Public Disclosure Authorized Public Disclosure Authorized

GREEN YOUR RIDE Clean in Latin America Summary report

January 2019 Public Disclosure Authorized Public Disclosure Authorized

I

1 (2013). IADB (2015), EA emissions 2

Transport is the fastest growing growing fastest is the greenhousesource gas of emissions worldwide, responsible CO global of 23% for from fuel combustion. Driven of rate unprecedented the by and demand for transport has transportation, of contributor largest the become Latin in emissions gas greenhouse America.1 ii Clean Buses in Latin American Cities Clean Buses in Latin American Cities American Latin in Buses Clean

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. Systems 24 B. Environmental Policies 26 . Sector 28 . Governance and Markets 30 . Funding and Finance 32 Self Evaluations 33 5 General Recommendations 35

6 City-Specific Recommendations and Implementation Roadmaps 39

A. Buenos Aires 40 B. 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 The team would also Acknowledgements This report was developed Steer by for the NDC Clean Bus Latin Americain and the ProjectCaribbean led Bianca by (LAC) Bianchi Alves Sethi, and Kavita and the team, including Abel Lopez Dodero, Alejandro Hoyos Guerrero, Diego Puga, Eugenia Perez Prada, Fiamma Hellem Yeghyaian, Miranda, Monica Porcidonio, Pedro Orbaiz, Bose,Ranjan Roberto Abraham Vargas, Winkelman, andSteve Yin Qiu. The report received detailed contributions Abel by Lopez Dodero, Pedro Orbaiz, Winkelman Steve and Yin Qiu. The authors to thank would like peer-reviewers Dominic Patella, Jaques, Ivan and MariusFranck Taillandier for Kaiser the valuable contributions. to thank Practicelike Managers Shomik Raj Mehndiratta and Juan Gaviria, and Sector Leader Procee Paul for their guidance and support.

This report is a product the of staffof The Bank with externalWorld contributions. The findings,interpretations, and conclusions expressed this in volume do not necessarily reflectWorld the Bank,viewsof its The Board Executiveof Directors, or the governments represent.they Bank doesThe World not guarantee the accuracy the of data included this in work. The boundaries, colors denominations and other information shown map this in on any work does judgement any not imply on the part Bank concerning The of World the legal status territory any of or the endorsement or boundaries. such of acceptance

iv Clean Buses in Latin American Cities

Clean Buses in Latin American Cities American Latin in Buses Clean 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), 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. verview Their diverse experience is valuable for informing regional replication efforts on clean bus technologies.

To transform transportation in Latin America for , 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 , as well as the operational efficiency of transport systems. In recent years, a range of clean 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 , and programmatic approach aimed at accelerating lower tailpipe and lifecycle emissions compared the transition to buses. This with conventional buses. These technologies approach embraces knowledge sharing, strategic could improve air quality and public 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 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), and hydrogen-

1 . (Chapter 6) . This is followed by : A. Transport Public . The report concludes by from LAC counterparts. from 2 , and analysis an the of cost- , the costs total ownership of of ) are greatest of concern. Feasibility 2 T involved stakeholders from each country. This is a subjective evaluation that that evaluation subjective a is This country. each from stakeholders involved reflects the knowledge of the participants at the workshop but who did not necessarily possess information on all the relevant areas. The evaluation doesnot represent the view of The World Bank or Steer.

The report goes on to provide general recommendations for improvements within each theof factors, five categorizing eachintervention as essential, desirable or supportive the of level priorityof (Chapter 5) recommending specificinterventions for each city and displays implementation an roadmap with suggested specific timeframes, priorityand levels involvement required stakeholder and municipalities nine in countries. Also present were regional stakeholders, including financiers, manufacturers, national transport operators’ partner and distributors, energy associations, organizations, consulting firms,and research institutes fromthe US, China, UK, India and Spain. The discussions and feedback from the were usedevent to fine-tune findingsthe and recommendations this in report. This report first presentsoverviewan of the five cities clean and of a variety bus technologies (Chapter 1) different clean bus technologiesin each city (Chapter 2) effectivenessof emissions reductionsin the local contexts (Chapter 3) a summary the of diagnostic findingsgrouped factorskey five into that constitute the enabling (Chapter environment 4) Systems, B. Environmental Policies, Energy C. Governance D. and Regulation, and E. Sector, Funding and Finance. Chapter 4 also includes the self-evaluation results 2 he self-evaluation exercise, carried out during the Iguassu Falls workshop, Clean Bus Technologies Bus Clean The performance, emissions and costs of clean bus technologies can significantly vary depending on local conditions, including corridor characteristics, energy prices and the market vehicles of availability and parts. The optimal choice clean of bus technology for a particular or corridorcity will depend factors, of on a variety including air which emissions (e.. or CO considerations such as upfront costs, availability finance,of easeof operation and maintenance, institutional capacities, and political will, also considered. be to need Policy Environmental Environmental Energy and Public Public Factors The Five Enabling Transport

