GREEN YOUR BUS RIDE Clean Buses in Latin America Summary report January 2019 i Clean Buses in Latin American Cities Transport is the fastest growing source of greenhouse gas emissions worldwide, responsible for 23% of global CO2 emissions from fuel combustion. Driven by the unprecedented rate of urbanization and demand for transportation, transport has become the largest contributor of greenhouse gas emissions in Latin America.1 1 IEA (2015), IADB (2013). ii Clean Buses in Latin American Cities |  Overview 1 1 Introduction 7 Overview of Clean Bus Technologies 8 2 Total Costs of Ownership 11 World Bank TCO Estimates 12 3 Cost-Effectiveness Analysis 15 4 Enabling Environment 21 What makes a good enabling environment for the implementation of clean buses? 22 Diagnosis of Current Situation A. Public Transport Systems 24 B. Environmental Policies 26 C. Energy Sector 28 D. Governance and Markets 30 E. Funding and Finance 32 Self Evaluations 33 5 General Recommendations 35 6 City-Specific Recommendations and Implementation Roadmaps 39 A. Buenos Aires 40 B. Mexico City 44 C. Montevideo 47 D. Santiago 50 E. São Paulo 53 Conclusions 57 References 59 Appendix A: Key Assumptions for World Bank TCO Analysis 61 Appendix B: TCO Estimates for each of the Five Cities 65 iii Clean Buses in Latin American Cities Acknowledgements This report is a product of the staff of The This report was developed by Steer for the World Bank with external contributions. The NDC Clean Bus in Latin America and the findings, interpretations, and conclusions Caribbean (LAC) Project led by Bianca expressed in this volume do not necessarily Bianchi Alves and Kavita Sethi, and the team, reflect the views of The World Bank, its Board including Abel Lopez Dodero, Alejandro of Executive Directors, or the governments Hoyos Guerrero, Diego Puga, Eugenia they represent. Yeghyaian, Fiamma Perez Prada, Hellem Miranda, Monica Porcidonio, Pedro Orbaiz, The World Bank does not guarantee the Ranjan Bose, Roberto Abraham Vargas, accuracy of the data included in this work. Steve Winkelman, and Yin Qiu. The report The boundaries, colors denominations and received detailed contributions by Abel Lopez other information shown on any map in this Dodero, Pedro Orbaiz, Steve Winkelman work does not imply any judgement on the and Yin Qiu. The authors would like to thank part of The World Bank concerning the legal peer-reviewers Dominic Patella, Ivan Jaques, status of any territory or the endorsement or Franck Taillandier and Marius Kaiser for the acceptance of such boundaries. valuable contributions. The team would also like to thank Practice Managers Shomik Raj Mehndiratta and Juan Gaviria, and Sector Leader Paul Procee for their guidance and support. iv Clean Buses in Latin American Cities | Overview Overview This report presents the findings of a comprehensive study on the drivers and barriers to the uptake of cleaner technologies for public transport in five cities in Latin America: Buenos Aires (Argentina), Mexico City (Mexico), Montevideo (Uruguay), Santiago (Chile) and São Paulo (Brazil). These cities were selected to represent a range of sizes, demographics, economies, transport systems, and governance structures in the Latin America region. Their diverse experience is valuable for informing regional replication efforts on clean bus technologies. To transform transportation in Latin America for sustainable development, the World Bank has been using a conceptual framework of “Avoid-Shift-Improve”: “Avoid” unnecessary motorized trips by creating more compact and productive cities; “Shift” to more efficient and integrated modes such as public transport and non-motorized modes; and “Improve” the environmental and safety performance of vehicles, as well as the operational efficiency of transport systems. In recent years, a range of clean vehicle technologies have gained increasing appeal in cities due to their multiple benefits derived from converting energy efficiently to vehicle movements, and the region, the World Bank is conducting a higher compatibility with renewable energy, and programmatic approach aimed at accelerating lower tailpipe and lifecycle emissions compared the transition to clean technology buses. This with conventional buses. These technologies approach embraces knowledge sharing, strategic could improve air quality and public health planning, capacity building, and financing of in cities overall, as well as benefiting climate projects identification. This promising agenda change globally. They also bring an opportunity received funding support from the NDC Support to rethinking about how to make public transport Facility (http://www.worldbank.org/en/programs/ more attractive to citizens. The transition to clean ndc-support-facility) as a contribution to the NDC buses will thus achieve substantial benefits not Partnership (http://ndcpartnership.org). only by “improving” actual bus performance, but The terms “clean technology bus” or “clean bus” also by “shifting” people from private vehicles on are used interchangeably in this report to refer to public transport - essential for reducing carbon to a variety of advanced technologies involving footprints in general, relieving traffic congestion lower-emission energy sources, such as clean and improving overall urban efficiency. diesel (Euro VI equivalent), compressed natural Given the limited information on the barriers gas (CNG), battery-electric (BEB), hybrid diesel- and opportunities existing in individual cities electric (Hybrid or HBD), biofuel and hydrogen- 1 Clean Buses in Latin American Cities powered buses. The clean bus concept in and municipalities in nine countries. Also present general entails cities adopting a noncommittal were regional stakeholders, including financiers, technology-neutral approach while they conduct manufacturers, national transport operators’ evidence-based assessments of specific bus associations, energy distributors, and partner technologies tailored to local conditions. organizations, consulting firms, and research The study includes diagnostics, consultation institutes from the US, China, UK, India and and recommendations regarding the drivers and Spain. The discussions and feedback from the barriers to the uptake of cleaner technologies event were used to fine-tune the findings and for public transport in five cities in Latin America: recommendations in this report. Buenos Aires (Argentina), Mexico City (Mexico), This report first presents an overview of the five Montevideo (Uruguay), Santiago (Chile) and cities and a variety of clean bus technologies São Paulo (Brazil). These cities were selected (Chapter 1), the total costs of ownership of to represent a range of sizes, demographics, different clean bus technologies in each city economies, transport systems, and governance (Chapter 2), and an analysis of the cost- structures. Their experience is valuable for effectiveness of emissions reductions in the informing regional replication efforts on clean bus local contexts (Chapter 3). This is followed by technologies. a summary of the diagnostic findings grouped The data collection methodology included into five key factors that constitute the enabling reviewing the latest technical literature and environment (Chapter 4): A. Public Transport local workshops and interviews with primary Systems, B. Environmental Policies, C. Energy stakeholders in all five cities. The stakeholders Sector, D. Governance and Regulation, and E. included key players from government institutions, Funding and Finance. Chapter 4 also includes the vehicle manufacturers, financial institutions, self-evaluation results2 from LAC counterparts. bus concessionaires and civil society. Data The report goes on to provide general collection sought to identify the main barriers recommendations for improvements within each and opportunities for the uptake of clean buses, of the five factors, categorizing each intervention by analyzing the five key factors of their enabling as essential, desirable or supportive of the level environment: Public Transport, Environmental of priority (Chapter 5). The report concludes by Policy, Energy and Infrastructure, Governance recommending specific interventions for each city and Regulation, and Funding and Finance. and displays an implementation roadmap with suggested specific timeframes, priority levels and required stakeholder involvement (Chapter 6). Public Transport Clean Bus Technologies The performance, emissions and costs of Funding and Environmental clean bus technologies can vary significantly Financing Policy The Five depending on local conditions, including corridor Enabling Factors characteristics, energy prices and the market availability of vehicles and parts. The optimal choice of clean bus technology for a particular city or corridor will depend on a variety of factors, Governance Energy and and Regulation Infrastructure including which emissions (e.g. air pollutants or CO2) are of greatest concern. Feasibility considerations such as upfront costs, availability of finance, ease of operation and maintenance, The work ended with a three-day regional training institutional capacities, and political will, also event in Iguassu Falls, Brazil. The event was need to be considered. attended by Latin American and the Caribbean 2 The self-evaluation exercise, carried out during the Iguassu Falls workshop, (LAC) counterparts from ministries of transport, involved stakeholders from each country. This is a subjective evaluation that reflects the knowledge of the participants at the workshop but who did not energy, environment, and finance from 12 cities necessarily possess information on all the relevant areas. The evaluation does not represent the view of The World Bank or Steer. 2 Clean Buses in Latin American Cities | Overview BEBs, with zero greenhouse gas (GHG) and higher Total Costs of Ownership (TCO)3 than air pollutant emissions at the tailpipe, are the diesel buses but, according to Bloomberg, most most energy-efficient option among the clean BEBs are expected to have lower TCO than diesel bus technologies, and typically have the lowest buses within 2 - 3 years, and the upfront costs lifecycle GHG emissions (grams CO2 per km) for BEBs are projected to be equivalent to diesel under a well-to-wheels (WTW) analysis. However, buses by 20304. the carbon intensity of the electricity grid (grams TCO analyses were undertaken for the five CO2 per kWh) and corridor-specific drive cycles Latin American cities using local, national and (speed, acceleration, deceleration) significantly international data sources, and considering impact GHG emission rates. Euro VI diesel buses different bus technologies5 such as: diesel (the have low air pollutant emission rates, but higher baseline for each city), overnight depot and fast CO2 emissions than BEBs. CNG buses have low "opportunity" charging BEBs, HBD, CNG, and particulate (PM) emissions, but higher CO2 and biofuels. smog-precursor emissions (NOx) than Euro VI The TCO evaluation revealed that vehicle buses. Net GHG emissions from biofuel buses acquisition costs are different in each city, and depend on their energy source and production that competitive processes (e.g. Santiago)6 can method, with PM levels similar to Euro VI diesel, sometimes lower costs. Moreover, green financing but higher NOx emissions. mechanisms can offer significant benefits in Total Cost of Ownership countries with high interest rates. Clean bus technologies have higher upfront 3 Total Costs of Ownership (TCO) include the lifetime costs of vehicle purchase, capital costs than diesel buses, but these infrastructure, operations and maintenance, labor, battery overhaul and taxes on vehicles and fuels. are often offset by lower operational and 4 Bloomberg New Energy Finance, 2018. Electric Buses in Cities: Driving Towards Cleaner Air and Lower CO2. maintenance costs. Current BEBs generally have 5 These technologies are not necessarily present today in all cities evaluated. The selection of bus types by city has been determined based on clean bus technologies that the transportation ministry or key institution has set for evaluation, but they have also been validated with the Local WB consultant. 6 BEB prices before applicable taxes in Buenos Aires and Montevideo are 42% and 50% higher than in Santiago (comparing the same vehicle model). 3 Clean Buses in Latin American Cities Cost Effectiveness Analysis • High upfront costs of clean buses, especially for BEBs, pose a significant barrier to short-term The World Bank conducted a cost-effectiveness uptake, principally in some cities where vehicle analysis of the marginal abatement cost (MAC) prices are still high. of reducing a tonne of CO2 emissions7 when • Electricity distribution networks under switching from diesel buses (Euro V)8 to clean bus development. The vast majority of technologies. The analysis considered TCO for transportation energy use in the five cities is each technology, as well as the externality costs based on oil. However, most of the national of air pollution (NOx and PM). Cost-effectiveness governments have set objectives to increase analysis is dependent on a set of factors that electricity production from renewable sources. vary over time (e.g. as technologies evolve), and New investments will be needed in local are subject to local interpretation.9 Therefore, the electricity distribution networks to support high results summarized in this report should be taken BEB penetration, including for fast-chargers. as a depiction of the current situation at the time of publication, and broader generalizations are • Market competition. High concentration of not advised. public transport service delivery by a few companies with strong market power can lead Diagnostics of Key Barriers and to low levels of service, inefficiencies, and high Opportunities fares. Limited market competition presents a significant barrier in most cities and current bus Of the various factors impacting the pace of operators are resistant to change operating adoption of clean technologies in urban transport practices and technologies. in the five cities, the following issues emerged as key challenges: • Understanding and managing the new institutional frameworks. The need for • Public transport system inefficiencies − such complex institutional coordination and as from informal services offered by small constraints on competition are emerging as vehicles with high costs of operation, low- key barriers to the development of the market quality service and increasing expenditures are for cleaner bus technologies. Forthcoming of greater concern to both the city authorities concession tenders in Santiago and São Paulo and the public than emissions of CO2 or air present potential opportunities for introducing pollutants. clean buses. Electricity providers can serve • Small-scale interventions and lack of data as strategic partners in deploying BEBs, and on costs and performance. Lower-emission there are opportunities to expand clean bus buses represent about only one percent of all manufacturing capacity. buses in the five cities. While some technologies • Lifting financing constraints. Cities face have been piloted in the five cities, operators financial challenges in enhancing the quality, express general concerns about the costs, frequency and coverage of public transport performance, operations, and maintenance systems. The cities face conflicting pressures of unfamiliar technologies. A lack of data on to keep fares low (i.e. to increase affordability) actual local costs and energy,environmental, and to minimize fare subsidies (i.e.to meet and operational performance is also a barrier budget constraints). The higher upfront costs to comprehensive technology comparisons. of clean buses can exacerbate funding and finance challenges, especially since commercial banks and often operators have only minimal knowledge of clean bus technologies and seek 7 Marginal abatement costs are a ratio of incremental cost-effectiveness calculated by taking the difference in costs between clean buses and Euro V to avoid market risks. diesel buses and dividing that by the difference in CO2 emissions. 8 We assume a base technology of Euro V for diesel buses for consistency • Procurement processes tend to focus on across the five cities. This is a conservative estimate since the buses in the five cities have higher real-world emission performance than what the standards reducing upfront costs rather than minimizing claim. 9 In the presentation of the results below we consider a technology to be “cost TCO. effective” if the marginal abatement cost is negative, i.e., generating a net cost savings compared to the base technology. Each city or country may have their own threshold as to what $/tonne level is desirable given other mitigation options and co-benefits considered. 