STORY HIGHLIGHTS
- The Clean Bus project, which is supported by the World Bank’s Nationally Determined Contributions (NDC) Support Facility, has demonstrated the potential for cost-effectively scaling up clean mobility in Latin American cities. The project has also helped mobilize a multi-sectoral community of leaders committed to achieving the region’s climate mitigation goals.
- Decreasing battery costs coupled with a growing share of renewables in the electric grid hold promise for overcoming obstacles that have typically stalled the uptake of electric vehicles in Latin America and elsewhere.
- The Chilean capital, Santiago, is a frontrunner in the adoption of battery-electric buses in the region. Rethinking diesel subsidies and mainstreaming green finance – efforts that have been made by officials in Santiago – will help other Latin American cities scale up clean mobility and make progress on their NDCs.
This marked a first in the region, and images of the state-of-the-art buses driving in convoy toward their new home in Chile’s capital city drew international attention.
This transformation is expected to help the country meet one of the targets included in its Nationally Determined Contributions (NDCs) that were set in the run-up to the Paris Agreement. The specific target calls for a 30% reduction in GHG emissions per unit of GDP by 2030, with transportation being one of the main sectors for mitigation.
The story of Santiago, however, remains an exception in the region. Though Latin American countries have signaled their intentions to embrace a low-carbon future, the transition to low and zero-emissions vehicles has been slow. To better understand the challenges of accelerating the adoption of clean technologies in Latin America, the World Bank supported the Clean Bus project including through the NDC Support Facility.
The Clean Bus project was implemented in five cities across the continent: São Paulo, Mexico City, Santiago, Buenos Aires, and Montevideo, all of whom are cities of member countries of the NDC Partnership. A city-by-city diagnostic was undertaken to compare 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. BEBs emerged as the most energy-efficient option across technologies, although their uptake continues to be challenged by two factors: their carbon intensity and high upfront costs. However, the recent sharp drop in the cost of battery technology—the main cost component of an electric bus — as well as an increasing share of renewables in the grid, are helping to overcome these challenges.
The project also evaluated other factors influencing the uptake of BEBs, including fuel subsidies, market competition, transport corridor characteristics, and most critically, political will across the five cities. Among other things, low interest rates and competitive tendering processes have helped Santiago take the lead in the use of BEBs. Other Latin American cities can follow suit by promoting greater competition in their public transport industries and adopting concession models. Likewise, rethinking diesel subsidies and scaling up green finance remain crucial to addressing key market and policy barriers to the widespread adoption of electric buses.
The Clean Bus project has also played an important mobilization role, connecting a range of stakeholders committed to the clean mobility agenda, including representatives from Ministries of Transport, Energy, Environment and Finance, as well as private bus manufacturers, operators, public transport management companies, and commercial financial institutions. These new networks have created innovative spaces for engagement. For example, with funding from the NDC Support Facility, the World Bank co-organized a “Green Your Bus” workshop in Brazil, in partnership with the World Resources Institute and the German Organization for International Cooperation that focused on Latin America’s sustainable transport agenda. Workshop participants from 12 cities across 9 countries - financiers, manufacturers, national associations of operators, transit agencies and think tanks – came together to showcase city-specific experiences and discuss solutions to drive a wider uptake of clean mobility.
Building on this first phase of research and policy discussion, the World Bank will now work closely with cities across the continent to create the right conditions for scaling up clean vehicle technologies, considering local opportunities and constraints. The NDC Support Facility remains committed to supporting this low-carbon transition and enhance the climate ambitions of Latin American countries.
Project Team Leaders:
Bianca Bianchi Alves is a Senior Urban Transport Specialist at the World Bank. She can be reached at bbianchialves@worldbank.org
Kavita Sethi is a Senior Transport Economist at the World Bank. She can be reached at ksethi@worldbank.org