Governance and Regulationand

Financing Funding and and Funding powered buses. The clean bus concept in general entails cities adopting a noncommittal technology-neutral approach conduct they while evidence-based assessments specific of bus technologies tailored local to conditions. The study includes diagnostics, consultation and recommendations regarding the drivers and barriers cleaner of to the uptake technologies for public transport cities five in Latinin America: Mexico (Mexico), City Buenos Aires (Argentina), and Montevideo Santiago (Uruguay), (Chile) These citiesSão (Brazil). were Paulo selected to represent a range sizes, of demographics, economies, transport systems, and governance structures. Their experience is valuable for informing regional replication efforts on clean bus technologies. The data collection methodology included reviewing the latest technical literature and local workshops and interviews with primary stakeholders cities. five all in The stakeholders included players key from government institutions, vehicle manufacturers,institutions, financial bus concessionaires and civil society. Data collection sought to identify the main barriers and opportunities clean of for the buses, uptake factorskey analyzingby the five of their enabling environment: Transport, Public Environmental EnergyPolicy, and Infrastructure, Governance and Regulation, and Funding and Finance. The work ended with a three-day regional training Iguassu in event Falls, Brazil. The was event attended Latin American by and the Caribbean counterparts(LAC) from ministries transport, of energy, environment, and finance from 12 cities 2 Clean Buses in Latin American Cities 3 Clean Buses in Latin American Cities | Overview can 6 than 3 such as: diesel (the such as: diesel (the 5 . 4 T B T B infrastructure, battery operations and maintenance, overhaul and labor, taxes on vehicles and fuels. CO2. Lower Cleaner and Air Towards The selection of bus types by city has been determined based on clean bus technologies that the transportation ministry or key institution has set forevaluation, but they have also been validated with the Local WB consultant. and 50% higher than in Santiago (comparing the same vehicle model).

TCO analysesTCO were undertaken for the five Latin American cities using local, national and considering and sources, data international different bus technologies diesel buses but, according to Bloomberg, most BEBs are expected than to have diesel lower TCO buses within 2 - 3 years, and the upfront costs for BEBs are projected to be equivalent to diesel buses 2030 by 3 otal Costs of Ownership (TCO) include the lifetime costs of vehicle purchase, 4 5 loomberg New Energy Finance, 2018. Electric Buses in Cities: Driving hese technologies are not necessarily present today in all cities evaluated. 6 EB prices before applicable taxes in Buenos Aires and Montevideo are 42% higher Total Costs Ownership of higher Total (TCO) sometimes lower costs. green financing Moreover, mechanisms can offer significant benefits in countries with interest high rates. baseline depot overnight and for fast each city), "opportunity" charging BEBs, and CNG, HBD, . revealed evaluation The that TCO vehicle acquisition costs are differentin each city,and that competitive processes Santiago) (e.g. 2 and per km) 2 per km) per kWh) and corridor-specific2 perdrive kWh) cycles 2 emissions than BEBs. CNG buses have low Total Cost of Ownership Cost of Total Clean bus technologies have higher upfront capital costs than diesel buses, but these are often offsetby operationallower and maintenance costs. Current BEBs generally have BEBs, and with zero greenhouse gas (GHG) pollutantair emissions at the tailpipe, are the most energy-efficientoption among the clean bus technologies, haveand the typically lowest lifecycle GHG emissions (grams CO under a well-to-wheels (WTW) analysis. However, the carbon intensity the of electricity grid (grams CO significantly acceleration, deceleration) (speed, impact GHG emission rates. VI Euro diesel buses have low air emission rates, but higher CO particulate emissions, (PM) but higher CO -precursor than emissions VI Euro (NOx) buses. Net GHG emissions from biofuel buses depend on their energy source and production method, with PM levels similar to VI Euro diesel, but higher NOx emissions. The need for tend to focus on The vast majority of Procurement processes Procurement reducing upfront costs rather than minimizing TCO. Understanding and managing the new new the managing and Understanding institutional frameworks. Lifting financing constraints. Cities face financial challengesin enhancing the quality, frequency and coverage public of transport systems. The cities face conflicting pressures to increaseto fares keep low (i.e. affordability) meet and fare to minimize subsidies (i.e.to costs upfront higher The constraints). budget cleanof buses can exacerbate funding and commercial since especially challenges, finance banks and often operators have minimal only knowledge clean of bus technologies and seek to avoid risks. market High upfront costs clean of buses, especially for BEBs, pose a significant barrier to short-term principally some in uptake, cities where vehicle prices are still high. Electricity distribution networks under development. transportation energy use the in cities five is most the of nationalbased on oil. However, governments have set objectives to increase electricity production from renewable sources. New investments will be needed local in electricity distribution networks to support high BEB penetration, including for fast-chargers. competition.Market High concentration of public transport service delivery a few by companies with strong power market can lead service,to low levels of inefficiencies, and high fares. Limited competition market presents a significant barrier in most citiesand current bus operators are resistant to change operating practices and technologies. complex institutional coordination and constraints on competition are emergingas barrierskey to the development the of market for cleaner bus technologies. Forthcoming concession tenders Santiago in and São Paulo present opportunities potential introducing for clean buses. Electricity providers can serve as strategic partners deploying in BEBs, and there are opportunities to expand clean capacity.