4 Clean Buses in Latin American Cities | Overview • Nascent environmental policies for • Improving data collection on air and noise alternative technologies. All five cities are pollution is essential in order to capture more working to reduce GHG emissions and improve fully the benefits of clean vehicle technology Te Cha Pirámde de Cerro na lm Tenayuca Chiquihuitle yu a ca OLIMPICA air quality, but often lack data to support and Sn. Javier • Public Authorities should provide stakeholders San José Periférico Mario Colín TLALNEPANTLA Alfredo del Mazo target policy development. Noise pollution is a Periférico timely and up-to-date information on the Aragón Acueducto ECATEPEC ca hu significant concern but has attracted limited ac capacity of power distribution networks and the -P De los Olivos o xic Ceylàn z Mé z Ba Ticomán re Ce ( policy attention. The cities lack experience á o FES Ju Adolfo López Mateos av nt 100 Valle del Guadiana 1P adequacy of the charging infrastructure Ixtalcala ra M st te Gu lL e Va . C tr a ll Ví ár os) ej de o of regulating BEB battery disposal and need na s Ac • City and national governments could join hands ue Gran Canal Naucalpan - Ecatepec (Cuota) Othón du MUZQUIZ ct o for energy policy tools to support battery reuse 165 1/2 Ote Centenario with research institutes and academia to share IPN F Azcapotzalco N IP 260 Periférico Río de los Remedios M. de Anda 168 Nueva storage. Pte 152 CP 167 Atzacoalco 166 INDIOS the state-of-the-art battery technology with POLITECNICO LL VERDES ROS 5 Nte CP IPN 264 263 RIO DE LOS REMEDIOS 31 Tic I 259 Derportivo Reynosa CP General Recommendations 0 om 1 Pte Vallejo G 258 Depósito Industrial Insurgentes án IPN Unidad respect to electric vehicles El Rosario Vallejo UAM Zacatenco LL San Felipe de Jesús EL ROSARIO Azcapotzalco 5 Nte LL G Pte. 140 5 Nte Montevideo 250 F De las Zapatas Alameda 6 Nte FEL The report includes a number of preliminary I FORTUNA COY Villa de Ayala IMPULSORA • Policies which address market distortions in I del Norte U.H. LL Lindavista MARTIN G FERRERIA DEPORTIVO CARRERA TEZOZOMOC 4 Nte NORTE 45 Vallejo Constitución ARENA CIUDAD DE MEXICO Masagua LINDAVISTA 18 DE MARZO 266 LL recommendations for advancing clean buses. Key AZCAPOTZALCO 177 LA VILLA- LL conventional vehicles the operations of 251 and VALLEJO Instituto del INSTITUTO DEL 265 4 Nte Petróleo PETROLEO BASILICA Morazán Azcapotzalco- La Villa 22 de Febrero 133 4 Nte Euzkaro VLL LL LL La Villa Poniente 128 TDN 178 points include to: Parque CCH LL Deportivo Los Galeana A A harmonize emissions standards will do much to AQUILES SERDAN ezozomoc Tesorería De ARA IPN G Terminal de LL la Poniente 118 Fc razá s I Mo TEZ Autobuses 252 127 Gr o. n Ce del Norte LL Depósito an 5 AUTOBUSES POTRERO TALISMAN Castilla ylà • The selection of clean bus technology should the economic outcomes arising from improve 253 Nt ja DEL NORTE Aragón n s e Lerdo Fabela Loreto S. Poniente 112 Poniente 112 F J. Terminal d J 113 I 112 e Hidalgo Pantaco 180 4 Ar Gran Canal Poniente 106 consider both corridor-specific performance private sector involvement in the adoption of Petrolera J G A Nt 1P ag 4/5 Nte 512 3 Ote E. Molina 101 e POT òn te 3 Nte Cuitláhuac Ta 3 Nte San Isidro J J G G G li sm G G H án CAMARONES H VILLA DE 3 Nte A. Albino Corzo Ce San Juán de Aragón Ca 3 aro BONDOJITO requirements (e.g. distance, speed, capacity, vehicles clean 117 ARAGON Misterios nt Guadalupe Nt ne m 111b ra Tezozomoc 3 Nte 508 e s LA RAZA l Depósito G Azcapotzalco Aquiles Serdán I LL Bosque de Aragón 111a J A noise) as well as the availability of city-wide Azcapotzalco 8 • Improving market competition and concession Tacuba - VALLE G 60 GOMEZ 3 Nte 506 Río Consulado MISTERIOS 125 H BOSQUE DE infrastructure Circuito Interior G ARAGON lis 103 of 248 processes can advance the deployment 553 Felipe Massenet Río Consulado ac po 5 May. REFINERIA Villanueva F hu Loreto Fabela lio 503 BEE itlá He Cu CONSULADO Chopin LL J 249 • A Total Cost of Ownership (TCO) methodology clean buses I C. de la Uniòn Santa Lucía Parque Bicentenario 2 Nte Eulalia Guzmán 2 Nte M. Glez. ARAGON Manuel MOL EDUARDO 602 MOLINA G 2 Ote TLATELOLCO González DEPORTIVO OCEANIA H Ca L. Cárdenas is recommended to evaluate the financial Insurgentes l tria 246 247 Guerrero Ind t. I. m Reforma Central ar us Norte 1 Pte U.H. ico . In on Cir ío Nonoalco A cn Cir es 107 cu Co R IPN Unidad Cir Tlatelolco ito ns CANAL Aduana cu performance of clean technology buses, Sto. Tomás Flores 3 Ote Eduardo Molina Té UATRO CAMINOS DEL NORTE nv Int ulad 105 CUITLAHUAC Magón Del Trabajo 2 Nte Transvaal ala er o Tacuba OCEANIA io 1 Ote ció PANTEONES TACUBA R. Flores r n Magón Mé acu ba - 100 T cu o xic ba POPOTLA particularly BEBs. Ta èxic LL o o Luna xic M I NUN U Mercado Mé J BUENAVISTA LL Lagunilla H rto N ROMERO e GARI G Pu 1 Nte Mosqueta LAGUNILLA TEPITO RUBIO Marina F. Carrillo Puerto N BALDI N Nacional Cir. Int. Puerto Aéreo N N F COLEGIO N N N Ote. 172 MILITAR BUENAVISTA GUERRERO 1 Nte Héroe a ria 226 rm de Granaditas Peña y Peña MORELOS ga N Repúbica fo U V Le Re de Perú Gaona Violeta a SAL Violeta ní Mariano Escobedo V N ea Ma V A Oc rin NORMAL LL M. Alemán a RICARDO G Santa Veracruz Aeropuerto Internacional Na Radial Río V FLORES REVOLUCION Bellas H cio 1 Ote Circunvalación H. de Nacozari San Joaquín Artes MAGON de la Ciudad de México na J l SAN HIDALGO BELLAS ALLENDE F I COSME LL ARTES TERMINAL Tomatlán AEREA Pino Suárez SAN JOAQUIN Independencia V Moliere Conjunto Juárez Madero U Madero CARSO L. Cárdenas V N 20 Nov. Centro 1 Nte 17 N Central SAN F SAN LAZARO Izt M. de Cervantes Sullivan Histórico 174 3 po JUAREZ JUAN DE ac A LETRAN Pt ZOCALO F Oc t. am cíh Reforma e or . In CANDELARIA W Th ua Victoria W lch Cir Ejército Nacional Parque Vía W Uruguay 173 ie tl República Nt 2 rs e Pt Balderas de Uruguay W 13 e W W 2 Me Morelos 17 Rí Salvador 3 M. fé o e. 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Resina 156 Ñ C S Y Morena Ñ C COYUYA ETIOPIA Ciudad Deportiva Ñ Viaducto M.A. Soria XOLA C Ñ C PLAZA DE LA 4 Sur Xola UPIICSA 3 4 TRANSPARENCIA Ñ C B Iztacalco Su 3 Ote Fco. del Paso Su 164 r r B C Ñ B C Ñ S FC Centro SCOP Sn 4 Sur Xola XOL 4 Sur Plutarco 2 Ote De la Viga A. Molina Enrìquez Rio .R Xola / Tlalpan Elías Calles o C af Fr sc Cumbres de ae ce to io li Correspondencia r rra F Ja Acutzingo Be uc lA Su Av. Coyoacán Cuauhtémoc 1 Ote R. Viad tli es Div R xc Ma SAN PEDRO nt M 148 o 1 Pte isió ltr Vasco de Quiroga DE LOS PINOS ge ALVARO IZTACALCO Canal de Tezontle at Guipuzcoa 162 ur n VILLA DE C Ñ S a A. Lópz Mateos OBREGON Luz Saviñón Ins de M Periférico Blvr. 143 CORTES M IZT lN Canal de Tezontle 5 Sur Eugenia 5 Sur R. 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Int. e Laurent O na ad s ACULCO id División TET O Q rs 108 Veinte 241 ive 7 Sur de Gabriel Tenayuca / 102 del Norte PORTALES Depósito 139 Central de Abasto Un Municipio A Eje MIXCOAC 1 2 4 6 Félix Cuevas Moras Noviembre Mancera Cuauhtémoc Vértiz Libre Central 7 Sur Tetepilco 140 Circuito Interior D D Plutarco Río Churubusco F R D Tokio Mpio. Rumania Miravalle Elías Calles D F 3 Ote 3 5 Oso Fresas HOSPITAL 20 Zapata Av. 5 Aniceto PARQUE DE NOVIEMBRE Ortega DE LOS Y Libre P INSURGENTES ZAPATA 5 Ote J. Rojo Gómez Mixcoac 1 Patriotismo SUR VENADOS 7A Sur 102 120 Arboledas 159 2 Poussin 110 Emiliano R 3 Augusto Rodín Tajín E. Zapata Zapata Sur 69-A D Tetepilco 4 Jerez CRU D ESCUADRON Sur 73 o 201 alg 5 Insurgentes División 6 Insurgentes 110B 8 Sur Eje Canarias Hid del Norte Central Popocatépetl Popocatepetl MEXICALTZINGO E E E R E E s 8 Sur J. Ma. 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Zamora Viveros R 190 Alta Tensión de Coyoacán 3 Ote Arneses Irlanda T F Cerro de 001 TASQUEÑA la Estrella 5 Pte Leones 5 Vito Alessio Robles 114 1 P ad América 126 CUL id FIN TASQUEÑA R rs ive Las Águilas 130 División del 002 Un Norte Tasqueña 9 Sur Miguel Ángel de Quevedo 9 Sur Taxqueña GAR Ròmulo O’ Farril L K A K L T K L Altavista L K L K L T 138 MIGUEL ANGEL Central TAS Cerro A Revoluciòn DE QUEVEDO 2 Ote Escuela Pa Huitzilac Central de K CULHUACAN Naval Militar 136 c Autobuses San Lorenzo División del Norte K ífi C Desierto de los Leones co del Sur L ico LAS TORRES 1 004 255 ér 189 rif L R Pe 003 Tlá Panteón 10 Sur Pedro E. Ureña Santa Ana T hu 212 R K SAN ANDRES 1 ac Glaciar Las Águilas COPILCO CIUDAD JARDÍN R T TOMATLAN 25 6 Clean Buses in Latin American Cities 1 Clean Buses in Latin American Cities | Introduction Introduction Clean buses cover a variety of fuel and vehicle technology combinations. This report considers the following technologies: Euro VI Diesel, Compressed Natural Gas, Biofuel, Hybrid diesel and Battery Electric Buses. Specific clean bus technologies face a variety performance (range, efficiency), and environment: advantages and disadvantages in categories GHGs, air pollution, land use, water use and such as costs (vehicles, infrastructure, energy, quality. Table 1.1 below summarizes the key operation and maintenance, secondary advantages and deterrents of clean bus market value), feasibility (technology maturity, technologies, which are further discussed below. commercial availability, fuel availability), Table 1.1.: Advantages of and deterrents to clean bus technologies. Technology Advantages Deterrents • Existing technology • Lowest purchase costs • High GHG emissions Diesel - Euro VI • No need for new infrastructure • Subject to availability of ultra-low • Much lower PM than older diesel tech sulfur diesel • Known secondary market value • Readily available from manufacturers • Emission advantages over Euro VI diesel are modest compared to Compressed Natural Gas • Moderate to low purchase price other clean bus technologies (CNG) • Modest price premium compared to other • Infrastructure upgrades needed if clean bus technologies no existing network • Higher NOx emissions than Euro VI diesel • GHGs can be 40-60% lower than diesel, Biofuels • Potential land use concerns: GHGs depending on feedstocks and competition for food crops • Water use and quality concerns • 20-30% GHG reduction • Relatively mature technology • Emission benefits depend strongly Hybrid Diesel Electric on duty cycle and driver efficiency (HBD) • Lower operation costs • Higher acquisition cost than diesel • No new infrastructure needed • Zero tailpipe emissions • Very high bus purchase price • 50-100% GHG savings (depends on electricity source) • Secondary market value uncertain • Lower maintenance and operation costs • Evolving technology with limited Battery Electric (BEB) commercial application in LAC • Starting to become commercially available • Electricity distribution infrastructure • Battery costs declining rapidly upgrades needed for rapid-charging • BEBs expected to have same upfront cost as • Range limitations for some BEB diesel by 2030 • Currently in an experimental stage • Zero tailpipe emissions Hydrogen with high vehicle costs • 50-100% GHG savings • High infrastructure costs Source: Based on Carnegie Mellon University (2017), Steer (2018), EU (2014), Delucchi (2010) and Bloomberg (2018) 7 Clean Buses in Latin American Cities Diesel - Euro VI BEB Euro VI diesel buses are commercially available Battery electric buses are an evolving technology and have the lowest purchase costs of the clean that is just starting to be commercially available bus technologies examined. Existing secondary in Latin America. BEBs require high upfront costs markets for used diesel buses creates value for vehicle purchase, but entail lower maintenance for fleet owners that is not currently available and operating costs. Secondary markets for for newer technologies. Euro VI diesel does not BEBs do not currently exist, thus reducing their require new transportation infrastructure, but full value for fleet owners. With rapidly declining does require market availability of ultra-low sulfur battery costs the TCOs of BEBs are expected to diesel, which may require changes in fuel supply be lower than diesel over the next few years. BEBs infrastructure (importing, refining, distribution). may require electricity distribution infrastructure From an emissions perspective, Euro VI diesel offer upgrades (such as for rapid-charging). BEBs do only modest GHG benefits, and have significantly not emit local air pollutants and offer potential lower PM and NOx emissions rates than older GHG savings of 50-100% depending on the diesel technologies, but not as low as BEBs. sources of electricity generation. Some BEBs face range limitations in terms of the number of CNG kilometers that they can drive per charge or per Compressed natural gas buses are readily day, so technology selection must be carefully available from manufacturers at a modest aligned with route requirements. price premium compared to other clean bus Hydrogen technologies. Infrastructure upgrades would be required if there is an inadequate network for Hydrogen buses are currently at an experimental CNG distribution. CNG buses emit more CO2 stage and face both high vehicle and and NOx than Euro VI diesel buses but have the infrastructure costs. As with BEBs they have zero potential for significant reductions in particulate tailpipe emissions and have the potential for 50- emissions. 100% GHG savings, depending on the hydrogen production and transport methods. Biofuels Emissions and Noise Pollution from Biofuels from a range of feedstocks can be used Clean Bus Technologies to power urban buses including biodiesel and bio-CNG. Greenhouse gas emissions from biofuels Air pollutant and GHG emissions are a function can be 40-60% lower than diesel, depending of energy source and vehicle technology.10 Bus on feedstocks and production techniques, but emissions can also vary significantly depending NOx emissions are much higher than for Euro VI on local and technological conditions such diesels. Biofuel feedstock cultivation can lead to as drive cycle (speeds, acceleration and environmental concerns including water use and deceleration) and the condition of emission water quality as well as concerns about land use control devices. Electric buses tend to have the impacts on GHGs and competition for food crops. lowest overall emissions rates, CNG buses have low PM10, but relatively high CO2 emissions, and HBD Euro VI diesel buses perform well for air pollution Hybrid diesel-electric buses are a relatively but not for CO2. mature technology with higher upfront costs Thorough GHG analysis should consider full life- than diesel and potentially lower operating costs. cycle emissions, including upstream emissions Hybrids offer low to moderate GHG savings, but (e.g. electricity generation, biofuel production, GHG benefits depend strongly on drive cycle and methane leakage from natural gas pipelines), fuel driver efficiency. refining processes, and downstream emissions (e.g. vehicle re-use and disposal). 10 Exposure to particulate matter (PM), especially that smaller than 10 microns, can penetrate deep into the lungs and has been linked to lung and heart ailments (US EPA, a). Nitrogen oxides (NOx) contribute to ground-level ozone pollution, which harms breathing and aggravates lung diseases (US EPA, b). 8 Clean Buses in Latin American Cities | 1 The life-cycle data in Table 1.2 indicates that Each city has its own local character in terms low-speed urban operation has higher GHG of operation, regulation, stakeholders and emissions than medium-speed urban or higher- environmental conditions, making each of them speed commuter buses.11 BEBs have the lowest unique. Moreover, they differ in size, ranging lifecycle GHG emissions, which vary significantly in population from 1.7 to 21.4 million on the depending on the energy matrix. Biofuel emission metropolitan scale, and from 1.4 to 12.1 million at rates also vary greatly depending on their city level. feedstock and production method. Given the significant variation in clean bus performance rates it is essential to measure the actual energy efficiency and emissions rates for clean bus technologies under local driving conditions and energy systems. Pilot testing and ongoing measurement will help inform effective clean bus technology selection and deployment strategies. 11 An average of low and medium speed CO2 values were applied for the cost- effectiveness analysis to reflect typical urban driving conditions in the five cities. The specific emissions factors applied for each bus type and city are displayed in Appendix A. Table 1.2: Well-to-wheel GHG emissions (g CO2e / km). Technology Low speed* Medium speed* Commuter / suburban Diesel - Euro VI 2,290 1,840 1,380 CNG - fossil 2,350 1,680 1,200 Hybrid Euro VI 1,800 1,470 1,400 Bio-diesel - plant oils 1,430 1,150 860 Bio-CNG - landfill gas 1,440 1,030 730 BEB - Santiago, Chile 1,070 760 797 BEB - Mexico City 1,050 750 780 BEB - Buenos Aires 860 610 630 BEB - São Paulo 430 310 320 Source: ICCT 2017 *Modeling assumed the Manhattan drive cycle for low-speed routes (average 11 km/h), and the Orange County Transit Authority drive cycle for medium-speed routes (average 19 km/h). 9 10 Clean Buses in Latin American Cities 2 Clean Buses in Latin American Cities | Total Costs of Ownership Total Costs of Ownership The choice of optimal bus technology for a particular corridor or city will be informed by a variety of factors, including which pollutants are of highest concern (e.g. GHGs or health impacts of PM), balanced by cost and feasibility considerations, which vary significantly from city to city. High upfront costs are a major barrier to the uptake Given the dynamic nature of clean bus of clean bus technologies. Better understanding of technologies and variations in local conditions, the total costs of ownership (TCO), including the these assessments should therefore be considered costs of vehicle purchase, infrastructure, operation, as a point of departure for deeper, localized maintenance and disposal, over the lifetime of analysis and measurement. the vehicle is essential for informing finance and procurement decisions and for designing effective business models. Similarly, assessing the cost effectiveness of the various bus technologies, such as for service provision and emissions reduction (next chapter), is critical for policy and procurement decisions. The results of World Bank TCO analyses for each of the five cities are presented in this chapter. These findings are based on data on the current situation, and allow for initial comparisons among bus technologies within each of the five cities, as well as across the five cities. It is important to note that since clean bus technologies and markets are evolving rapidly, current cost estimates and forecasts only represent a snapshot in time that can be expected to change. It is noteworthy that the TCOs of BEBs are decreasing, but the results are highly dependent on local conditions and the battery-charging technology considered. In addition, the acquisition, maintenance and operating costs of clean buses vary significantly across geographies, and information on local costs for non-commercial technologies and maintenance are rarely known with certainty, requiring informed assumptions to support the analysis. 