The story of Santiago, however, remains an exception in the region. Though Latin American countries, as signatories to the Paris Agreement, have signaled their concrete intention to embrace a low-carbon future, the transition to low and zero-emissions vehicles has been slow. To better understand the challenges in accelerating the adoption of clean technologies in LAC, the World Bank has recently implemented the Clean Bus project, funded by the NDC Support Facility, a contribution to the NDC Partnership .
The project included five cities across the continent: São Paulo, Mexico City, Mexico, Santiago de Chile, Buenos Aires, and Montevideo. A city-by-city diagnostic that compared life cycle costs and GHG emissions of technologies ranging from clean diesel (Euro VI equivalent) and compressed natural gas (CNG) to battery-electric (BEB) and hydrogen buses was completed. Not surprisingly, BEBs emerged as the most energy-efficient option across technologies. BEBs typically also have the lowest lifecycle GHG emissions when considering the footprint of both fuel production and vehicle operation (well-to-wheel analysis).
Though the urban air quality benefits of BEBs are undisputed, their uptake continues to be challenged by two factors. First, the carbon intensity of electric production which directly impacts the environmental benefits of BEBs. However, hope lies in the growing share of renewables in grid electricity, which is making the environmental case for electric buses stronger than ever. Second, the high upfront costs of these technologies pose a significant challenge to cash-strapped public agencies and private operators, most of which do not have access to affordable financing options. Thankfully, the cost of battery technology—the main cost component of an electric bus—has dropped sharply in recent years, lowering the lifecycle cost of electric buses.
The project also looked at the marginal cost of reducing a ton of CO2 emissions when switching from diesel buses (Euro V) to clean bus technologies. To evaluate this, we computed the total cost of ownership for each technology as well as the externality costs of air pollution (NOx and PM). BEB’s, we found, offer the highest CO2 reduction potential of the technologies analyzed, and that cost effectiveness is highly dependent on bus acquisition prices and financing costs. The comparison across technologies yields different results for each city due to variations in purchase price, diesel subsidies, and interest rates. Other important factors are corridor characteristics, nature of concession arrangements, and the all-important ingredient: political will. With the lowest interest rates in the region and competitive tendering processes, Santiago is leading the way in BEBs implementation in the region. Rethinking diesel subsidies and supporting green financing could help other LAC cities follow suit.
Beyond technical aspects, the Clean Bus project connected a range of stakeholders to serve as a cross-country community of leaders committed to the clean mobility agenda. The group brings together representatives from Ministries of Transport, Energy, Environment and Finance, as well as private bus manufacturers, operators, public transport management companies, and commercial financial institutions. With NDC Support Facility funding, the World Bank recently co-organized the “Green Your Bus” workshop in Brazil, in partnership with the World Resources Institute (WRI) and the German Organization for Development Cooperation (GIZ). Focused on Latin America’s sustainable transport agenda, 83 participants from 12 cities and 9 countries, including financiers, manufacturers, national associations of operators, transit agencies and think tanks from Europe, the US, China and India, showcased city-specific experiences and discussed policy and implementation challenges to wider adoption of e-mobility.
There are many obstacles that stand in the way of clean mobility, yet the example of Santiago and other cities shows that change is possible. Building on this first phase of research and policy discussion, the World Bank Group will now work closely with cities across Latin America to create the right conditions for scaling up clean vehicle technology, always keeping in mind the opportunities and constraints specific to the local context.