• • • • • • 2 or air when 7 to clean bus 8 2 emissions. Therefore, the 9 2 emissions

W I 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 standardsclaim. 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. calculated by taking the difference in costs between clean buses and Euro diesel buses and dividing that by the difference in CO Small-scale interventions and lack of data on costs and performance. Lower-emission buses represent about one only percent all of buses the in cities. five While some technologies have been piloted the in cities, five operators costs, the about concerns general express maintenance and operations, performance, technologies. unfamiliar of A lack data of on energy,environmental, and costs local actual and operational performance is also a barrier to comprehensive technology comparisons. Public transport system inefficiencies − such as frominformal services offered by small vehicles with costs high operation, of low- servicequality and increasing expenditures are greaterof concern to both the authorities city and the public than emissions CO of pollutants.

technologies. The analysis considered for TCO each technology, as as well the externality costs Cost-effectiveness air of (NOx and PM). analysis is dependent on a set factors of that and as technologies time evolve), (e.g. over vary aresubject to local interpretation. 8 e assume abase technology of Euro Vfor diesel buses for consistency 9 the presentation of the results below we consider atechnology to be “cost 7 arginal abatement costs are aratio of incremental cost-effectiveness • Of the various factors impacting the pace of adoption clean of technologies urban in transport thein cities, five the following issues emerged as challenges:key • Diagnostics of Key Barriers and and Barriers Key of Diagnostics Opportunities The World Bank conductedThe World a cost-effectiveness analysis the of marginal abatement cost (MAC) reducingof a tonne CO of Cost Effectiveness Analysis Analysis Effectiveness Cost results summarized this in report should be taken asa depiction the of current situation at the time publication,of and broader generalizations are advised.not switching from diesel buses V) (Euro 4 Clean Buses in Latin American Cities

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Clean Buses in Latin American Cities | Overview Q Acueducto

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N 242 Bolivar Ñ LL Eje Central Algarín 1 U U 011 Improving data collection and on air isessential order in to capture more thefully benefitsof clean vehicle technology AuthoritiesPublic should provide stakeholders timely and up-to-dateinformation on the capacity power of distribution networks and the infrastructure charging the of adequacy and nationalCity governments could join hands with research institutes and academia to share the state-of-the-art battery technology with respect to electric vehicles Policies which address distortions market in the operations conventional vehicles of and harmonize emissions standards will do much to theimprove economic outcomes arising from private sector the in involvement adoption of vehicles clean Improving competition market and concession processes can advance the deployment of buses clean POTRERO Y E Libre

S Central 246

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Central L. Cárdenas AZTECA ESTADIO • • • • • 1

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A Total Cost Ownership of methodologyA Total (TCO) is recommended the to evaluate financial performance clean of technology buses, particularly BEBs. The selection clean of bus technology should consider both corridor-specific performance distance,requirements speed, (e.g. capacity, as as well city-wide the of availability noise) infrastructure Nascent environmental policies for policies environmental Nascent technologies.alternative working to reduce GHG emissions and improve quality,air but often lack data to support and target policy development. Noise pollution isa significant concern but has attractedlimited policy attention. The cities lackexperience regulatingof BEB battery disposal and need policy tools to support battery reuse for . I Ajusco - Picacho J L Ròmulo O’ Farril O’ Ròmulo G 133

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6 Clean Buses in Latin American Cities

Clean Buses in Latin American Cities American Latin in Buses Clean Introduction 1

Clean buses cover a variety of fuel and vehicle technology combinations. This report considers the following technologies: Euro VI Diesel, Compressed , Biofuel, Hybrid diesel and Battery Electric Buses.

| I ntroduction

Specific clean bus technologies face a variety performance (range, efficiency), andenvironment : advantages and disadvantages in categories GHGs, , , 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 • 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