11 Clean Buses in Latin American Cities World Bank TCO Analysis Figure 2.1: World Bank TCO Buenos Aires estimates ($/km) $2.50 The World Bank conducted TCO analyses based on a variety of local, national and international $2.25 data sources, including technical literature and $2.00 $0.12 manufacturer information, exercising professional $0.05 $0.07 judgment when city or country-specific data were $1.75 $0.15 $0.09 $0.05 not available. $0.04 $0.04 $0.07 $1.50 $0.04 $0.05 $0.15 $0.11 $0.12 $0.11 $0.03 The selection of the bus technologies for TCO $0.23 $0.14 $0.54 $1.25 $0.21 $0.23 analysis for each city was based on consultations $0.26 $0.42 $0.22 with local experts, considering implementation $1.00 $0.22 $0.22 potential and the availability of cost data.12 $0.19 $0.20 $0.19 $0.22 $0.55 $0.75 $0.42 $0.22 Appendix A summarizes the key input data and $0.19 $0.20 $0.19 $0.50 assumptions used for these analyses. Staff costs refers only to bus operators. Administrative staff $0.25 $0.57 $0.57 $0.57 $0.57 $0.57 $0.57 costs or common costs to all the technologies, such as tires or fixed costs, are not included. $- $-0.12 $-0.13 The TCO estimates for each of the five cities are $-0.25 Diesel E5 Diesel E6 Biofuel CNG Electric Electric Fast presented in the following figures.13 Depot Charge Charge Staff Capital investment Interest payment Buenos Aires TCO Estimates Maintenance Fuel Fuel tax Purchase tax Fuel subsidy World Bank TCO Analysis indicates that CNG Source: Steer for the World Bank based on various buses in Buenos Aires have the lowest TCO of the sources summarized in Appendix A. analyzed technologies. Due to higher fuel costs and fuel taxes, TCO for diesel buses is higher, but Figure 2.2: World Bank TCO Mexico City estimates ($/km) the fuel cost is subsidized for concessionaires $2.50 (negative bars). Biofuel buses have TCO 6% higher than CNG, due primarily to higher fuel cost and $2.25 fuel taxes. Despite lower fuel and maintenance $2.00 costs, BEBs TCO are higher than the rest of the technologies. $1.75 $0.15 $0.05 $0.05 $0.05 $0.08 $0.08 Mexico City TCO Estimates $0.11 $1.50 $0.34 $0.07 $0.36 $0.19 BEBs in Mexico City have the lowest TCO of the $1.25 $0.49 $0.49 $0.05 $0.33 technologies considered to be due primarily to $0.22 $0.18 lower fuel and maintenance costs. Hybrid buses $1.00 $0.28 $0.34 $0.22 $0.28 have TCO 15% higher than diesel buses, although $0.45 $0.47 $0.75 their fuel cost is lower. Although the TCO for BEBs $0.33 $0.33 $0.36 $0.31 is lower than the rest of the technologies, no $0.50 private concessionaires have tested these buses. $0.21 $0.22 $0.25 $0.34 $0.31 $0.24 $0.25 $0.23 $0.23 $0.23 $0.23 $0.23 $0.23 $- 12 For example, certain vehicle types or fuels might be excluded from analysis if Diesel E5 Diesel E6 CNG Hybrid Electric Electric Fast unavailable in the local market. Depot Charge 13 Amounts in USD. Note that these TCO graphs do not reflect emission reduction Charge benefits. See the next section on cost effectiveness which addresses emissions. Staff Capital investment Interest payment Maintenance Fuel Fuel tax Purchase tax Fuel subsidy Source: Steer for the World Bank based on various sources summarized in Appendix A. 12 Clean Buses in Latin American Cities | 2 Figure 2.3: World Bank TCO Montevideo estimates ($/km) Montevideo TCO Estimates $2.75 TCO for diesel Euro III buses are similar to fast $2.50 charge BEBs in Montevideo. The current diesel $2.25 $0.06 subsidy for bus concessionaires allow diesel $0.12 technologies to be at least 20% more competitive $2.00 $0.06 $0.43 $0.12 than any kind of electric bus. $1.75 $0.13 $0.33 $1.50 $0.13 $0.22 São Paulo TCO Estimates $0.22 $0.15 $0.72 $1.25 $0.13 $0.55 Biofuel and Euro VI diesel buses in São Paulo $0.21 $0.25 $1.00 have low TCOs due to the vehicle costs and moderate fuel costs. Fast charge BEBs have the $0.75 lowest costs among the technologies and depot $0.50 $0.98 $0.98 $0.98 $0.98 charge BEBs TCO is the higher than the rest of the $0.25 technologies. $- Santiago TCO Estimates $-0.38 $-0.39 $-0.25 BEBs in Santiago have the lowest TCO of the $-0.50 Diesel E3 Diesel E6 Electric Depot Electric Fa st C ha rge technologies analyzed, on average, 9% lower than C ha rge for diesel buses. Despite higher vehicle acquisition Staff Capital investment Interest payment costs, the low TCO for BEBs is due primarily to Maintenance Fuel Fuel subsidy lower fuel costs. CNG buses have TCO 8% higher than BEBs due primarily to higher fuel costs, and Source: Steer for the World Bank based on various sources summarized in Appendix A. diesel buses have TCO 9% higher than BEBs due to higher fuel and maintenance costs. Figure $2.50 2.4: World Bank TCO São Paulo estimates ($/km) $2.50 $2.25 Figure $2.25 2.5: World Bank TCO Santiago estimates ($/km) $2.00 $2.00 $1.75 $1.75 $1.50 $0.14 $0.05 $0.10 $1.50 $0.07 $0.09 $0.04 $0.09 $0.06 $0.14 $0.07 $0.25 $- $1.25 $0.11 $0.25 $0.09 $1.25 $0.27 $0.05 $0.41 $0.39 $- $0.17 $0.10 $0.19 $1.00 $0.29 $1.00 $0.11 $0.17 $0.24 $0.15 $0.15 $0.08 $0.52 $0.09 $0.08 $0.08 $0.08 $0.75 $0.39 $0.75 $0.38 $0.24 $0.29 $0.17 $0.17 $0.21 $0.50 $0.50 $0.58 $0.58 $0.58 $0.58 $0.57 $0.57 $0.57 $0.57 $0.25 $0.25 $- $- Diesel E6 Biofuel Electric Depot Electric Fa st C ha rge Diesel E6 C NG Electric Depot Electric Fa st C ha rge C ha rge C ha rge Staff Capital investment Interest payment Staff Capital investment Interest payment Maintenance Fuel Fuel tax Maintenance Fuel Fuel tax Purchase tax Source: Steer for the World Bank based on various Source: Steer for the World Bank based on various sources summarized in Appendix A. sources summarized in Appendix A. 13 Clean Buses in Latin American Cities BEB TCO and Range Considerations There are a variety of BEBs available from is considered. However, BEB vehicle purchase manufacturers with different battery sizes, prices and financing currently have the greatest charging configurations (static depot-charging effect on the total cost of BEBs, as in the case of and en-route fast "opportunity" charging – both Buenos Aires and Montevideo, where BEBs are wireless and overhead contact systems), each less competitive with other technologies. In some with its own associated driving range (e.g. km/ cases, competitive processes (e.g. Santiago) day). BEB selection and TCOs are influenced by can lower costs. Therefore, green financing the daily distance they are required to travel. BEBs mechanisms offer significant benefit in countries with larger batteries can travel greater distances with high interest rates. without en-route charging and cost more upfront. Having presented findings on the total costs The TCOs of BEBs improve in comparison to diesel of ownership of clean buses, the next chapter as the daily travel distance increases (Figure explores the cost-effectiveness of various clean 2.2). This is true even for buses with smaller (110 bus technologies in reducing CO2 emissions. kWh) batteries coupled with more expensive The World Bank conducted a cost-effectiveness wireless charging systems. BEB range can also analysis of the marginal abatement cost (MAC) be impacted by topography (e.g. navigating hilly of reducing a tonne of CO2-equivalent (CO2e) terrain requires more energy than flat areas) emissions when switching from Euro V diesel and climate (e.g. air conditioning leads to faster buses14 to clean bus technologies. The analysis battery discharge). There is no substitute for considered the TCO for each technology, as well local measurement of BEB performance in actual as the externality costs of air pollution (NOx and driving conditions. PM). Cost-effectiveness analysis is dependent on While BEBs currently have higher TCOs than diesel a set of factors that vary over time and context, buses, Bloomberg (2018) projects that within 2-3 and is subject to local interpretation.15 Therefore, years most BEB configurations will have lower the results summarized below should be taken as TCOs than diesel, and that upfront BEB costs will a depiction of the current situation at the time of be the same as for diesel buses by around 2030. publication and broader generalizations are not Growing demand for BEBs could reduce battery advised. prices even faster, resulting in cost parity by the mid-2020s. 14 We assume a base technology of Euro V diesel buses. This is a conservative estimate since the buses in the five cities have higher real-world emission performance than the standards claimed for the European contexts. Both the World Bank TCO analysis and Bloomberg 15 In the presentation of the results below we consider a technology to be “cost effective” if the marginal abatement cost is negative, i.e., generating a net TCO findings show that in terms of costs, cost savings compared to the base technology. Each city or country may have its own threshold regarding what $/tonne level is desirable given the BEB is the best alternative when its lifecycle other mitigation options and co-benefits considered. Figure 2.2: Total cost of bus ownership comparison with different annual distance driven. Source: Bloomberg New Energy Finance, AFLEET, Advanced Clean Transit Notes: Diesel price at $0.66/litre ($2.5/gallon). Electricity price at $0.10 kWh, annual km. traveled - variable. Bus route length will not always correspond. 14 3 Clean Buses in Latin American Cities | Cost-effectiveness Analysis Cost-effectiveness Analysis Cost-effectiveness analysis of the marginal cost of reducing a tonne of CO2-equivalent (CO2e) emissions when switching from diesel buses to clean buses was undertaken based on review of the latest technical literature. The analysis considered TCO and the externality costs of air pollution. Results of the analysis are summarized below. Marginal Abatement Costs Marginal abatement costs (MAC) graphs depict • The vertical height represents the cost to reduce the economic costs of CO2 emission reduction one tonne of CO2 emissions, with negative measures relative to a baseline situation. The values (below the line) indicating net cost graphs show the cost of reducing one tonne savings.16 of CO2 from a particular emission reduction • • The horizontal width of each bar indicates the measure as well as the magnitude of the potential cumulative CO2 reduction potential from each CO2 savings. The inclusion of multiple emission bus technology over its lifetime. reduction measures in one graph allows for The marginal abatement costs for each clean bus comparison across CO2 reduction options. technology vary by city, as indicated below. Note In the case of clean buses, we are interested that the total height (green) of each bar indicates in how the various technologies compare to the marginal abatement costs, while the gray diesel buses (Euro V) in terms of both the cost- portion indicates the marginal abatement costs effectiveness of emission reduction ($ per tonne with the externalities considered, i.e., the benefits CO2) and the potential CO2 savings (tonnes of of reduced air pollution. (Figure 3.1) CO2). Marginal abatement costs are calculated by taking the difference in TCOs between clean buses and diesel buses and dividing it by the difference in CO2 emissions. 16 Note that the magnitude of positive values is an indicator of relative cost- effectiveness (e.g., a technology with a MAC of $20/t CO2 yields greater CO2 The MAC histograms depict the cost and CO2 savings per dollar spent than a technology with a MAC of $100/t). However, the magnitude of negative values does not provide any relevant information reduction potential of each clean bus technology on relative cost effectiveness. Since all the technologies analysed emit less CO2 than diesel buses, negative values only indicate that the TCOs of these as follows: technologies are lower than for diesel. Neither does the magnitude of the negative value reflect the magnitude of TCO reduction compared to diesel. 15 Clean Buses in Latin American Cities Figure 3.1: Interpretation of Marginal Abatement Cost histograms. Less cost- effective CO2 reduction More cost- effective CO2 reduction Marginal Abatement Costs for the Five In Montevideo (Figure 3.4), hybrid buses are Cities currently the only cost-effective clean bus option, with a moderate CO2 reduction potential BEBs The World Bank calculated marginal abatement pose high mitigation costs, due primarily to costs for clean bus technologies in each of the five the upfront costs of BEBs compared to diesel cities. The results are as follows:17 buses. The inclusion of externalities does not In Buenos Aires (Figure 3.2), opportunity charging significantly reduce the high MACs of BEB ($102 BEBs and CNG are cost-effective (negative for opportunity-charging and $210 for depot- values). In contrast, depot-charging BEBs pose charging). high net costs for each tonne reduced (positive In Santiago (Figure 3.5), fast-charging BEBs values), but also high emission reduction potential yield net cost savings, while depot-charging (wide horizontal bar). The MAC of a depot- BEBs pose moderate costs ($13), and low costs charging BEB is $138 per tonne; if environmental with externalities included ($9). , while offering externalities are included, the MAC is reduced to high CO2 reduction potential. CNG buses are the $133 per tonne. least economically viable technology due to high In Mexico City (Figure 3.3), fast-charging and CNG fuel costs in Chile and low CO2 mitigation depot-charging BEBs yield significant cost potential. HBD buses are not cost-effective in savings and have high CO2 mitigation potential. Santiago ($149 per tonne of CO2 reduced). CNG18 buses are deemed cost effective but offer In São Paulo (Figure 3.6), CNG buses offer net only minimal CO2 savings. Hybrid19 buses pose cost savings per tonne of CO2 reduced, but offer very high MAC ($283 per tonne) with moderate trivial CO2 mitigation potential. Fast-charging mitigation potential when compared to other bus BEBs is a cost-effective option under current options. assumptions, with substantial CO2 mitigation potential, while depot-charging BEBs indicate a 17 See Appendix A for details on the inputs and assumptions for the cost- effectiveness analyses. large CO2 reduction potential at a moderate cost 18 We assume Euro III for CNG buses. This is a conservative estimate since the buses in the five cities have higher real-world emission performance than the ($42, or $39 accounting for externalities). Hybrid standards claimed for European contexts. 19 The analysis assumed the same air pollutant emission factors for hybrid buses require $31 for per tonne of CO2 reduced diesel-electric buses as for Euro V diesel buses. This is a conservative assumption based on literature review, showing that hybridization does not and have a moderate CO2 reduction potential. automatically guarantee reductions in regulated non-CO2 pollutants (e.g. NOx) compared to conventional diesel engines, even for buses certified to the same emission standards. 16 Clean Buses in Latin American Cities | 3 Figure 3.2: Marginal Abatement Costs histogram for Buenos Aires Figure 3.3: Marginal Abatement Costs histogram for Mexico City Figure 3.4: Marginal Abatement Costs histogram for Montevideo 17 Clean Buses in Latin American Cities Figure 3.5: Marginal Abatement Costs histogram for Santiago Figure 3.6: Marginal Abatement Costs histogram for São Paulo 18 Clean Buses in Latin American Cities | 3 Insights from Cost-Effectiveness Analyses The cost-effectiveness results presented above do • Lower carbon intensity grids can help reduce not represent definitive findings, but they provide the MACs of BEBs. initial input to local decision making with regard • Under current finance conditions opportunity- to deciding which clean bus technologies may be charging BEBs are cost-effective in all cities the most effective and cost effective for reducing except Montevideo. Depot-charging BEBs are CO2 emissions and reducing the harmful impacts cost-effective in Mexico and require a modest of air pollution. $13 per tonne in Santiago and $42 per tonne in São Paulo. Compressed Natural Gas Buses • Inclusion of externalities diminishes the MAC • CNG buses are cost-effective for CO2 reduction for BEBs by only a few percent in cities where in Mexico, Buenos Aires and São Paulo, but they are not already cost-effective (except provide very low levels of CO2 reduction. CNG for Santiago, where inclusion of externalities buses provide significant reductions of PM reduces the MAC of depot-charged BEBs from emissions relative to Euro V or earlier diesel $13 to $4 tonne). bus technologies, but may increase NOx Countries with highly fluctuating bank lending emissions. On the other hand, Euro VI CNG rates can consider other financial instruments, and Euro VI diesel buses have comparable NOx discussed in Chapters 4 and 5.20 and PM emissions and result in a considerable improvement relative to older technologies. The results of the cost-effectiveness analyses can • Where not already cost-effective from a CO2 inform deeper analyses, including by helping to perspective, the inclusion of air pollution prioritize which technologies to include in pilot externalities decreases the cost-effectiveness of testing and performance measurement under CNG buses. actual local conditions. The ultimate decision on clean bus technology selection will include Hybrid Buses emission reduction cost-effectiveness analysis as • Hybrid buses are cost-effective for CO2 well as other performance, cost and feasibility reduction only in Montevideo, providing considerations. moderate CO2 reductions. In São Paulo, CO2 abatement costs from hybrid buses are $31 per 20 Argentina and Brazil have very high lending interest rates. Large operators in tonne. these countries could avoid their high regional interest rates by negotiating financial agreements with operators. In São Paulo better financial conditions could decrease the TCO of BEBs by around 10%. • Where not already cost-effective from a CO2 perspective, inclusion of air pollution externalities improves the cost-effectiveness of hybrid buses in Mexico City, Santiago and São Paulo to $0 per tonne. Battery Electric Buses • BEBs offer the highest levels of CO2 reduction potential of the clean bus technologies analysed. • Opportunity-charging BEBs are more cost- effective than depot-charging BEBs due to their lower battery costs and their higher efficiency. • The cost-effectiveness of BEBs is highly dependent on bus acquisition prices. • BEBs are more cost-effective in countries with higher diesel prices and lower electricity prices. 19 20 Clean Buses in Latin American Cities 4 Clean Buses in Latin American Cities | Enabling Environment Enabling Environment Effective introduction of clean bus technologies requires evaluation and improvement of five key enabling factors: public transport systems, environmental policies, energy & infrastructure, governance & regulations, and funding & finance. The analysis of those elements provides the framework of deterrents to facilitators for new bus technologies to achieve faster implementation. Figure 4.1: Main factors that influence the enabling environment for clean buses The Five Enabling • System characteristics Factors • Stakeholders (operators) • Route compatibility with technology • Operational costs • Tendering & concessions • Clean bus pilot experiences • Environmental commitments • Funding sources Public • Clean bus standards • Subsidies Transport • Pollution monitoring • Financing instruments • Environmental regulations Funding & Environmental Financing Policy Environment for deploying clean buses Governance & Energy & Regulation Infrastructure • Institutions • Current sources • Regulation • Infrastructure • Procurement • Potential low-carbon sources Source: Steer 21 Clean Buses in Latin American Cities What makes a good enabling environment for the implementation of clean buses? The identification of the primary challenges to reducing atmospheric emissions. Environmental drivers for introducing new clean bus technologies regulations and clean bus standards, such as was conducted using a framework of five key specific regulations for battery disposal and enabling factors, as shown in Figure 4.1. re-use options were also analyzed, as well as the existing air quality monitoring network. To identify the potential to improve urban public transport services by transforming buses into Energy and infrastructure are important clean mobility solutions, we need to understand enabling factors since some clean bus the context of these services in the region. This technologies may require infrastructure upgrades, involves analyzing enabling factors, which such as electricity distribution for rapid-charging include the public transport system of each city, or CNG distribution networks. Energy matrices in order to evaluate the system and its operational and currently available fuel sources were characteristics, such as route compatibility with analyzed in order to identify barriers that may clean bus technologies and operational costs, hinder the uptake of these new technologies. tendering and concessions status, and previous Furthermore, governance, regulation and experience with clean bus technologies. markets were analyzed in order to characterize Environmental policies are a critical enabling the entities responsible for national and local factor, since GHG emissions continue to grow transport policies, and the key characteristics worldwide at a faster pace than populations. of bus concessionaires and their organizations, Climate change is one of the most important fleet conditions and direct or indirect incentives global challenges this century. Given that clean established for fleet renewal. Finally, since clean buses can help cities achieve local and national buses typically have higher upfront costs than GHG and air pollutants reduction targets, each diesel buses and therefore strain municipal country's Nationally Determined Contribution budgets, the currently available options for (NDC) commitments were identified, together with funding and financing clean bus projects in the local laws, where applicable, that set targets for five cities were identified. 