to Net-Zero Emissions: Lessons from Latin America and the Caribbean

 

Follow us on Twitter @BIDCambioClima


Filed Under: Climate change

Benoit Lefevre

Benoit Lefevre, PhD, é economista e engenheiro agrônomo. Atualmente trabalha como especialista sênior na divisão de Mudanças Climáticas do Banco Interamericano de Desenvolvimento (BID), com foco em melhorar a compatibilidade climática das operações do Grupo BID tanto para mitigação quanto para adaptação, alavancando o financiamento climático e catalisando o investimento privado em soluções limpas e resilientes. Benoit lidera e/ou participa de operações no México, Costa Rica, Panamá, Colômbia, Haiti, República Dominicana, Guatemala, Peru, Equador e Paraguai. Benoit também representa o BID nos MDBs que ingressaram no Grupo de Trabalho para Rastreamento de Financiamento Climático de Mitigação e no Grupo de Trabalho Técnico da IFI sobre contabilidade de GEE. Anteriormente, Benoit trabalhou para o World Resources Institute (WRI) como Diretor Global de Energia, Clima e Finanças do Center for Sustainable Cities. Nessa função, ele liderou atividades em modelos de negócios alternativos, finanças municipais, capacitação, preparação de projetos upstream, modelagem de energia urbana e políticas integradas de transporte e uso da terra. Antes de ingressar no WRI, Benoit foi diretor do programa Urban Fabric no IDDRI e professor visitante na Universidade de Berkeley. Engenheiro, ele é PhD em economia e finanças e fez pós-doutorado na Universidade da Colômbia. Benoit foi o autor principal do 5º Relatório de Avaliação do IPCC. É autor de 5 livros, diversos artigos acadêmicos e colunas de opinião.

Maria Margarita Cabrera Botero

She has over 15 years of experience with leadership in climate finance, sustainable infrastructure, environmental management risks, and climate change in Latin America and the Caribbean (LAC) and the USA. During her professional career, she has overseen technical leadership in identifying, developing, evaluating and managing a wide range of public and private sector projects within diverse sectors including energy, transport, forestry, renewables, as well as providing green finance strategies and blended finance solutions to access International Climate Funds (e.g. CIF, GCF, IKI, GEF and NDF). She is currently the Fund Adviser of the Sustainable Infrastructure Program (UK SIP) and the NDC pipeline Accelerator Fund (ACL), within the Climate Change Division at the Inter-American Development Bank, managing a wide portfolio of green projects and interventions that promotes private sector investments. Prior, she was part of the Capital Markets Division, coordinating the “Leveraging green investments (LGI) Program- IKI Program”, a four-year Program to develop Green Finance Strategies and addresses barriers to green investments in LAC countries through National Development Banks to develop green investments to mobilize private sector capital and coordinated the creation of the first national innovation Lab with the Brazilian Government. She holds a specialist degree in Management of Quality and Innovation processes from EAN School of Business and a Bachelor’s degree in Environmental and Sanitary Engineering from La Salle University, in Bogota, Colombia. She is an accredited HSEQ auditor.

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Sustainability

This blog is a space to reflect about the challenges, opportunities and the progress made by Latin American and Caribbean countries on the path towards the region’s sustainable development.

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