• Zero tailpipe emissions • Currently in an experimental stage 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 Bus 10 2 emissions, and . 2 , but relatively CO high 10 can penetrate deep into the lungs and has been linked to lung and heart ailments (US EPA, Nitrogen a). oxides (NOx) contribute to ground-level pollution, which harms breathing and aggravates lung diseases (US EPA, b). E xposure to particulate matter (PM), especially that smaller than 10 microns, BEB Battery electric buses are evolving an technology that is just starting to be commercially available Latin America.in BEBs require upfront high costs for vehicle purchase, but lower maintenance entail and operating costs. Secondary markets for BEBs do not currently exist, thus reducing their full for value fleetowners. With decliningrapidly battery costs the BEBs of TCOs are expected to be lower than diesel the over next few years. BEBs may require electricity distribution infrastructure as forupgrades rapid-charging). BEBs (such do not emit local pollutants air and offer potential GHG savings 50-100% of depending on the sources electricity of generation. Some BEBs face range limitations terms in the of number of kilometers that they can drive per charge or per day, so technology selection must becarefully aligned with route requirements. Hydrogen Hydrogen buses are currently experimental at an stage and face both vehicle high and infrastructure costs. As with BEBs they have zero tailpipe emissions and have the potential for 50- 100% GHG savings, depending on thehydrogen production and transport methods. 10 Emissions and Noise Pollution from from Pollution Noise and Emissions Technologies Bus Clean Air pollutant and GHG emissions are a function energyof source and vehicle technology. emissions can alsodepending significantly vary on local and technological conditions such as drive cycle acceleration (speeds, and and thedeceleration) condition emission of control devices. Electric buses tend to have the lowest emissions overall rates, CNG buses have low PM VIEuro diesel buses perform for pollution well air but not for CO Thorough GHG analysis should consider full life- cycle emissions, including upstream emissions electricity generation,(e.g. biofuel production, methane leakage from fuel natural gas pipelines), refining processes,and downstream emissions vehicle re-use(e.g. and disposal). 2

Diesel- Euro VI Euro VI diesel buses are commerciallyavailable and have the lowest purchase costs the of clean bus technologies examined. Existing secondary markets for used dieselbuses creates value for fleetowners that is not currently available for newer technologies. VI Euro diesel does not require new transportation infrastructure, but does require ultra-low of availability market sulfur diesel, which may require changes fuel in supply infrastructure (importing, refining,distribution). emissionsan From perspective, VI Euro diesel offer modestonly GHG benefits,and have significantly lower and PM NOx emissions rates than older diesel technologies, but not as low as BEBs. CNG Compressed natural gas buses are readily available from manufacturers at a modest price premium compared to other clean bus be would technologies. Infrastructure upgrades required there if is inadequate an network for CNG distribution. CNG buses emit more CO and NOx than VI Euro diesel buses but have the potential for significant reductionsin particulate emissions. Biofuels Biofuels from a range feedstocks of can be used to power urban buses including and bio-CNG. from biofuels can be 40-60% lower than diesel, depending on feedstocks and production techniques, but NOx emissions are much higher than for VI Euro diesels. Biofuel feedstock cultivation can lead to and use water including concerns environmental water as quality as well concerns about land use impacts on GHGs and competition for food crops. HBD Hybrid diesel-electric buses are a relatively mature technology with higher upfront costs than diesel and potentially lower operating costs. Hybrids offer to low moderateGHG savings, but GHG benefits depend strongly driveon cycle and driver efficiency. 8 Clean Buses in Latin American Cities 9 Clean Buses in Latin American Cities | 1 797 730 780 320 630 860 1,400 1,200 1,380 Commuter / suburbanCommuter / 610 310 760 750 1,150 1,470 1,840 1,680 1,030 Medium speed* Medium Each city has city Each its ownlocal character terms in operation, and regulation, stakeholders of environmental conditions, making each them of they differin size, ranging unique.Moreover, populationin from on the million 1.7 to 21.4 metropolitan at million scale, to 12.1 and from 1.4 level. city 430 860 1,070 1,440 1,430 1,050 1,800 2,290 2,350 Low speed* Low e / km). 2 BEBs have the lowest 11 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. A BEB - São Paulo BEB - Mexico City BEB - Buenos Aires Diesel - Euro VI CNG - fossil Hybrid Euro VI BEB - Santiago, Chile Technology Bio-diesel - plant oils Bio-CNG - gas n average of low and medium speed CO2 values were applied for the cost- Source: ICCT 2017 Table 1.2: Well-to-wheel GHG emissions (g CO lifecycle GHGemissions, which significantly vary emission matrix. the energy depending Biofuel on rates also greatly vary depending on their feedstock and production method. Givenvariation the in significant clean bus performance ratesis it essential to measure the actual energy efficiency and emissions rates for clean bus technologies under local driving conditions and energy systems. testing Pilot and ongoing measurement will help inform effective clean bus technology selection and deployment strategies. *Modeling assumed the Manhattan drive cycle for low-speed routes (average 11 km/h), and the Orange County Transit Authoritydrive cycle for medium-speed routes (average 19 km/h). 11 The life-cycle 1.2indicates data Table in that low-speed urban operation has higher GHG emissions than medium-speed urban or higher- speed commuter buses.