22 Clean Buses in Latin American Cities | 4 Figure 4.1: Overview of the Five Cities (data for metropolitan regions, unless otherwise specified). Sources: Steer from: AR: (Presidencia de la Nación, 2017), MX: INEGI, Encuesta Origen - Destino en Hogares de la Zona Metropolitana del Valle de México (EOD) 2017, UY: Montevideo’s Municipality (2017). CL: Encuesta Origen-destino, Santiago, 2012. BR: Pesquisa de Mobilidade da Região Metropolitana de São Paulo, 2012 * From C40 GHG emissions interactive dashboard at http://www.c40.org/other/gpc-dashboard. A) at country level. B) based on a five-year budget. C) not available at this level. D) 2017, E) There is no official information of the exact number of private concessions in Mexico City. 23 Clean Buses in Latin American Cities A. Public Transport Public transport is a vital source of mobility for Motorization rates range from 238 to 578 vehicles many people in Latin American cities and buses registered per 1,000 people. Cities with higher play a very important role in this context due to private vehicle ownership rates tend to have a their flexibility to adapt to urban growth and their higher bus mode share. The per-capita GDP in the ability to provide wide coverage. To identify the five cities ranges from around $8,750 to $15,500, potential for improving public transport services with no clear relationship to modal share. Average in the cities by transforming buses into clean bus fares are about $0.30 in two cities and more mobility solutions, we need to understand the role than $1.00 in the other three, representing the played by them in the region. existence of a range of subsidy policies for both drivers and passengers. Bus fares range from 2% This section presents an overview of the role to 11% of minimum daily wages, with lower ratios the buses play in the five cities addressed by tending to correlate with higher bus mode share. this project. The following section describes the current situation of public transport and the role Bus fleet characteristics vary significantly across of the bus system, current public transport tariffs, the five cities, with fleet sizes ranging from about fare collection mechanisms and operating costs. 1,500 to 30,000 vehicles, and the average bus The processes involved in the development of life ranging from 5 to 20 years (Table 4.1). The bus projects are also discussed, and attention introduction of clean bus technologies can be is drawn to the clean bus technologies already challenging in cities with a large number of tested in each city. operators (such as Buenos Aires and Mexico). While annual bus sales data for the cities are Public Transport System Context not readily available, an estimate can be made In order to understand the enabling environment from the bus market demand from these cities. for clean bus technologies, it is important to Fleets that currently have higher sales rates may consider the current features of the public be better positioned for faster transformation transport systems in the five cities and the factors to clean bus technologies, which could be that influence them. accelerated via fleet rationalization, route optimization and increased scrappage rates. The public transport modal share ranges from 32% to 45% in the five cities and includes rail, The current fleet of cleaner buses operating in the bus and cycling, with buses responsible for the five cities is about 870, which includes 440 trolley vast majority of trips (Figure 4.1). The population buses, 300 CNG buses, 17 BEBs and 14 hybrids. density varies from 461 to 3,341 people per square kilometer, with no clear relationship with public transport modal share. Table 4.1: Bus fleet characteristics Average Average Annual bus Sales as % City Fleet size Operators buses per age sales (estim.) of bus fleet company Buenos Aires 18,412 5 193 95 3,600 20% Mexico City 30,641 ~20A 200+B n/a n/a n/a Montevideo 1,560 13 4 3904 117 8% Santiago 6,681 8.4 7 954 800 12% São Paulo 14,957 5 27 554 3,000 20% Source: Steer from local sources A estimated B two public operators, 16 BRT concessions and 27 corridor concessions, plus an unknown number of individual concessions 24 Clean Buses in Latin American Cities | 4 Figure 4.2: Lower-emission bus technologies in the region. Source: Steer Summary of Public Transport Barriers and Drivers • Adoption of stricter bus emissions standards operation and maintenance of unfamiliar would support the uptake of cleaner technologies such as BEBs. technologies. At present, only Mexico City and • Cities that place age limits on buses help Santiago mandated Euro VI standards for to accelerate fleet renewal, which can feed new buses from 2019 . In the other cities higher secondary markets and create additional value emitting buses make up the majority of the for fleet owners. The lack of secondary markets fleets,21 with no immediate plans to introduce for new bus technologies can weaken the Euro VI models. business model for clean buses. • However, public transport system inefficiencies caused by, for example, informal services offered by small vehicles with high operating costs, seem to be of greater concern to city authorities and the public than pollution from Most cities have tested new bus emissions. The improvement of public transport technologies, but operators are systems, with a move towards larger buses, resistant to change due to concerns could open opportunities for new technologies. about the performance, operations, maintenance and costs of new • Most of the cities have already tested a variety technologies. Although the capital costs of clean bus technologies and electrification for clean bus technologies are higher appears to be a popular technology solution than for diesel buses, these can be in all five countries. Operators are however offset by lower operating maintenance concerned about the costs, performance, costs for CNG, hybrid and BEBs. 21 For example, 50% of Euro III buses in Buenos Aires and São Paulo, 78% Euro III in Santiago, and a mix of Euro II and III models in Montevideo. 25 Clean Buses in Latin American Cities Table 4.2: Country GHG reduction commitments and transportation share of GHGs Argentina Mexico Uruguay Chile Brazil National NDC GHG mitigation target CO2/GDP: CO2/GDP: CO2/GDP: CO2/GDP: -25% vs. BAU -40% vs. 2013 -49% vs. 1990 -30% vs. 2007 -75% vs. 2005 (by 2030) baseline level level level level Transportation sector share of total 24% 32% 50% 31% 48% CO2 emissions Source: Steer with data from CAIT Climate Data Explorer B. Environmental Policies Each country has set nationally-determined planning and strategy development. In Mexico contribution (NDC) goals for mitigating GHG City, São Paulo and Santiago, real-time emissions (with emissions targets set against a information produced by these networks is used range of different base years). to identify dangerous air pollutant concentration Air pollution is an important concern in each of the levels and trigger emergency actions such as five cities due to its impact on health, quality of rationing the circulation of cars and trucks. life and the economy. Each city has an automatic Table 4.3 shows the air quality monitoring stations atmospheric monitoring network that produces for each city and the continuously measured historical data used in local environmental pollutants. Table 4.3: Air pollution monitoring stations per city Metropolitan Mexico Valley Santiago Metropolitan Buenos Aires Area of Metropolitan Metropolitan Area of São Region (AMBA) Montevideo Zone (ZMVM) Region (RM) Paulo (RMSP) (AMM) Station 3 42 6 13 30 Average CO value n/a 0.67 ppm (2016) 0.40 (2015) 0.68 ppm (2017) 1.03 (2017) PM10: 43 NO2: 26 PM10: 27 PM10: 62 PM10: 29 PM2.5-10: 20 PM10: 1 Average PM value (µg/m3) PM2.5: 13 PM2.5: 27 PM2.5: 17 PM2.5: 23 PM2.5: 19 (2016) (2017) (2017) (2016) (2015) Mean O3 levels n/a 30 ppb (2015) n/a 13.4 ppb 40 ppb (2016) Stations in the city, not metropolitan level like the others. Also, in this case the CO emissions correspond to annual averages of the maximum daily concentrations of CO (average of 8 hours) for the metropolitan region *Ppm: parts per billion. Source: AR: https://data.buenosaires.gob.ar/dataset/calidad-de-aire y http://apps.who.int/gho/data/view.main.AMBIENTCITY2016?lang=en. MX: http://www.aire.cdmx. gob.mx/descargas/publicaciones/flippingbook/informe_anual_calidad_aire_2016v1/informe_anual_calidad_aire_2016.pdf. UY: Intendencia de Montevideo. CL: https:// sinca.mma.gob.cl. BR: https://cetesb.sp.gov.br/ar/wp-content/uploads/sites/28/2013/12/relatorio-ar-2016.pdf The five cities have particulate matter above the cities with slightly better results (Buenos Aires WHO recommendations for PM10 (20 micrograms/ and Montevideo) also have the lowest number m2). Only Montevideo, according to the city’s of monitoring points in the network. Deficiencies records, shows acceptable PM2.5 (10 micrograms in air quality monitoring – both in terms of the /m2) levels (although in this case monitoring specific pollutants monitored, and the locations stations are not located at pedestrian level). The and distribution of monitoring stations - limit the most critical situations found are in Santiago ability of cities to effectively identify risks and and Mexico City, followed by São Paulo. The target their emission reduction strategies. 26 Clean Buses in Latin American Cities | 4 Figure 4.3: Air quality monitoring systems Source: Steer. Recommended number of stations per city population-wise: Guidelines for Ambient Air Quality Monitoring (CPCB, 2003) Each of the five cities has prepared local plans to mitigation measures (Table 4.4) that have been contribute to achieving national GHG mitigation proposed in city transport plans are primarily co- goals, and reducing local air pollutants. Specific benefits of transport management efforts. Table 4.4: Examples of local environmental policies pertaining to transportation City Local policy pertaining to transportation • The 2017 Clean Mobility Plan aims to reduce CO2 emissions by 14% and NOx and PM emissions by 50% (below Buenos Aires 2015 levels by 2035). The plan includes initiatives such as clean bus technologies pilots, low-emissions zones and improvements in air quality measurement. • A federal program sets strategic actions for reducing pollutant concentrations with a strong focus on vehicles and mobility, including promoting a modal shift from private vehicles to public transport. Mexico City • Local plans include vehicle-scrapping programs for public transport agencies and technology substitution. The Hoy No Circula program (no-drive days) for private vehicles started in 1989. • Mexico City has pledged to ban diesel buses by 2025 (C40, 2016). • The 2012 metropolitan climate plan defines three strategic lines of action for transportation: Increase mobility Montevideo efficiency, Promote active transport, and Introduce clean technologies for the transport system. • The 2016 Atmospheric Decontamination Plan includes several transport sector measures, such as: low-emission cargo Santiago zone, restrictions for vehicles older than 10 years and modal change incentives. • A new regulation establishes emission reduction targets: CO2 of fossil fuel origin - 100% within 20 years; PM - 95% São Paulo within 20 years; NOx - 90% within 20 years. Source: Steer with information from local emissions policies 27 Clean Buses in Latin American Cities Some of these cities already had previous legal • Regulations for BEB battery disposal or reuse requirements that were not complied with, as have not yet been developed in any of the in the case of São Paulo. The previous city law cities. This potential for secondary use of BEB on climate change (2009) required the annual batteries for energy storage should be explored replacement of 10% of the bus fleet and stipulated jointly with electricity suppliers. Improper the end of fossil fuel buses within a decade (2018). disposal of batteries can lead to heavy metal However, this target was far from being met, due contamination of soil and water. The benefits of mainly to the failure to align the law with the battery re-use and the costs of disposal should terms of bus concession contracts, and the lack be included in full cost analyses. of mechanisms for monitoring, controlling and enforcing cases of non-compliance with targets. In 2018, only 1.4% of the fleet (mostly trolley-buses), The cities are committed to reducing met the 2009 goals. The new São Paulo law GHG and local pollutants, although however establishes annual targets for emissions improvements are needed in their air reductions, and failure to meet these targets will quality monitoring systems to provide result in monthly fines for the operators of each a better understanding of emissions non-complying vehicle. In this way, the city has sources. Noise is a significant concern but has not been treated with the same bolstered the credibility of the regulations and priority as atmospheric emissions. their ability to enforce operators to meet the new There is a lack of regulations for BEB targets. battery disposal and a need for analysis on options for BEB re-use for energy Summary of Environmental Barriers storage. and Drivers • Environmental commitments at national and local levels are important drivers for C. Energy the introduction of clean buses. The five countries have established NDC targets and Given that the existing energy matrix and energy strategic climate change actions to reduce distribution infrastructure of cities impact GHG emissions. In Mexico, the transport urban bus emissions, the success of clean sector accounts for the highest levels of GHG bus deployment efforts will depend upon an emissions, while in Brazil and Uruguay land use appropriate supply of, and easy access to, low- change and agriculture emissions are more emission fuels and energy sources. significant. In addition to these national goals, The vast majority of transportation energy in each of the five cities possesses environmental the five countries is currently oil-based. The two plans and targets to reduce local air pollutants. exceptions are Brazil (approximately 20% biofuel • Local air pollutants above WHO recommended use), and Argentina (20% natural gas) (Figure 4.4). levels. Santiago has the highest PM levels. An assessment of the current availability of fuels Air quality monitoring systems, especially for clean buses reveals that ultra-low sulfur diesel in Buenos Aires and Montevideo, need for use with Euro V, Euro VI and hybrid buses, is improvement, including expanding the commercially available in all the cities except monitoring of other pollutants (PM2.5, O3, SO2/ Montevideo. Compressed natural gas is available SH2), increasing the number of stations and in all the cities, although Mexico City has a improving their locations. limited distribution network. While the mandatory • Noise has been addressed in cities as having share of biodiesel in the diesel mix is expected to a lower priority than air pollution. São Paulo increase in Brazil, Argentina and Uruguay, biofuels and Buenos Aires are developing strategic noise are not available to fuel buses in Mexico City or maps to better understand traffic-related noise, Santiago. and Buenos Aires is pursuing traffic-calming The mitigation of GHG arising from the use of actions to help reduce levels. BEBs depends on the availability of electricity 28 Clean Buses in Latin American Cities | 4 generated from low-carbon sources. Most of the five countries have set targets for increasing electricity production from renewable sources. The transport sector is primarily Figure 4.5 shows the electricity energy matrix dependent on oil-based fuels, but the availability of alternative fuels, for each country and their goals for different renewable sources of energy and time horizons. The electricity providers consulted distribution infrastructure are opening in the five cities claimed that there is sufficient opportunities for technology transitions. capacity on their networks to launch electric bus New investments will be needed in operations, but upgrades may be required for electricity distribution networks to high penetration levels and the construction of a support high BEB penetration, with costs depending on local conditions. fast-charging infrastructure. Figure 4.4: Energy sources for the transportation sector Source: Steer with data from the International Energy Agency. Absolute numbers represents thousands of tons of oil equivalent (ktoe) 29 Clean Buses in Latin American Cities Figure 4.5: Energy matrix for electricity generation Source: Steer, with information from: AR: Informe anual (CAMMESA, 2017). MX: Programa de Desarrollo del Sistema Eléctrico Nacional (Secretaría de Energía, 2017), CL: Boletín del Mercado Eléctrico, Sector Generación. Enero 2018. Generadoras de Chile. BR: Ministério de Minas e Energia do Brasil - MME (June 2017). D. Governance and Regulation In order to identify the main governance main characteristics of bus concessionaires and regulation barriers and drivers, the (organization, fleet conditions and direct or bodies responsible for national and local indirect incentives for fleet renewal) studied. transport policies were consulted and the 30 Clean Buses in Latin American Cities | 4 Summary of Governance and Markets Barriers and Drivers • Institutional coordination. A variety of local, • Bus procurement. The lack of new concessions, metropolitan and national institutions together with the automatic renewal of expiring regulate bus types, concession allocation, concessions, makes it difficult for some cities service quality assurance, fares, subsidies to design a formal framework containing and timetables in the five cities. The lack of incentives for adopting new technologies. institutional coordination among national Bus concessions in Buenos Aires, Mexico ministries and/or local and regional transport City and Montevideo are granted directly to system managers is the main barrier in most concessionaires with no competitive tendering. of the cities. In many cases, fragmented Although Santiago and São Paulo have governmental authorities have failed to initiated some tendering opportunities, some integrate transport system planning and elements still present barriers to new bidders. policies. Contracts are generally signed for a minimum • Market competition. The high concentration of 10 years, except for Montevideo where there of public transport service delivery by a few are no fixed time limits. All the cities provide a companies with strong market power can lead set of incentives for concessionaires to renew to low service levels and high fares. While their fleets: Buenos Aires and São Paulo offer limited competition is a significant barrier in encouragement in the form of “carrots” such as most cities, bus operators resist changing attractive secondary markets for buses, while operating practices and technologies. In São Buenos Aires, Mexico City and Montevideo have Paulo and Santiago (both shortly to hold “sticks” such as subsidy reductions and non- tendering processes) the requirements to enter renewal of concessions. the bidding processes are complex and limit the • Strategic partners. Electricity providers eligibility of foreign companies. In Mexico City, can act as partners in the deployment of Buenos Aires and Montevideo, the concession BEBs by installing or facilitating charging processes allow operators to stay in the market infrastructures, subsidizing energy tariffs indefinitely (except for BRT and transport and forging innovative business and financial corridor operators in Mexico City). partnerships with bus operators (e.g. financing, • Policy priorities. Electromobility has attracted bus or battery leasings, battery reuse and broad interest and is now beginning to enter energy purchasing agreements with fixed the policy agendas in all five countries. The electricity prices for the duration of contracts) new transport bidding processes in São Paulo • Economic development. There is potential for and Santiago provide potential opportunities increasing clean bus manufacturing capacity for the introduction of new bus technologies. In in the region, especially in Argentina, Brazil Buenos Aires, the expiration of bus concessions and Mexico, where vehicle manufacturers are presents fresh opportunities for re-organizing already working to produce electric, CNG and the city’s public transport system. hybrid buses. Complex institutional coordination and limitations to market competition are the main barriers identified in the five cities. New concessions may provide opportunities to introduce clean technologies. Electromobility is on the policy agenda and there is potential to increase clean bus manufacturing in the region. 