10 Clean Buses in Latin American Cities

Clean Buses in Latin American Cities American Latin in Buses Clean Total Costs of Ownership 2

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. | T otal Costs of Ownership of Costs otal

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 $0.18 $0.22 $0.36 $0.24 $0.23 $0.05 $0.05 Charge $0.15 $0.07 $0.07 $0.42 $0.42 $0.57 $0.09 $0.09 $0.05 $0.05 Charge Electric Fast Electric Fast $0.19 $0.31 $0.22 $0.23 $0.07 $0.07 $0.47 Depot $0.15 $0.12 $0.07 $0.07 $0.57 Charge Electric $0.55 $0.05 $0.05 $0.54 Depot Interestpayment Fuel tax Charge Electric Fuel tax Interestpayment $0.15 $0.34 $0.33 $0.34 $0.23 $0.05 $0.05 $0.45 $0.14 $0.57 $0.22 $0.22 $0.26 CNG $0.05 $0.05 $0.03 Hybrid $0.11 $0.12 $0.19 $0.19 $0.34 $0.33 $0.23 $0.36 CNG $0.23 $0.57 $0.22 $0.25 $0.04 $0.04 Biofuel Capital investment Fuel Fuel subsidy Fuel Fuel subsidy Capital investment 0.13 - $0.11 $0.23 $0.57 $0.22 $0.20 $0.20 $0.20 $0.04 $0.04 $ $0.33 $0.22 $0.23 $0.49 $0.05 $0.05 $0.08 $0.28 Diesel E6 Diesel E6 0.12 - $0.11 $0.21 $0.19 $0.19 $0.57 $0.22 $ $0.04 $0.04 $0.21 $0.31 $0.23 $0.49 $0.05 $0.05 $0.08 $0.28 Diesel E5 Diesel E5 Maintenance tax Purchase Staff Staff Maintenance tax Purchase $- $- $1.75 $1.25 $1.00 $1.50 $0.75 $2.25 $2.00 $2.50 $0.25 $0.50 $1.75 $1.25 $1.00 $1.50 $-0.25 $0.75 $2.25 $2.00 $2.50 $0.25 $0.50 Source: Steer for the World Bank based on various sources summarized Appendix in A. Figure 2.2: World Bank TCO Mexico City estimates ($/km) Figure 2.1: World Bank TCO Buenos Airesestimates ($/km) Source: Steer for the World Bank based on various sources summarized Appendix in A. 12 13