31 Clean Buses in Latin American Cities E. Funding and financing • Subsidies. Most of the cities have direct public subsidies to help cover capital and operational The gap between urban transport needs and costs. Most of them, except Mexico City, also their provision is often blamed on the lack of have some level of subsidies for diesel fuel. appropriate funding and financing streams. There The subsidies are designed to ensure that is no doubt that the higher upfront costs of clean public transport is affordable to users and bus technology are a major strain on already that concessionaires' revenues are adjusted limited budgets. accordingly. However, this type of subsidies Summary of Funding and Finance presents a strong disadvantage to cleaner Barriers and Drivers vehicles powered by non-fossil fuel over the conventional diesel vehicles. • Funding availability. Cities typically lack • Budgetary pressure. Most of the cities are sufficient financial resources to support under pressure to reduce, or at least to cap the adequate levels of public transport serving level of subsidies for bus transportation, as well very large catchment areas. The five cities as keep fares low. This makes it more difficult under study are no exception. The funding to secure new financing and funding for clean of bus fleets in these cities depends on a technologies. variety of public sources, commercial banks • High capital costs. The higher upfront costs and bus suppliers, often using partial credit of clean buses can exacerbate funding and guarantees. Only Mexico City and São Paulo financing challenges. The cash flow for a typical have funds to cover a portion of the differential bus project is usually high at the outset in view cost for accessing clean bus technology.22 of the initial outlay on the vehicles. Whereas Bus suppliers provide substantial financing in financing can be used to access capital up all the cities, using their extensive knowledge front, financing mechanisms are generally of market conditions and motivation to sell debt or equity related, implying that over time their product. At present concessionaires are the revenue stream from one or more funding experiencing difficulties to obtain finance even sources (e.g., user tariffs) can be used to pay for conventional bus technologies. back the debt incurred at the outset, as well as • Finance markets. The maturity of bus financing for defraying operating and maintenance costs markets is closely related to the quality of and payments to private operators. local public transport systems (regulatory • Financial institutions. Commercial banks have power, financial sustainability and market minimal knowledge of the bus market and are structure, including levels of competition among unwilling to take risks on new technologies. Most operators). Limited financing sources and lack of the cities finance their bus fleets from public of funds for promoting clean technologies sources, commercial banks and bus suppliers. are major barriers. In Brazil, the main An exception is Buenos Aires, where commercial financing programs require buses to be made banks have some low-level participation, and domestically with a majority local content. Montevideo, where the national pension fund is Meanwhile, currency instability in Brazil the main financier. Partial credit guarantees are remains a significant barrier to international often supported by public bodies. financing of bus transportation. • Innovation. Innovative business, ownership and 22 Brazil’s Fundo Clima expired in 2017. Efforts are being made to reactivate it. This program includes the requirement for vehicles to contain a proportion of procurement models that reward low TCO (e.g. domestically manufactured components. Mexico’s clean bus technologies program has provided $10 million to support 800 CNG buses, but this leasing, rental, energy company participation, program is dependent on annual renewal in the national budget. service contracts) can help overcome high upfront costs. This means that longer-term cost savings can be anticipated in purchasing decisions, which ensures that vehicles will remain affordable for operators and users alike. These business models are new to the five cities and require further analysis and development. 32 Clean Buses in Latin American Cities | 4 Figure 4.6 shows the self-assessment outcomes for the five cities. Santiago gained the highest Cities typically lack sufficient resources average score (between 4 and 5 for all the areas for fully meeting public transport evaluated), while Montevideo came in second, needs using current technologies. The with balanced results in the different areas higher upfront costs of clean buses (except perhaps in relation to financing, as can exacerbate funding and finance detected in the diagnosis done by the Project). challenges, especially since commercial banks have only minimal knowledge of Figure 4.6: Self-evaluation results for the Five Cities these technologies. Self Evaluations The diagnosis of the five factors was validated and enhanced as the result of input from LAC counterparts during the Iguassu Falls workshop. The goal was to evaluate Latin American and Caribbean cities based on the experience and expertise of the participating stakeholders. The self-assessment mechanism enabled a broader benchmarking on clean buses and led to a better understanding of the most critical issues in the region, although some results might have been constrained by participants' knowledge and viewpoints. Source: Steer A key finding of the evaluation was that although the environmental, health and social benefits of Mexico City presents better results on clean buses are recognized, resources have not environmental policy and public transport, been allocated to subsidize technology change, although there are still public transport and price incentives or tax penalties to encourage management issues that need to be improved the use of cleaner fuels have not been introduced to increase the uptake of new technologies. in most of the cities or countries represented by São Paulo produced similar results to the other the workshop attendees. Moreover, there is still an cities, although it scored lower than expected absence of common technical standards for CNG on finance, given that city has several financing propulsion, or electric bus charging or leasing mechanisms. Buenos Aires scored lowest on the schemes used to finance buses and/or batteries. government theme, reflecting the overlapping A further point is that although many cities have responsibilities of different authorities in the piloted certain clean bus technologies, little public transport area. information on such projects has been published. Based on the diagnosis of the current situation Most of the cities surveyed have set standards for in each of the five cities, we now offer general urban bus emissions, and technology change has recommendations for generating improvements in been led by specific institutions. There has also each of the five enabling factors to advance the been progress on electricity tariffs (night tariffs, deployment of clean bus technologies. peak, non-peak rates, etc.) and most cities have re-assessed the capacity of their energy systems in readiness for introducing clean buses (electric / CNG) fleets on a large scale. The five cities have all made environmental commitments to adopt clean bus technologies. 33 34 Clean Buses in Latin American Cities 5 Clean Buses in Latin American Cities | General Recommendations General Recommendations While each city faces distinct technical, economic and institutional issues, we were able to generate a set of general recommendations based on analysis of the barriers and drivers to clean bus implementation in the five cities. To meet the NDC targets and countermand the increasing threat of global warming, countries in Latin America must rapidly scale-up the adoption of clean vehicle technologies in public transport, as well as the transport sector in general. The study reviewed, city by city, the costs and feasibility of several clean technologies, including CNG and electric. Recommendations specific to each city are provided in Chapter 6 (City-specific Recommendations). The present chapter provides guidance which applies to cities in LAC in general (i.e. in addition to the cities covered by the study). Given the recent, global advances in the life and costs of batteries, electric vehicles seem set to dominate the future of clean technologies in Latin America and worldwide. While the recommendations below apply mainly to the evaluation and adoption of any clean technology in the area of public transport, they tend to point to the increased use of electric buses. 35 Clean Buses in Latin American Cities 1. The selection of clean bus technology should consider both corridor-specific performance requirements (e.g. distance, speed, capacity, noise) as well as the availability of city-wide infrastructure. For high-capacity, trunk corridors the optimal technology may differ from that for feeder lines and commuter routes. City-wide requirements for cross-route compatibility, flexibility and redundancy should also be taken into account. 3. Improving data collection on air and noise pollution is essential in order to capture more fully the benefits of clean vehicle technology. While air quality monitoring has improved across cities in Latin America, gaps remain in identifying particular sources of pollution and using monitoring stations to track urban air quality. Since air quality is the single biggest beneficiary of the introduction of clean technologies, it is vital for cities to measure and collect reliable data on air and noise pollution caused by vehicles using traditional fossil fuels. 4. Public Authorities should provide stakeholders timely and up-to-date information on the capacity of power distribution networks and the adequacy of the charging infrastructure. Lack of reliable and relevant data creates uncertainty and undermines the willingness of public transport agencies and bus operators to consider moving to electric vehicles. The energy sector must collaborate closely with the transport and environment ministries and agencies in order to achieve greater clarity on these issues. 2. A Total Cost of Ownership (TCO) methodology is recommended to evaluate the financial performance of clean technology buses, particularly BEBs. TCO captures both the higher upfront costs of BEBs and their lower operating costs over the span of a vehicle’s life. It is necessary to assess the cost of batteries, which is the single biggest item determining the higher cost of electric vehicles. 36 Clean Buses in Latin American Cities | 5 6. Policies which address market distortions in the operations of conventional vehicles and harmonize emissions standards will do much to improve the economic outcomes arising from private sector involvement in the adoption of clean vehicles. Market distortions are the single biggest risk to introducing and scaling up electric vehicles in LAC. With the exception of Mexico City, our sample cities possess inadequate emissions standards, and provide direct public subsidies for operational and capital costs as well as for diesel fuel. With the price of diesel artificially lower, the financial accounting of vehicle operations tends to favor conventional vehicles. Moreover, lower emissions standards allow conventional vehicles to ignore some of the externalities generated by them, thus also impacting the financial optics in favor of conventional, fossil fuel-powered vehicles. Addressing these sources of market distortion will be challenging, but this is essential for enabling a more realistic assessment of the financial and economic performance of clean vehicles. 5. City and national governments could join hands with research institutes and academia to share the state-of-the-art battery technology with respect to electric vehicles. 7. Improving market competition and The lack of information noted on energy-related concession processes can advance issues also affects technology aspects regarding the deployment of clean buses. the performance of batteries and the related Cities such as Santiago and Shenzhen have, operational performance of electric vehicles. for example, encouraged the participation of This restrains efforts by national and city third parties such as energy and vehicle leasing governments to move forward on the clean vehicle companies to share financial burdens and risks agenda. There is a pressing need at the city, and expand the possibilities for BEBs. In addition, national and international level for research and innovative business models (e.g., vehicle leasing, dissemination efforts to educate stakeholders. rentals, third party involvement, service contracts) Since BEB technology is rapidly improving, with can spread risks and help overcome high upfront impacts on performance levels and TCO, it is vital costs so that longer-term cost savings can be that information on the latest improvements is anticipated in purchasing decisions, which should communicated and distributed widely within the ensure that vehicles will remain affordable for PT community. operators and users alike. 37 38 Clean Buses in Latin American Cities Clean Buses in Latin American Cities | City-specific Recommendations and Implementation Roadmaps City-specific Recommendations and Implementation Roadmaps 6 The specific recommendations, and implementation roadmaps, for each of the five cities suggests timeframes, levels of priority and necessary stakeholder involvement. Strategic questions should be considered before launching a Clean Bus Plan. These questions will guide cities towards making an appropriate choice of clean bus technologies and their deployment. Objectives Project Selection Barriers and Drivers Recommendations How can we overcome What are the right projects What are the main barriers those barriers and What is to be achieved? to achieve it? and drivers? take advantage of the opportunities? Which institutions are How does this link with the responsible for their city's objectives? implementation? Source: Steer 39 Clean Buses in Latin American Cities A. Buenos Aires TCO comparison for clean bus technologies in Figure 6.1: TCO/km. for buses in Buenos Aires, assuming São Paulo bus prices and reduced interest rates Buenos Aires revealed a wide difference between traditional diesel technologies and electric buses $2.50 .Diesel fuel subsidies make electric buses even $2.25 less attractive. Pre-tax BEB prices in Buenos Aires (comparing the same models of bus), are higher $2.00 than in São Paulo and Santiago by 36% and 42% $1.75 respectively. High interest rates for bus financing $0.04 $0.04 increase the TCO for buses that are already $1.50 $0.04 $0.11 $0.11 $0.12 $0.05 $0.03 $0.09 $0.05 expensive to purchase. $0.21 $0.23 $0.23 $0.14 $0.07 $0.07 $1.25 $0.05 $0.15 $0.07 $0.26 Figure 6.1 shows a scenario in which the same $0.22 $0.22 $0.22 $0.16 $0.15 $1.00 purchasing arrangements for BEBs in São Paulo $0.20 $0.22 $0.12 $0.19 $0.19 are applied in Buenos Aires. The figure assumes $0.75 $0.40 $0.31 $0.19 $0.20 $0.19 $0.22 increased market competition that reduces bus $0.50 prices, and a lower interest rate (an annual simulated rate of 7.5%), that could be achieved $0.25 $0.57 $0.57 $0.57 $0.57 $0.57 $0.57 through revolving and guarantee funds using a $- mix of currently available funding and financing $-0.12 $-0.13 resources in Buenos Aires. $-0.25 Diesel E5 Diesel E6 Biofuel C NG Electric Electric Fa st • National and local funds: credit lines from Depot C ha rge C ha rge the National Bank or the creation of a fund Staff Capital investment Interest payment to capture the cost of externalities caused by Maintenance Fuel Fuel tax other transport modes, such as on-demand Purchase tax Fuel subsidy transport apps or city taxes. Source: Steer for the World Bank based on various sources summarized in Appendix A. 40 Clean Buses in Latin American Cities | 6 • National subsidies: The current diesel subsidy financing, and / or Export Credit Agencies is $8,500 USD/year per bus. This could be (ECAs) support. redirected to setting up a revolving fund or to Two main plans are currently being developed in guarantee a financing mechanism with lower Buenos Aires, both promoting low-carbon public interest rates and longer payback periods. transport and providing good opportunities for • Local and international lending options: the introduction of clean buses: the National These could include Green Bond issuance, Transport and Climate Change Action Plan International Finance Corporation (IFC) (PANTyCC) and the Clean Mobility Plan. support, Climate Investment Funds (CIF) Table 6.1: Key recommendations for the PANTyCC (Buenos Aires) Timeframe Stakeholders Recommendations Status Short Medium Long Government Private Term Term Term Local Nation sector Include emission and noise reduction ENV4 elements in cost-benefit evaluation Desirable ● L N processes. Conduct technical analysis of energy system ENE1 Essential L N P capacity to support large-scale bus fleets. Specify the lead entity or body to coordinate clean bus deployment strategies and GOV4 Supportive ● L N P conduct periodic stakeholder outreach to gauge reactions to Clean Buses Develop mechanisms to facilitate access to FFF2 Supportive ● N green funds Diversify and incentivize access to finance FFF3 Supportive ► N P mechanisms. Evaluate the feasibility of budget FFF8 reassignment from other ministries to Desirable ● ► N incentivise clean bus projects Source: Steer PANTyCC the lessons learnt in the course of PANTyCC and Clean Mobility Plan implementation are fully The PANTycc includes a variety of initiatives disseminated and shared. Socio-environmental intended to reduce environmental impacts assessments should be included together caused by the transport sector, mainly by with details of financial project evaluation promoting public transport buses powered methodologies. by alternative, cleaner energy sources. There is therefore a clear opportunity to align with When clean buses are introduced on a larger the local government to bolster its efforts and scale, it will be important to evaluate the pursue the introduction of cleaner buses. A few requirements for electric / gas network and key actions have been identified as a starting charging / fuelling infrastructure investments and point for the successful implementation of their associated financing implications. the PANTyCC. The suggested timeframes and To assist promotion of actions within the PANTyCC stakeholder types are listed in Table 6.1. targeted at public transport buses powered by The first key action is to define a leading agency, cleaner energy sources, funding and financing institution or task force to ensure that all the mechanisms could be investigated and tested, efforts complement one another. The second key either by developing structures or systems to action is to ensure that the data gathered and facilitate access to green funds, or by evaluating 41 Clean Buses in Latin American Cities ways to diversify and encourage access to implementation of the Clean Mobility Plan. The financing mechanisms with national government suggested timeframes and stakeholder types are support. Using model sensitivity results, reduced listed in Table 6.2 interest rates and lower bus prices (similar The clean bus technology pilot program, currently to prices in other cities in the region), such being developed for implementation, provides an approach would make these technologies an important opportunity to test the feasibility more competitive. These actions could initially of introducing clean technologies. Implementing be tested, and later scaled up, leading to the these efforts in parallel with the clean bus introduction of clean buses in Buenos Aires, program presents a valuable opportunity to and to serve as a catalyst for further expansion develop an integrated database on emissions, and throughout Argentina. on variables to monitor and evaluate clean bus Clean Mobility Plan implementation policies. The Clean Mobility Plan aims to reduce emissions Lack of knowledge (e.g. whether specific and improve air quality. The various initiatives technologies can be used in the city/country or being pursued under this plan, including the clean not) was identified as a barrier for concessionaires bus technology pilot program, are important for to embark on piloting clean buses. Data collected facilitating the introduction of these technologies from pilot projects should serve as evidence across the country. A few key actions have been of the benefits and challenges of the different identified as effective starting points for the technologies. Table 6.2: Key recommendations for the Clean Mobility Plan (Buenos Aires) Timeframe Stakeholders Recommendations Status Short Medium Long Government Private Term Term Term Local Nation sector ENV2 Strengthen urban bus emission standards Essential L N Include emissions and noise reduction ENV4 Desirable L N elements in cost-benefit evaluation processes Evaluate prioritizing zero/low emission zones ENV5 Supportive L or corridors Create common technical standards for bus ENE3 Desirable L N charging Promote independent and open knowledge PT2 Supportive ► L N transfer of performance data from pilots Strengthen concession conditions with GOV1 mechanisms to guarantee bus payments or Essential ► L N P reduce risks of default Pursue regulatory & contractual frameworks GOV3 to promote energy company participation in Desirable L N P BEB deployment Evaluate the potential for cross-modal FFF1 Desirable ► L subsidies to support public transport Develop mechanisms to facilitate access to FFF2 Supportive ► N green funds Dversify and incentivise access to finance FFF3 Supportive ► L N mechanisms Explore leasing schemes for buses and FFF6 batteries and guarantees to reduce technical Desirable L N risks Create incentives for clean buses and fuels FFF7 Supportive ► L N that support emission reduction goals Source: Steer 42 Clean Buses in Latin American Cities | 6 To ensure that all concessionaires, manufacturers, Stakeholders investors and other key stakeholders can trust The key stakeholders in Buenos Aires for clean bus the evidence presented, we recommend that the implementation are: government support an independent, transparent technical assessment process designed to The Ministry of Environment and Sustainable facilitate knowledge transfer by making pilot Development (MAyDS) and the Ministry of performance data readily available to the general Transport -- the leading national agencies involved public and interested parties. in implementation of the PANTyCC. Bus acquisition, charging infrastructure and The CNRT (National Transport Commission), a operating costs should be shared with the public decentralized entity of the Ministry of Transport in order to engender better decision-making responsible for overseeing the bus transport processes. The need for financing instruments system within the AMBA region. to achieve lower interest rates (and possible The Secretary of Transport of the CABA funding mechanisms) is important for clean bus Government, responsible for the implementation deployment. These mechanisms might include of the Clean Mobility Plan. cross-modal subsidies, improved access to green funds, bonds, or to other long-term financial Other stakeholders that should be involved wholly instruments with the aim of achieving competitive or partially in the process include the Ministry of TCO for clean bus technologies. Finally, the pilot Energy and Mining, energy companies and bus results could help identify clean bus technologies operators’ trade associations. that are worth pursuing in Buenos Aires (based on local costs, benefits and feasibility), and it is recommended that the evidence be used at the national level to support the development of fresh incentives for the use of clean fuels, and to help make clean bus technologies more attractive to the different stakeholders. 43 Clean Buses in Latin American Cities B. Mexico City Although clean buses have a low TCO in Mexico Such mechanisms may be applied to the upfront City, upfront costs for hybrid and battery payment over the total credit life. A scenario in electric buses are 50% to 75% higher than for which a financial mechanism is used to reduce diesel buses. This is a clear deterrent for cleaner the interest rate to 6.5%24 (from the current 12.5%) technologies. Providing financial incentives to for hybrid and electric buses is shown in the TCO reduce interest rates for purchasing clean buses comparison in Figure 6.2. may be necessary to encourage their use. Two main types of public transport projects Setting up a revolving fund to improve the currently underway in Mexico City are both financial conditions for clean bus purchases candidates for clean bus implementation: or accessing other available financing • New BRT Lines; mechanisms can help encourage the switch to clean technologies. Other financial incentives to • Fleet renewal process on traditional bus guarantee funds include: corridors. New BRT Lines • National and local funds: government to underwrite loan guarantees or leasing payment The planned BRT network expansion represents an mechanisms with public funds such as the opportunity for clean buses, since the system as National Fund for Climate Change, or other structured reduces the financial risk for creditors, locally available funds23, to extend debt periods and facilitates the implementation of zero- or and/or enable reduced interest rates. low-emission corridors. The system consists of • Local and international lending options: individual concessions for each component: a green bond issue, International Finance • Operational and monitoring system audits; Corporation (IFC) support, Climate Investment • Fare collection operators; Funds (CIF) financing, and Export Credit Agencies (ECAs) support. • Fare collection trust funds; • Public and private bus concessionaires; 23 The Mobility Law for Mexico City describes two possible mechanisms to promote better public transportation systems and cleaner technologies: the • Metrobús. public fund for mobility and roadway safety (Fondo Público de Movilidad y Seguridad Vial) and the public transport financing fund (Fondo de Promoción para el Financiamiento del Transporte Público). 24 This rate is similar as the green bond issue in 2016 in MXN, at an interest rate of 6.2% over five years. 44 Clean Buses in Latin American Cities | 6 Figure 6.2: TCO/km comparisons for buses $2.50 A few key actions have been identified as effective in Mexico City, assuming interest rates starting points for the incorporation of clean $2.25 buses in these network expansions. The suggested timeframes and stakeholder types are listed in $2.00 Table 6.3. $0.17 $1.75 BRT systems have been implemented, taking into $0.05 $0.05 $0.15 $0.08 $0.08 $0.11 $0.05 account the specific conditions of each corridor. $1.50 $0.16 For example, Line 1 uses bi-articulated buses, $0.36 $0.34 $1.25 $0.49 $0.49 $0.07 Lines 2, 3, 5 and 6 have articulated buses, Line $0.19 $0.05 4 operates with Hybrid and Euro V low-platform, $0.18 $1.00 $0.34 $0.33 $0.22 12m buses, and the recently-opened Line 7 has $0.28 $0.28 $0.22 double- decker Euro VI buses. This shows that $0.75 $0.33 $0.45 route compatibility analyses can consider $0.31 $0.33 $0.47 $0.50 $0.36 different potential technologies, such as hybrid $0.21 $0.22 $0.25 buses for routes with higher commercial speeds $0.16 $0.15 $0.12 $0.25 and long-distance services, BEBs for shorter $0.23 $0.23 $0.23 $0.23 $0.23 $0.23 routes with lower speeds or the land availability $- Diesel E5 Diesel E6 C NG Hybrid Electric Electric Fast and configuration to support required charging Depot C harge C harge infrastructure. Staff Capital investment Interest payment Maintenance Fuel Fuel tax Purchase tax Fuel subsidy Source: Steer for the World Bank based on various sources summarized in Appendix A. Table 6.3: Key recommendations roadmap for new BRT lines in Mexico City Timeframe Stakeholders Recommendations Status Short Medium Long Government Private Term Term Term Local Nation sector Evaluate prioritizing zero/low emission zones ENV5 Supportive ● L P or corridors Conduct route compatibility analysis with PT1 clean bus options to define the best suitable Desirable ● L P technologies Promote independent and open knowledge PT2 Supportive ► L N P transfer of performance data from pilots Promote benefits of noise and emissions PT3 reduction and study changes to land use Supportive L restrictions for depots and terminals Strengthen concession conditions with GOV1 mechanisms to guarantee bus payments or Essential L N P reduce risks of default Pursue regulatory and contractual GOV3 frameworks to promote energy company Desirable L N P participation in BEB deployment Evaluate the potential for cross-modal FFF1 Desirable ► L N subsidies to support public transport Develop mechanisms to facilitate acces to FFF2 Supportive L green funds FFF4 Decouple the credit payment from the tariff Essential ► L Integrate small operators in the fare trust FFF5 Desirable ► L funds managed by an external trustee Source: Steer 45 Clean Buses in Latin American Cities Table 6.4: Key recommendations roadmap for fleet renewal in Mexico City Timeframe Stakeholders Recommendations Status Short Medium Long Government Private Term Term Term Local Nation sector Include emission and noise reduction ENV4 Desirable ● L N elements in cost-benefit evaluation processes Strengthen concession conditions with GOV1 mechanisms to guarantee bus payments or Essential L N P reduce risks of default Pursue regulatory and contractual GOV3 frameworks to promote energy company Desirable L N P participation in BEB deployment Evaluate the potential for cross-modal FFF1 Desirable ► L subsidies to support public transport Develop mechanisms to facilitate access to FFF2 Supportive ● L N green funds Source: Steer Fleet renewal processes on SEDEMA: Mexico City’s Secretariat of traditional bus corridors Environment is the public agency responsible for environmental protection and sustainable Public funding instruments such as the National development, with air quality, climate change Fund for Climate Change, aimed at reducing and sustainable mobility as its key focus areas. the differential purchase cost between diesel SEDEMA was responsible for establishing the and CNG buses, and other bus scrapping funds, conditions that led to the creation of Metrobús in are budgetary instruments that are not always 2005. It also managed the carbon bond financing available to concessionaires. mechanisms for several projects, as well as other Strengthening these other revolving funds, public transport-related financing and funding together with the mechanisms to guarantee mechanisms in Mexico City. against payment default, would help improve the SEMOVI: Mexico City’s Secretariat of Mobility uptake of clean buses on those corridors where manages public transport concessions in Mexico their efficiency is proven. Fare collection devices City, and at present directs the fare trust fund are desirable on these services. expansion among the various public transport Mexico City does not possess a public transport providers. SEMOVI currently manages the “Fund registry nor an up-to-date inventory of buses, for Taxis, Mobility and Pedestrians”, created in concessions and routes, which makes it extremely 2015 to collect 1.5% of the cost of each trip made difficult to define effective policy actions and on app-based mobility services to encourage measure their impacts. The implementation of a public transport and active mobility in the city. public transport registry, as specified by current SEFIN: Responsible for leading on local economic law, is recommended in the short term. policy, the Secretariat of Finance sets the budget Stakeholders for public transport operators such as SM1 and STE, and provides funding for their bus fleets when Metrobús: As a public planning institution, required. Metrobús can set the standards for new corridors, procure new concessions and develop new FONADIN through Banobras: runs the payment formulas for clean bus services. Federal Public Transportation Support Program (PROTRAM) focused on mass transit infrastructure. FONADIN has been a major funding source for national BRT and Metro projects since its creation in 2008. 46 Clean Buses in Latin American Cities | 6 C. Montevideo Figure 6.3: TCO/km. assuming the same acquisition price as São Paulo for BEBs and an interest rate of 5.5% High costs are one of the main barriers to the $2.50 uptake of clean buses in the region, both in $2.25 terms of vehicle purchase price and associated financing costs. BEB prices in Montevideo are 45% $2.00 higher than in São Paulo and 50% higher than in $1.75 $0.06 Santiago. To improve opportunities for adoption $0.13 $0.12 $0.13 $0.06 of clean buses in Montevideo, an open market for $1.50 $0.22 $0.12 $0.12 $0.22 $0.09 bus acquisition is the key to lowering BEB prices in $0.15 $1.25 $0.13 $0.50 line with international market levels. $0.38 $0.21 $0.25 $1.00 If BEB acquisition prices were reduced to the same level as in São Paulo, electric buses would $0.75 have a TCO of only $0.33 /km more than diesel $0.50 $0.98 $0.98 $0.98 $0.98 buses (i.e.s $0.05/km less than the current diesel subsidy). $0.25 The current funding for diesel subsidies (or other $- available resources), could be reallocated to $-0.38 $-0.39 $-0.25 provide incentives for clean buses via revolving funds which provide guarantees for creditors or $-0.50 Diesel E3 Diesel E6 Electric Depot Electric Fa st C ha rge direct subsidies. The available local mechanisms C ha rge include: Staff Capital investment Interest payment Maintenance Fuel Fuel subsidy • Diesel subsidy (Fideicomiso del Combustible): This is a money-back incentive provided to bus Source: Steer for the World Bank based on various sources summarized in Appendix A. operators based on the number of kilometers driven. This may represent a saving in the case Funded by the Global Environmental Facility of electric buses. (GEF), the project is led by MIEM and MVOTMA, • Uruguayan Trust for Energy Saving and and aims to: Efficiency (FUDAEE) is a support mechanism providing financial leverage for projects and • Contribute to the development of public policies activities that promote energy efficiency. to reduce GHG from the transport sector by optimizing transport energy consumption, • The Plan for Energy Efficiency grants credit conducting studies on the life cycle and guarantees to improve energy efficiency. impacts of batteries, etc. International mechanisms can also be used to • Promote the electrification of the transport improve financial credit conditions (e.g. better sector by implementing pilot projects to test five interest rates). Such mechanisms may include: electric buses by different bus concessionaires. • Green bond issuance; • Contribute to a culture change towards • International Finance Corporation (IFC); a smaller carbon footprint, and promote • Climate Investment Funds (CIF); sustainable transport. • Export Credit Agencies (ECAs). The project involves an investment of over $21.7 million to support the government´s actions and These mechanisms would help to augment the meet the project´s targets over a four-year period. savings from the funds currently applied to the diesel subsidy. In November 2017, the national government launched the project “Towards an efficient and sustainable urban mobility system in Uruguay”. 