O Estimates

A benefits. See the next section on cost effectiveness which addresses emissions. unavailable in the local market. the unavailable in F mountsin USD. Note that these TCO graphs do not reflect emission reduction or example, certain vehicle types or fuels might be excluded from analysis if 12 BEBs Mexico in have City the the of lowest TCO technologies considered to be due primarily to lower fuel and maintenance costs. Hybrid buses higher than diesel 15% buses,have TCO although Althoughtheir for fuel BEBs the TCO cost is lower. is lower than the rest the of technologies, no buses. these tested have concessionaires private Mexico City TCO Estimates TCO City Mexico World Bank TCO Analysis Bank TCO indicatesWorld that CNG buses Buenosin Aires havethe the of lowest TCO analyzed technologies. Due to higher fuel costs and fuel but taxes, for diesel TCO buses is higher, the fuel cost is subsidized for concessionaires Biofuel higher buses 6% bars). have TCO (negative due primarilythan to higher CNG, fuel cost and fuel taxes. Despite lower fuel and maintenance costs, are BEBs higher TCO than the rest the of technologies. The World Bank conducted TCO analyses based based analyses TCO conducted Bank World The local, of on a variety national and international data sources, including technical literature and manufacturer professional information, exercising judgment when or country-specific city weredata not available. The selection the of bus technologies for TCO analysis for each was based city on consultations experts, local with considering implementation potential and cost the of availability data. World Bank TCO Analysis TCO Bank World Buenos Aires TC Aires Buenos Appendix A summarizes input data the and key assumptions usedfor these analyses. Staff costs refers to bus only operators. Administrative staff costs or common costs the to all technologies, such as tires or fixed costs,are included. not estimatesThe TCO for each the of cities five are presented the in following figures. 13 12 Clean Buses in Latin American Cities Clean Buses in Latin American Cities | 2 13 - $ $0.17 $0.10 $0.10 $0.29 $0.57 $0.05 $0.05 $0.08 Electric Fast Charge Fast Electric Interestpayment Fuel tax - $ $0.11 $0.11 $0.17 $0.38 $0.07 $0.07 $0.57 C ha rge Electric Depot C NG $0.29 $0.07 $0.07 $0.25 $0.09 $0.24 $0.57 $0.05 $0.05 Capital investment Fuel $0.21 $0.27 $0.04 $0.04 $0.06 $0.06 $0.24 $0.57 $0.08 $0.08 Diesel E6 Staff Maintenance tax Purchase $- $1.75 $1.25 $1.00 $1.50 Source: Steer for the World Bank based on various sources summarized Appendix in A. $0.75 $2.25 $2.00 $2.50 $0.25 Figure 2.5: World Bank TCO Santiago estimates ($/km) $0.50 Montevideo TCO Estimates TCO Montevideo for dieselTCO III Euro buses are similar to fast charge BEBs Montevideo. in The current diesel subsidy for bus concessionaires allow diesel technologies to beat least more 20% competitive than kind electric any of bus. Estimates TCO Paulo São Biofuel and VI Euro diesel buses São in Paulo have due low to TCOs the vehicle costs and moderate fuel costs. Fast charge BEBs have the lowest costs among the technologies and depot charge is BEBs the higher TCO than the rest the of technologies. Estimates TCO Santiago BEBs Santiago in have the the of lowest TCO technologies analyzed, on average, lower than 9% for diesel buses. Despite higher vehicle acquisition costs, for BEBs the low TCO is due primarily to lower fuel costs. CNG higher buses 8% have TCO than BEBs due primarily to higher fuel costs, and diesel buses higher 9% than have BEBs TCO due to higher fuel and maintenance costs. $0.14 $0.19 $0.39 $0.09 $0.09 $0.58 $0.12 $0.33 $0.06 $0.06 $0.98 $0.55 Electric Fast Charge Fast Electric Electric Fast Charge Fast Electric Interestpayment Fuel tax Interestpayment Fuel subsidy $0.12 $0.43 $0.72 $0.14 $0.98 $0.06 $0.06 $0.52 $0.25 $0.09 $0.09 $0.58 C ha rge C ha rge Electric Depot Electric Depot 0.39 - $0.13 $0.15 $0.22 $0.25 $0.98 $ $0.17 $0.15 $0.39 $0.09 $0.09 $0.08 $0.08 $0.58 Capital investment Fuel Biofuel Capital investment Fuel Diesel E6 0.38 - $0.13 $0.13 $0.21 $0.22 $0.98 $ $0.17 $0.41 $0.15 $0.10 $0.10 $0.58 $0.08 $0.08 Diesel E3 Diesel E6 Staff Maintenance Staff Maintenance $- $- $1.75 $1.25 $1.00 $1.50 $2.75 $0.75 $2.25 $2.00 $0.25 $2.50 $0.50 $-0.25 $-0.50 $1.75 $1.25 $1.00 $1.50 $0.75 $2.25 $2.00 $0.25 $2.50 $0.50 Source: Steer for the World Bank based on various sources summarized Appendix in A. Figure 2.3: World Bank TCO Montevideo estimates ($/km) Source: Steer for the World Bank based on various sources summarized Appendix in A. Figure 2.4: World Bank TCO São Paulo estimates ($/km) e) 2 Therefore, 15 2 emissions. -equivalent (CO 2 to clean bus technologies. The analysis 14 I estimate since the buses in the five cities have higher real-world emission performance than the standards claimed for the European contexts. 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 its own threshold regarding what $/tonne level is desirable given the other mitigation options and co-benefits considered. W n the presentation of the results below we consider atechnology to be “cost e assume abase technology of Euro Vdiesel buses. This is aconservative considered for each the TCO technology, as well as the externality costs pollution air of (NOx and Cost-effectivenessPM). analysis is dependent on a set factors of time that and over context, vary and is subject to local interpretation. 14 emissions when switching from V diesel Euro buses is considered. However, BEB vehicle purchaseis considered. However, prices and financing currently have thegreatest effect on the total costof BEBs, in as the caseof Buenos Aires and Montevideo, where BEBs are less competitive with other technologies. In some cases, competitive processesSantiago) (e.g. can lower costs. Therefore, green financing mechanisms offer significant inbenefit countries with interest high rates. Having presented findings on the total costs ownershipof clean of buses, the next chapter explores the cost-effectivenessvariousof clean bus technologies reducing in CO Bank conductedThe World a cost-effectiveness analysis the of marginal abatement cost (MAC) reducingof a tonne CO of 15 the results summarized below should as be taken a depiction the of current situation at the time of publication and broader generalizations are not advised. Figure