47 Clean Buses in Latin American Cities At a local level, the Municipality of Montevideo Towards an efficient and sustainable (IMM) is working towards implementing different urban mobility system in Uruguay initiatives contained in its Mobility Plan for The implementation of the five bus pilots in Montevideo 2010-2020, which has been aligned Montevideo could be an opportunity to test and with national environmental objectives and evaluate the performance of clean technologies, energy efficiency goals. The Plan sets out nine and to provide evidence for the introduction of strategic objectives, with four related of them to relevant standards. The knowledge, outcomes public transport: and evidence gathered from these initiatives • Promote sustainable transport, should be openly shared and disseminated using • Rationalize the current metropolitan transport independent and transparent methods to increase system (STM), stakeholders’ confidence level in the transport system. Bus purchasing, tariff and operating costs • Promote an integrated transport system (fare data should be also shared in order to inform integration), and better decision-making. Promoting consolidated • Promote energy efficiency in the public and competitive fleet acquisition processes would transport sector. also be beneficial to the uptake of clean buses. Multiple projects are being pursued to meet the The high cost of buses with cleaner technology strategic objectives, notably the implementation was found to be a major obstacle for bus of segregated corridors and the integration of concessionaires. It is therefore recommended that public transport. In a 2017 report, the Municipality mechanisms to help them access available funds expounded a strategy to introduce electromobility should be explored and evaluated. This could be into public transport to increase the reliability of achieved through the provision of information, the system. advice on funding processes, or even by creating new funds to improve the appeal of clean bus technologies. Table 6.5: Key recommendations for the project “Towards an efficient and sustainable urban mobility system in Uruguay” Timeframe Stakeholders Recommendations Status Short Medium Long Government Private Term Term Term Local Nation sector Create standards for secondary use, ENV3 recycling and/or final disposal of vehicle Essential L N batteries Include emission and noise reduction ENV4 elements in cost-benefit evaluation Desirable ● L N processes. Create common technical standards for bus ENE3 Desirable L N P charging Promote independent and open knowledge PT2 Supportive ► L N P transfer of performance data from pilots Develop mechanisms to facilitate access to FFF2 Supportive ● N green funds Evaluate the feasibility of budget FFF8 reassignment from other ministries to Desirable ► N incentivize clean bus projects. Source: Steer 48 Clean Buses in Latin American Cities | 6 Mobility Plan for Montevideo 2010-2020 The above analysis should provide a clear idea of current challenges and the steps that need to be Montevideo's mobility plan and its urban mobility taken to overcome them.. In addition to evaluating resilience actions are identified as opportunities available financing mechanisms, the study should, for the introduction of clean buses. Some key look closely at current bus operation subsidies to actions are listed in Table 6.6 identify any incentives such as diesel subsidies To advance the Municipality's strategy to that may undermine the competitiveness of the introduce electromobility in its public transport new technologies. system, common technical standards for bus charging need to be analyzed and introduced. Stakeholders This will help to open the market by providing the The recommendations listed above are relevant for flexibility of choosing among different suppliers, the following key stakeholders: and reduce the need to customize infrastructure for each project. As the capital costs for BEBs Ministry of Energy and Mines (MIEM) and Ministry are a major obstacle for concessionaires in of Housing, Land-use and Environment (MVOTMA), Montevideo, multiple options should be explored jointly responsible for the project “Towards an to mitigate this barrier, such as evaluating leasing efficient and sustainable urban mobility system in schemes for buses and batteries and providing Uruguay”. guarantees to reduce technical risks. Municipality of Montevideo (IMM): responsible for To encourage bus concessionaires to renew implementing the Mobility Plan and overseeing their fleets and promote cleaner technologies, bus services in the city. we recommend studying the financing mechanisms that are currently available to bus concessionaires. This will help identify existing financing options and their feasibility for assisting the rollout of new technologies. Table 6.6: Key recommendations for the Mobility Plan for Montevideo 2010-2020 Timeframe Stakeholders Recommendations Status Short Medium Long Government Private Term Term Term Local Nation sector ENV2 Strengthen urban bus emission standards Essential ● L N Evaluate prioritizing zero/low emission zones ENV5 Supportive ● ● L or corridors Create common technical standards for bus ENE3 Desirable L N P charging Conduct route compatibility analysis with PT1 clean bus options to define the best suitable Desirable ● L technologies Diversify and incentivize access to finance FFF3 Supportive ► L mechanisms. Explore leasing schemes for buses and FFF6 batteries and guarantees to reduce technical Desirable L P risks Source: Steer 49 Clean Buses in Latin American Cities D. Santiago Battery electric buses benefit from financing Early uptake: implementing 200 BEBs. incentives that reduce interest rates from 7.5% to This project is already underway with, contract 5.6%. These incentives enable a competitive TCO arrangements to incorporate additional new for clean technologies, but the main perceived buses (BEB and Diesel Euro VI), through fleet barrier for clean bus uptake was the risk of expansion and/or renovation. introducing a technology that is unfamiliar to bus concessionaires. Table 6.7 lists recommendations to favor risk reduction and to enable maximum learning to be Santiago has two important initiatives underway derived from the introduction of electric buses. that are suitable for clean bus uptake: The recent financing of BEBs through leasing • Early uptake: implementing 200 BEBs. schemes structured by the private sector (ENEL • Tendering process for Transantiago: providing and ENGIE energy companies), has created an further opportunities to introduce clean buses. interesting opportunity for other parties to join A series of complementary measures will be this market (e.g. other energy companies and considered during the implementation process new manufacturers). The authorities should also aimed at improving and accelerating clean bus look at ways to attract more potential financiers uptake. to this market. The leasing scheme includes the provision of a second battery when the vehicle Figure 6.4: TCO per kilometer, considering an has reached mid-life. This initiative needs to be interest rate of 7.5% for all technologies. analyzed in more detail to ensure that the systems $2.50 All technologies with an are not overpricing the technological risk, since $2.25 interest rate of 7.5% battery costs continue to decline, and technology is maturing in terms of autonomy and capacity. $2.00 Introduction of the 200 BEBs in Santiago provides $1.75 a unique opportunity to gather relevant real-world operational data from the different technologies. $0.05 $1.50 $0.04 $0.07 Providing data on clean bus performance for $0.06 $0.07 $0.25 $0.11 independent and public analysis and peer review $1.25 $0.27 $0.05 $0.17 $0.10 in technical reports, will help to ensure that $1.00 $0.24 $0.29 $0.14 $0.17 lessons are learned and taken into consideration $0.08 $0.09 $0.11 in future bidding processes. Santiago faces $0.75 $0.21 $0.24 $0.38 $0.29 some difficulty to find appropriate spaces for bus depots and operations centers. Providing $0.50 evidence at e-terminals on noise and emissions $0.25 $0.57 $0.57 $0.57 $0.57 reduction could help support changes in land use restrictions with a view to making more spaces $- available for the necessary transport facilities. Diesel E6 C NG Electric Depot Electric Fa st C ha rge C ha rge Staff Capital investment Interest payment Maintenance Fuel Fuel tax Purchase tax Source: Steer for the World Bank based on various sources summarized in Appendix A. 50 Clean Buses in Latin American Cities | 6 Table 6.7: Recommendation roadmap from implementing and learning from early uptake: implementing 200 e-buses in Santiago Timeframe Stakeholders Government Recommendations Status Short Medium Long Private Term Term Term Local Nation sector Include emission and noise reduction ENV4 elements in cost-benefit evaluation Desirable N P processes. Conduct technical analysis of energy system ENE1 Essential N P capacity to support large-scale bus fleets. Conduct route compatibility analyses with PT1 Clean Bus options to define the best suitable Desirable N P technologies. Promote independent and open knowledge PT2 Supportive N P transfer of performance data from pilots. Promote benefits of noise and emissions PT3 reduction and study changes to land use Supportive L N P restrictions for depots and terminals. Strengthen concession conditions with GOV1 mechanisms to guarantee bus payments or Essential N reduce risks of default. Specify the lead entity or body to coordinate Clean Bus deployment strategies and GOV4 Supportive N conduct periodic stakeholder outreach to gauge reactions to Clean Buses. FFF4 Decouple the credit payment from the tariff. Essential N Explore leasing schemes for buses and FFF6 batteries and guarantees to reduce technical Desirable N P risks. Source: Steer Tendering process for Transantiago: providing process. While the previous tendering process more opportunities for clean buses simply specified the number of BEBs required, it would be better for the new process to clearly The tendering process that is currently under specify the services required, to define corridors, preparation, and similar bidding exercises over the appropriate terminals, etc., and to determine the size next few years, present a unique opportunity to and characteristics of the new fleet. incorporate new technologies via a competitive process. The sheer number of buses required will Although the MTT has been leading BEB generate interest from many bus manufacturers. implementation, other elements of the Table 6.8 lists the main recommendations for electromobility strategy (2016-17) call for more making the tendering processes even more specific leadership to ensure better inter-sectoral competitive and efficient in terms of obtaining coordination, and private sector engagement. the best combination of transport technologies, We recommend, for example, looking carefully reducing risks and bringing down costs. at cost and risk reduction opportunities such as those related to the present battery replacement The previously aborted tendering process defined scheme at bus life mid-term. Euro VI as the standard for new buses, in conformity with the definition in the recently approved Environmental Decontamination Plan. We suggest that this norm should be maintained for the new 51 Clean Buses in Latin American Cities Elements for success Stakeholders Key elements for the successful introduction of The main stakeholders for clean bus deployment clean buses at scale in Santiago include: in Santiago include: • MTT leads implementation, but works closely • Ministry of Transport and Telecommunications with the Energy and Environment Ministries; (MTT) • The existence of a framework that allows as • 3CV (MTT) as the technical authority for much competition as possible; performance measurements • Private energy companies provide financing • Ministry of Environment (leasing) and reducing risks; • Ministry of Finance • Incentives provided for cleaner technologies, • Ministry of Energy and • Consorcio Movilidad Eléctrica (Public – Private Working Group) • Ex-post performance analyses and public information sharing. • Manufacturers • Energy Companies Table 6.8:Recommendation roadmap for the new tendering processes for Transantiago Timeframe Stakeholders Government Recommendations Status Short Medium Long Private Term Term Term Local Nation sector Evaluate prioritizing zero/low emission zones ENV5 Supportive L N or corridors. Conduct route compatibility analyses with PT1 clean bus options to define the best suitable Desirable N P technologies. Promote independent and open knowledge PT2 Supportive N P transfer of performance data from pilots. Promote benefits of noise and emissions PT3 reduction and study changes to land use Supportive L N P restrictions for depots and terminals. Pursue regulatory and contractual GOV3 frameworks to promote energy company Desirable N participation in BEB deployment. Specify the lead entity or body to coordinate clean bus deployment strategies and GOV4 Supportive N conduct periodic stakeholder outreach to gauge reactions to Clean Buses. Diversify and incentivize access to finance FFF3 Supportive N mechanisms. FFF4 Decouple the credit payment from the tariff. Essential N Explore leasing schemes for buses and FFF6 batteries and guarantees to reduce technical Desirable L N P risks. Create incentives for clean buses and fuels FFF7 Supportive N that support emission reduction goals. Source: Steer 52 Clean Buses in Latin American Cities | 6 E. São Paulo The present value analysis on the TCO per • The National Bank for Economic and Social kilometer shows that biofuel buses are more Development – BNDES offers a credit line competitive than the other clean bus technologies called FINAME to finance the manufacture in this city, although electric buses are less than and purchase of accredited domestically- 10% higher than the other two evaluated. produced machinery and equipment. This includes financing for buses, trucks, and other Providing financial incentives for zero-emission machinery. technologies to reduce the interest rate from the current high 11.1% may enable BEBs to be more • The Paulista Development Agency has competitive with the other bus technologies promoted sustainable development through (credits with 7% interest rate have been previously long-term credit operations for small and available for fleet purchase). medium-sized companies in São Paulo. The agency has a funding program with a The mechanisms available in São Paulo for technology incentive line called the Linha funding the appropriate financial incentives and Economia Verde. One item within this credit line establishing guarantee funds or direct subsidies, refers to the substitution of fossil fuels with clean are the following: fuels for use in public and private transportation • The Fundo Especial do Meio Ambiente (natural gas, biodiesel, ethanol, electricity, etc), e Desenvolvimento Sustentável (FEMA) fleet renewal and switching from diesel-powered provides low interest loans to support projects buses to biodiesel, ethanol or electric. However, for the improvement and/or recovery of none of São Paulo’s bus fleet has been financed environmental quality. with this credit line to date. • The Caixa Econômica Federal (Federal TCO/km for buses in São Paulo, assuming an interest rate of 7% for BEBs Housing Bank), has a credit line called $2.50 REFROTA as part of the Pro-Transportation Program funded by the FGTS (Fundo de $2.25 Garantia do Tempo de Serviço – Workers’ Guarantee Fund), which is available for $2.00 financing (under the control of the Ministry of Both electric buses with 7% interest rate Cities) the renewal or expansion of bus fleets for $1.75 companies that have concessions or permission to run urban transport services. $1.50 $0.10 $0.09 $0.14 Other financial mechanisms in São Paulo include $0.09 $1.25 $0.14 international lending options such as: $0.41 $0.39 $0.15 $0.09 $1.00 $0.12 • Green bonds, $0.15 $0.15 $0.52 • International Finance Corporation (IFC) $0.08 $0.08 $0.39 $0.75 support, $0.17 $0.17 • Climate Investment Funds (CIF), or $0.50 • Financing and Export Credit Agencies (ECAs) $0.25 $0.58 $0.58 $0.58 $0.58 support. Figure 6.5 shows the effect of lower interest rates $- Diesel E6 Biofuel Electric Depot Electric Fa st C ha rge on the TCO per kilometer for different clean bus C ha rge technologies. Staff Capital investment Interest payment Maintenance Fuel Fuel tax Source: Steer for the World Bank based on various sources summarized in Appendix A. 53 Clean Buses in Latin American Cities Table 6.9: Roadmap for São Paulo's new bus tendering process Timeframe Stakeholders Government Recommendations Status Short Medium Long Private Term Term Term Local Nation sector Create standards for secondary use, ENV3 recycling and/or final disposal of vehicle Essential N batteries. Evaluate prioritizing zero/low emission zones ENV5 Supportive ● L or corridors. Create common technical standards for bus ENE3 Desirable L N P charging. Evaluate the possibilities and economies of ENE4 Supportive L N P lower tariffs for slow charging at night. Conduct route compatibility analyses with PT1 clean bus options to define the best suitable Desirable ● L P technologies. Promote independent and open knowledge PT2 Supportive ► L N P transfer of performance data from pilots. Pursue regulatory and contractual GOV3 frameworks to promote energy company Desirable L N P participation in BEB deployment. Specify the lead entity or body to coordinate clean bus deployment strategies and GOV4 Supportive L conduct periodic stakeholder outreach to gauge reactions to clean buses. Evaluate the potential for cross-modal FFF1 Desirable L N subsidies to support public transport. Diversify and incentivize access to finance FFF3 Supportive ► L N mechanisms. Explore leasing schemes for buses and FFF6 batteries and guarantees to reduce technical Desirable L N P risks. Source: Steer São Paulo's New Bus Tendering Process battery leasing or substitution programs (at least in the first stage of the procurement process) and Evaluation of the current bus routes that helping to transfer knowledge to concessionaires. could operate exclusively with clean buses facilitates planning, cost evaluation, charging The terms of the bidding processes should enable infrastructure installation and results monitoring. a range of interested parties, such as energy The identification of high pollution areas, and companies, financial institutions, manufacturers creation of zero- or low-emission zones or