). This istrue ). for buses even with smaller (110 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. Figure 2.2: cost Total of bus ownership comparison with different annual distance driven. There are BEBs of variety a available from manufacturers with different battery sizes, (staticcharging depot-charging configurations and en-route fast "opportunity" charging – both wireless and each overhead contact systems), with its own associated km/ driving range (e.g. BEB selectionday). are and TCOs influencedby the distance daily they are required to travel. BEBs with larger batteries can travel greater distances withouten-route charging and cost more upfront. The BEBs of comparison TCOs in improve to diesel as the travel daily distance increases ( 2.2 batterieskWh) coupled with more expensive wireless charging systems. BEB range can also be navigating impacted topography by hilly (e.g. terrain requires more energy than flatareas) conditioning air leadsand to climate faster (e.g. battery There is no substitute discharge). for local measurement BEB of performance actual in driving conditions. While BEBs currently have higher than TCOs diesel buses, projects Bloomberg that within (2018) 2-3 years most BEB configurations will have lower thanTCOs diesel, and that upfront BEB costs will be the same as for diesel buses around by 2030. Growing demand for BEBs couldreduce battery resultingprices cost in faster, parity even the by mid-2020s. analysis and Bank BloombergBoth TCO the World findings show thatTCO in termsof costs, BEB is the best alternative when its lifecycle BEB TCO and Range Considerations Range and BEB TCO 14 Clean Buses in Latin American Cities Clean Buses in Latin American Cities | Cost-effectiveness Analysis 15 2 3 2 yields greater CO ) Figure 3.1 2 emissions, with negative 2 reduction potential from each 16 2 than diesel buses, negative values only indicate that the TCOs of these T

N 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 on relative cost effectiveness. Since all the technologies analysed emit lessCO technologies are lower than for diesel. Neither does the magnitude of the negative value reflect the magnitude TCOof reduction compared to diesel. effectiveness(e.g., a technology with a MAC of $20/t CO The vertical height represents the cost to reduce one tonne CO of indicating net costvalues the (below line) savings. • he horizontal width each of bar indicates thecumulative CO bus technology its over lifetime. ote that the magnitude of positive values is an indicator of relative cost-

16 • • The marginal abatement costs for each clean bus technology city, by as vary Note indicated below. each of that bar the indicates height total (green) the marginal abatement costs, while the gray portion indicates the marginal abatement costs with the externalities considered, the i.e., benefits reducedof pollution. air ( 2 e) emissions when switching from diesel buses buses diesel from switching when emissions e) 2 2 savings of (tonnes 2 emission reduction 2 reduction options. 2 emissions. -equivalent (CO 2 2 from a particular emission reduction ) and the potential CO Marginal). abatement costs are calculated 2 savings. The inclusion multiple of emission 2 2 Marginal Abatement Costs Marginal graphs abatement depict costs (MAC) the economic costs CO of takingby the differenceTCOs in between clean buses and diesel buses and dividing the it by differencein CO Cost-effectiveness analysis of the marginal cost of reducing a tonne tonne a of reducing cost marginal the of analysis Cost-effectiveness of CO technical latest the of review on based undertaken was buses clean to air of costs externality the and TCO considered analysis The literature. below. summarized are analysis the of Results pollution. measures relative to a baseline situation. The graphs show the cost reducing of one tonne of CO measure as as well the magnitude the of potential CO reduction measures one in graph allows for comparison across CO In the case clean of buses, are we interested how thein various technologies compare to diesel buses V) (Euro terms in both of the cost- effectivenessof ($ emission per tonne reduction CO CO The histograms MAC depict the cost and CO reduction potential each of clean bus technology as follows: Cost-effectiveness Analysis Cost-effectiveness reduced 2 reduced 2 mitigation 2 mitigation 2 reduced). 2 reduced, but offer ), hybrid buses), are 2 reduction potential. ), CNG), buses offer net ), fast-charging), BEBs 2 2 2 reduction potential BEBs Figure 3.4 ( Figure 3.6 Figure 3.5 ( Less cost- Less effective CO reduction cost- More effective CO reduction 2 mitigation potential. Fast-charging 2 reduction potential at a moderate cost 2 reduction potential. CNG buses are the Montevideo In currently the cost-effective only clean bus option, with a moderate CO pose mitigation high costs, due primarily to the upfront costs BEBs of compared to diesel buses. The inclusion externalities of does not ($102 significantly reduce of the high BEB MACs opportunity-chargingfor $210 and depot- for charging). In Santiago yield net cost savings, while depot-charging BEBs pose and low costs moderate costs ($13), , while offeringwith externalities included ($9). high CO least economically viable technology due to high CNG fuel costs Chile in and low CO potential. HBD buses are not cost-effectivein per tonne COSantiago of ($149 In São Paulo ( cost savings per tonne CO of CO trivial BEBs is a cost-effective optionunder current assumptions, with substantial CO potential, while depot-charging BEBs indicate a CO large or $39 accounting($42, Hybrid for externalities). buses require $31 for per tonne CO of and have a moderate CO 2 pollutants (e.g. buses pose pose buses 19