and others, to participate directly in the corridors restricted to clean buses, could enable concessions. This could help minimize the risks their gradual implementation in city areas liable to associated with the limited financial capacity of benefit most from early investment. bus concessionaires and/or their concern about technology risks (e.g. by facilitating leasing The bus tendering process could also include route schemes or capital contributions). However, to be compatibility analyses to define the priorities for fully effective it will also be necessary to revisit the BEB implementation, selecting routes with the commercial model and strengthen the concession potential for service efficiency improvements rules with mechanisms that can guarantee or to overcome current technology limitations. reduce the long-term risks of default on payments. Manufacturers can also play an active role in the introduction of clean buses, offering maintenance, 54 Clean Buses in Latin American Cities | 6 New bus corridors with clean buses The City government can promote the benefits of reduced noise and pollutant emissions, and Network planning and the construction of study normative changes to land use restrictions new bus corridors and terminals represent for bus depots and terminals. São Paulo is an opportunity simultaneously to implement currently mapping noise levels, which will help zero- or low-emission corridors. It also provides establish noise reduction targets in critical areas an opportunity to introduce value-for-money and stimulate the implementation of corridors methodologies that include emission and noise operating with BEBs. reduction factors in the cost-benefit evaluation processes. The corridors should be evaluated We recommend diversifying and encouraging by taking into account the external benefits to access to available financing mechanisms. In the urban population arising from improved addition to the options described above, new environmental quality and better health outcomes projects could be financed through land value due to emissions and noise reduction. This would capture mechanisms linked to other measures, encourage cleaner technologies to be selected which would require an integrated approach to where, although the direct (internal) costs may planning by the Mobility and Urban Planning be higher, the new technologies will in due course Secretariats. provide better value-for-money solutions. Table 6.10: Roadmap for new bus corridors with clean buses in São Paulo Timeframe Stakeholders Government Recommendations Status Short Medium Long Private Term Term Term Local Nation sector Include emission and noise reduction ENV4 elements in cost-benefit evaluation Desirable L processes. Evaluate prioritizing zero/low emission zones ENV5 Supportive L N or corridors. Promote independent and open knowledge PT2 Supportive ► L N P transfer of performance data from pilots. Promote benefits of noise and emissions PT3 reduction and study changes to land use Supportive L N P restrictions for depots and terminals. Pursue regulatory & contractual frameworks GOV3 to promote energy company participation in Desirable L N P BEB deployment. Diversify and incentivize access to finance FFF3 Supportive ► L N mechanisms. Source: Steer 55 Clean Buses in Latin American Cities Stakeholders National government - Ministry of Cities: manages financing programs, as well as the credit line These recommendations would require actions to REFROTA, of the Pro-Transportation Program, be taken by local, state and national government which uses the National Workers Guarantee Fund entities, as follows: to finance the renewal or expansion of bus fleets. Local government - São Paulo Transporte National government - Ministry of Environment: SA (SPTrans): subordinated to the Municipal manages the non-reimbursable climate fund Secretary of Mobility and Transport, manages all (Fundo Clima) which is an instrument of the the municipal bus routes in São Paulo. National Policy on Climate Change. The fund aims Local government – Municipal Secretariat for to finance studies and projects to reduce GHGs Green Spaces and the Environment (SVMA): emissions and adapt to climate change impacts. responsible for climate change, air quality and Ministry of Industry, Foreign Trade and Services atmospheric emissions at the municipal level. The (MDIC): is working with GIZ and Rota 2030 to SVMA, together with other municipal secretariats develop plans to promote the electromobility and institutions, form the São Paulo Municipality industry in Brazil. Climate Committee, an advisory body created in 2009 by the previous city law on climate change (Law No. 14,933 of 2009). São Paulo State Government: responsible for the provision of metropolitan public transport systems, including metropolitan buses managed by EMTU (Metropolitan Urban Transportation Company of São Paulo). 56 Clean Buses in Latin American Cities | 6 Conclusions While clean bus uptake may be constrained by fleets and generally improve public transport various barriers depending on environmental, services, reduce fleet financing costs and relieve energy, regulatory, institutional and financial pressure on user fares and / or public subsidies. contexts, there are mechanisms for overcoming Overcoming barriers to clean bus deployment these barriers and for fostering an enabling will involve active stakeholder participation, a environment for their uptake in the region. transparent approach to technical performance and implementation costs, and an extensive Since the operating and maintenance costs of review of available financing mechanisms. battery electric buses are lower, these buses are the best option from the TCO point of Pilot projects are essential for measuring the view in Mexico City and Santiago. However, real-world consumption, performance, capacity, concessionaires are reluctant to pilot these costs and compatibility of clean buses on technologies due to their limited knowledge of specific routes. The tendering processes for the operational and maintenance requirements fleet purchasing must be open and competitive, involved. It is true that these technologies have and contain clearly defined bus performance operational constraints requiring evaluation prior requirements. Moreover, innovative contractual to their implementation. and business models should be pursued to reward low TCO technologies, share risks and overcome Even in cities where BEBs at present have higher the challenges represented by high upfront costs. TCOs then diesel buses, the reduction of diesel subsidies would help to encourage the adoption Implemented together, the recommended of clean bus technologies. On the negative side, innovations in public transport, environmental other city- and corridor-specific barriers may policy, energy and infrastructure, governance increase implementation costs given the need for and markets and funding and finance can help depot reconfiguration, electric power network cities to accelerate the deployment of clean extensions and costs involved in the battery- bus technologies that are capable of yielding charging infrastructure. significant economic, social and environmental benefits. Clean buses are an opportunity to incorporate new third parties in schemes to provide new 57 58 Clean Buses in Latin American Cities Clean Buses in Latin American Cities | References References • Bloomberg New Energy Finance (2018). “Electric Buses in Cities: Driving Towards Cleaner Air and Lower CO2.” https://about.bnef.com/blog/electric-buses-cities-driving-towards-cleaner-air-lower-co2/ • C40 (2016). “Daring Cities Make Bold Air Quality Commitment To Remove All Diesel Vehicles By 2025.” https://www.c40.org/blog_posts/daring-cities-make-bold-air-quality-commitment-to-remove-all- diesel-vehicles-by-2025 • C40 (n/d). “GHG emissions interactive dashboard.” http://www.c40.org/other/gpc-dashboard • Carnegie Mellon University (2017). “Which Alternative Fuel Technology is Best for Transit Buses? Scott Institute for Energy Innovation.” https://www.cmu.edu/energy/education-outreach/public- outreach/17-104%20Policy%20Brief%20Buses_WEB.pdf • CIVITAS WIKI consortium (2013) “Smart choices for your city - Clean Buses for your city .” http:// civitas.eu/sites/default/files/civitas_policy_note_clean_buses_for_your_city.pdf • Delucchi, M. (2010). “Impacts of biofuels on climate change, water use, and land use,” Annals of New York Academy of Sciences. https://nyaspubs.onlinelibrary.wiley.com/doi/pdf/10.1111/j.1749- 6632.2010.05457.x • EU Clean Fleets (2014). Clean Buses – Experiences with Fuel and Technology Options. http:// www.clean-fleets.eu/fileadmin/files/Clean_Buses_-_Experiences_with_Fuel_and_Technology_ Options_2.1.pdf • IADB. (2013). “Low carbon technologies can transform Latin America’s bus fleets- Lessons from the C40-CCI Hybrid & Electric Bus Test Program”. https://webimages.iadb.org/publications/english/ document/Low-Carbon-Technologies-Can-Transform-Latin-America-Bus-Fleets.pdf • ICCT. (2017). “Low-carbon technology pathways for soot-free urban bus fleets in 20 megacities.” https://www.theicct.org/publications/low-carbon-technology-pathways-soot-free-urban-bus-fleets- 20-megacities Washington: The International Council on Clean Transportation. • IEA. (2015). “World Energy Outlook.” https://www.iea.org/publications/freepublications/publication/ WEO2015.pdf • Lopez Dodero, A. H. (2016). Bus Financing in Urban Transport Projects in Mexico: Challenges and Opportunities. Mexico City: The World Bank Group. • Steer (2018), “Clean Buses in LAC: Diagnosis Report.” World Bank [internal report]. • Steer (2018), “Clean Buses in LAC: Recommendations.” World Bank [internal report]. • US Environmental Protection Agency (US EPA, a), “Health and Environmental Effects of Particulate Matter (PM).” https://www.epa.gov/pm-pollution/health-and-environmental-effects-particulate- matter-pm • US Environmental Protection Agency (US EPA, b), “How Mobile Source Pollution Affects Your Health,” https://www.epa.gov/mobile-source-pollution/how-mobile-source-pollution-affects-your-health#smog • World Bank (2018), “Cost-effectiveness of clean bus technologies for five LATAM cities.” [in press] 59 60 Clean Buses in Latin American Cities Clean Buses in Latin American Cities | Appendix A: Key Assumptions for World Bank TCO Analysis Appendix A: Key Assumptions for World Bank TCO Analysis Following are key data inputs and assumptions clean bus costs are quite dynamic and these underlying World Bank TCO estimates. As noted, inputs represent only a snapshot in time. Table A.1: Key data inputs and assumptions underlying World Bank TCO Analyses - Buenos Aires Diesel Euro Electric bus Electric bus Units Diesel Euro V CNG bus Biofuel bus VI Depot Fast charge Vehicle Acquisition* USD $170,000 $180,000 $200,000 $170,000 $425,000 $367,030 Second battery USD - - - - $170,000 - Acquisition km/lt, Fuel performance km/kWh, 1.96 km/lt 1.96 km/lt 1.90 km/m3 1.76 km/lt 0.78 km/kWh 0.87 km/kWh km/m3. USD/lt, 0.10 0.103 Fuel Costs* USD/kWh, 0.63 USD/lt 0.66 USD/lt 0.33 USD/m3 0.63 USD/lt USD/kWh USD/kWh USD/m3 Maintenance Costs USD/km 0.22 0.22 0.26 0.22 0.15 0.15 Infrastructure USD $0 $0 $0 $0 $12,500 $7,000 Costs** Labor Costs USD/year $41,400 $41,400 $41,400 $41,400 $41,400 $41,400 Interest rate % 17.50% 17.50% 17.50% 17.50% 17.50% 17.50% Useful life Years 10 10 10 10 10 10 Sources: Instituto Metropolitano Protransporte de Lima, Agrale, Comisión Nacional de Regulación del Transporte, Ministerio de Ambiente y Desarrollo Sustentable, Ministerio de Energía, interview with Metbus Chile, Steer. *Including taxes. ** Part or all the cost of infrastructure may be included in Fuel Costs. Table A.2: Key data inputs and assumptions underlying World Bank TCO Analyses - Mexico City Diesel Euro Diesel Euro Electric bus Electric bus Units Hybrid bus CNG bus V VI Depot Fast charge Vehicle Acquisition* USD $220,000 $230,000 $360,000 $264,000 $330,000 $285,000 Second battery USD - - $132,000 - Acquisition km/lt, km/Kwh, Fuel performance 1.85 km/lt 1.85 km/lt 2.7 km/lt 1.37 km/m3 0.78 km/kWh 0.87 km/kWh km/m3 USD/lt, 0.14 0.16 Fuel Costs* USD/kWh, 1.06 USD/lt 1.06 USD/lt 1.06 USD/lt 0.49 USD/m3 USD/kWh USD/kWh USD/m3 Maintenance Costs USD/km 0.28 0.28 0.33 0.34 0.22 0.22 Infrastructure USD $0 $0 $0 $0 $12,500 $7,000 Costs** Labor Costs USD/year $15,882 $15,882 $15,882 $15,882 $15,882 $15,882 Interest rate % 12.65% 12.65% 12.65% 12.65% 12.65% 12.65% Useful life Years 10 10 10 10 10 10 Sources: Interview with CISA (metrobus and corridor concessionaire group), interview with Metbus Chile, Steer. *Including taxes. ** Part or all the cost of infrastructure may be included in Fuel Costs. 61 Clean Buses in Latin American Cities Table A.3: Key data inputs and assumptions underlying World Bank TCO Analyses - Montevideo B a ttery E lec tric B a ttery E lec tric U n its Dies el E u ro III Dies el E u ro V I B u s Depo t Fa s t C h a rg e Vehicle Acquisition* USD $150,000 $180,000 $450,000 $388,620 Second battery Acquisition USD - - $180,000 - km/lt, km/Kwh, Fuel performance 2.50 km/lt 2.50 km/lt 0.78 km/kWh 0.87 km/kWh USD/lt, USD/kWh, Fuel Costs* ** 0.32 USD/lt 0.32 USD/lt 0.045 USD/kWh 0.05 USD/kWh USD/km Maintenance Costs USD/km 0.22 0.22 0.12 0.12 Infrastructure Costs*** USD - - $12,500 $12,500 Labor Costs USD/year $70,701 $70,701 $70,701 $70,701 Interest rate % 13.50% 13.50% 13.50% 13.50% Useful life Years 15 15 10 10 Sources: Municipalidad de Montevideo, Intendencia de Montevideo, Administración Nacional de Usinas y Transmisiones Eléctricas (UTE), Decreto 411/010 del Ministerio de Economía y Finanzas, ANCAP, Ministerio de Industria, Energía y Miniería, Ministerio de Energía de Argentina, interview with Metbus Chile, Steer. * Including taxes. **Subsidized by about 75%. *** Part or all the cost of infrastructure may be included in Fuel Costs. Table A.4: Key data inputs and assumptions underlying World Bank TCO Analyses - Santiago B a ttery E lec tric B a ttery E lec tric U n its Dies el E u ro V I C NG bu s B u s Depo t Fa s t C h a rg e Vehicle Acquisition* USD $196,964 $225,267 $300,000 $259,090 Second battery USD - - $120,000 - Acquisition km/Kwh, km/m3, Fuel performance 2.15 km/lt 1.84 km/m3 0.78 km/KWh 0.87 km/KWh km/lt USD/kWh, Fuel Costs* 0.69 USD/lt 0.60 USD/lt 0.083 USD/kWh 0.091 USD/kWh USD/m3, USD/lt Maintenance Costs USD/km 0.24 0.29 0.17 0.17 Infrastructure USD $0 $0 $12,500 $7,000 Costs** Labor Costs USD/year $44,278 $44,278 $44,278 $44,278 Interest rate % 7.50% 7.50% 5.60% 5.60% Useful life Years 10 10 10 10 Sources: Interviews with Vule Metrogas, Enel and Metbus; Bloomberg, Transantiago, Comisión Nacional de Energía and Steer. *Including taxes. ** Part or all the cost of infrastructure may be included in Fuel Costs. 62 Clean Buses in Latin American Cities | Appendix A: Key Assumptions for World Bank TCO Analysis Table A.5: Key data inputs and assumptions underlying World Bank TCO Analyses - São Paulo B a ttery E lec tric B a ttery E lec tric U n its Dies el E u ro V I B io f u el bu s B u s Depo t Fa s t C h a rg e Vehicle Acquisition* USD $120,000 $120,000 $311,140 $268,700 Second battery USD - - $124,456 - Acquisition Fuel performance km/Kwh, km/lt 1.82 km/lt 1.91 km/lt 0.78 USD/kWh 0.87 USD/kWh Fuel Costs* USD/kWh, USD/lt 0.93 USD/lt 0.926 USD/lt 0.11 USD/kWh 0.12 USD/kWh Maintenance Costs USD/km 0.15 0.15 0.09 0.09 Infrastructure Costs** USD $0 $0 $12,500 $7,000 Labor Costs USD/year $40,468 $40,468 $40,468 $40,468 Interest rate % 11.10% 11.10% 11.10% 11.10% Useful life Years 10 10 10 10 Sources: Federação Nacional do comércio de Combustíveis e de Lubrificantes, Asociación Brasileña de Vehículos Eléctricos, ICCT: International Scenario Study on Public Policies for Electric Vehicles in Public and Private Fleets in Urban Areas, Interview with Metbus Chile and Steer. *Including taxes. ** Part or all the cost of infrastructure may be included in Fuel Costs. 63 64 Clean Buses in Latin American Cities Clean Buses in Latin American Cities | Appendix B: TCO Estimates for Each of the Five Cities Appendix B: TCO Estimates for Each of the Five Cities The following Tables summarize TCO by bus technology for each of the five cities. Table B.1: World Bank Clean Bus TCO Estimates ($USD/km) - Buenos Aires Dies el E u ro E lec tric bu s E lec tric bu s C o s t P a ra meter Dies el E u ro V B io f u el bu s C NG bu s VI Depo t f a s t c h a rg e Fuel 0.21 0.23 0.23 0.14 0.07 0.07 Fuel tax 0.11 0.11 0.12 0.03 0.05 0.05 Road tax 0.00 0.00 0.00 0.00 0.00 0.00 Purchase tax 0.04 0.04 0.04 0.05 0.12 0.09 Maintenance 0.22 0.22 0.22 0.26 0.15 0.15 Capital investment* 0.19 0.20 0.19 0.22 0.55 0.42 Interest payment 0.19 0.20 0.19 0.22 0.54 0.42 Staff 0.57 0.57 0.57 0.57 0.57 0.57 To ta l 1. 5 3 1. 5 7 1. 5 7 1. 5 0 2. 0 5 1. 77 *No tax included Table B.2: World Bank Clean Bus TCO Estimates ($USD/km) - Mexico City Dies el E u ro E lec tric bu s E lec tric B u s C o s t P a ra meter Dies el E u ro V C NG bu s Hy brid bu s VI Depo t Fa s t C h a rg e Fuel 0.49 0.49 0.36 0.34 0.19 0.18 Fuel tax 0.08 0.08 0.00 0.05 0.00 0.00 Road tax 0.00 0.00 0.00 0.00 0.00 0.00 Purchase tax 0.05 0.05 0.11 0.15 0.07 0.05 Maintenance 0.28 0.28 0.34 0.33 0.22 0.22 Capital investment* 0.21 0.22 0.25 0.34 0.31 0.24 Interest payment 0.31 0.33 0.33 0.45 0.47 0.36 Staff 0.23 0.23 0.23 0.23 0.23 0.23 To ta l 1. 6 5 1. 6 8 1. 6 1 1. 8 8 1. 4 9 1. 29 *Including taxes and interests. 65 Clean Buses in Latin American Cities Table B.3: World Bank Clean Bus TCO Estimates ($USD/km) - Montevideo C o s t P a ra meter Dies el E u ro III Dies el E u ro V I E lec tric B u s Depo t E lec tric B u s Fa s t Fuel 0.13 0.13 0.06 0.06 Fuel tax 0.00 0.00 0.00 0.00 Road tax 0.00 0.00 0.00 0.00 Purchase tax 0.00 0.00 0.00 0.00 Maintenance 0.22 0.22 0.12 0.12 Capital investment* 0.21 0.25 0.72 0.55 Interest payment 0.13 0.15 0.43 0.33 Staff 0.98 0.98 0.98 0.98 To ta l 1. 6 7 1. 74 2. 3 1 2. 0 5 *Including taxes and interests. Table B.4: World Bank Clean Bus TCO Estimates ($USD/km) - Santiago B a ttery E lec tric C o s t P a ra meter Dies el E u ro V I C NG bu s B a ttery E lec tric B u s Fa s t Fuel 0.27 0.25 0.11 0.10 Fuel tax 0.06 0.07 0.00 0.00 Road tax 0.00 0.00 0.00 0.00 Purchase tax 0.04 0.05 0.07 0.05 Maintenance 0.24 0.29 0.17 0.17 Capital investment* 0.21 0.24 0.38 0.29 Interest payment 0.08 0.09 0.11 0.08 Staff 0.57 0.57 0.57 0.57 To ta l 1. 4 7 1. 5 7 1. 3 9 1. 26 *Including taxes and interests. Table B.5: World Bank Clean Bus TCO Estimates ($USD/km) - São Paulo C o s t P a ra meter Dies el E u ro V I B io f u el bu s E lec tric B u s Depo t E lec tric B u s Fa s t Fuel 0.41 0.39 0.14 0.14 Fuel tax 0.10 0.09 0.00 0.00 Road tax 0.00 0.00 0.00 0.00 Purchase tax 0.00 0.00 0.00 0.00 Maintenance 0.15 0.15 0.09 0.09 Capital investment* 0.17 0.17 0.52 0.39 Interest payment 0.08 0.08 0.25 0.19 Staff 0.58 0.58 0.58 0.58 To ta l 1. 4 9 1. 4 7 1. 5 1 1. 5 3 *Including taxes and interests. 66 67 Clean Buses in Latin American Cities | Appendix B: TCO Estimates for Each of the Five Cities