17 ), opportunity ), charging 2 mitigation potential. ), fast-charging and and fast-charging ), Figure3.2 2 savings. Hybrid Figure 3.3 ( (

buses are deemed cost effective offerbut 18 S NOx) compared to conventional diesel engines, even for buses certified to the emissionsame standards. effectiveness analyses. effectiveness buses in the five cities have higher real-world emission performance than thestandards European claimed contexts. for diesel-electric buses as for Euro V diesel buses. This is a conservative assumption based on literature review, showing that hybridization non-CO regulated does in reductions not guarantee automatically T W Buenos Aires Buenos e assume Euro III for CNG buses. This is aconservative estimate since the he analysis assumed the same air pollutant emission factors for hybrid ee Appendix Afor details on the inputs and assumptions for the cost- very high MAC ($283 per tonne) with moderate per tonne) ($283 very MAC high mitigation potential when compared to other bus options. only minimal CO CNG 17 depot-charging BEBs yield significant cost savings and have CO high BEBs and CNG(negative are cost-effective In contrast, depot-chargingvalues). BEBs pose nethigh costs for each tonne reduced (positive but also emission high reductionvalues), potential The a depot- of MAC horizontal bar). (wide charging BEB is $138 per tonne; if environmental externalities are included, the is reduced MAC to $133 per tonne. City In Mexico The Bank World calculated marginal abatement costs for clean bus technologies each in the of five cities. The results are as follows: Marginal Abatement Costs for the Five the Costs Five for Abatement Marginal Cities In Figure 3.1: Interpretation of Marginal histograms.Abatement Cost Interpretationof 3.1: Figure 18 19 16 Clean Buses in Latin American Cities 17 Clean Buses in Latin American Cities | 3 Figure 3.4: Marginal Abatement Costs Montevideo histogram for 3.4: Figure Figure 3.3: Marginal Abatement Costs histogram for Mexico City Figure 3.2:Marginal Abatement Costs histogram for Buenos Aires

Figure 3.6: Marginal Abatement Costs histogram for São Paulo Figure 3.5: Marginal Abatement Costs Santiago histogram for 3.5: Figure 18 Clean Buses in Latin American Cities Clean Buses in Latin American Cities | 3 19 20 Chapters 4 and 5. A these countries could avoid their high regional interest rates by negotiatingfinancial agreements with operators. In São Paulo better financial conditionscould decrease the TCO of BEBs by around 10%. Lower carbonLower intensity grids can helpreduce the BEBs. of MACs Undercurrent finance conditions opportunity- charging BEBs are cost-effective citiesall in Montevideo.except Depot-charging BEBs are cost-effectivein Mexicoand require a modest $13 per tonne Santiago in and $42 per tonne in São Paulo. Inclusion externalities of diminishes the MAC for BEBs a few percent only by cities in where they are(except not already cost-effective for Santiago, where inclusion externalities of reduces depot-charged the of MAC BEBs from $13 to $4 tonne). rgentina and Brazil have very high lending interest rates. Large operators in

The results the of cost-effectivenessanalyses can inform deeper analyses, including by helping to prioritize which technologies to include pilot in under performance measurement and testing actual local conditions. The ultimate decision on clean bus technology selection will include emission reduction cost-effectivenessanalysis as aswell other performance, cost and feasibility considerations. 20 • • • Countries with fluctuating highly bank lending rates can consider otherinstruments, financial discussed in 2 2 2 2 reduction 2 reduction 2 reduction. CNG 2 reductions. In CO São Paulo, perspective, inclusion of air pollution pollution 2 perspective, air of inclusion 2 emissions and reducing the harmful impacts abatement costs from hybrid buses are $31 per tonne. The cost-effectivenessof BEBs highly is dependent on bus acquisition prices. BEBs are more cost-effectivein countries with higher diesel prices and lower electricity prices. Opportunity-charging BEBs are more cost- effective than depot-charging BEBs due to their lower battery costs and their higher efficiency. BEBs offer thehighest of CO levels potential the of clean bus technologies analysed. Where not already cost-effective from a CO externalities improves the cost-effectivenessof hybrid buses Mexico in City, Santiago and São to $0Paulo per tonne. perspective, the inclusion of air pollution pollution perspective, air of the inclusion externalities decreases the cost-effectivenessof buses. CNG Hybrid buses are cost-effective for CO providing Montevideo, reduction in only moderate CO Where not already cost-effective from a CO CNG buses are cost-effective for CO in Mexico,in Buenos Aires and but São Paulo, provide very CO low levels of busesprovide significant reductionsof PM emissions relative to V or Euro earlier diesel bus technologies, but may increase NOx emissions. On the other hand, VI Euro CNG and VI Euro diesel buses have comparable NOx and emissions PM and result a considerable in technologies. older to relative improvement

• • • • • • • The cost-effectiveness results presented do above not representfindings, definitive but they provide inputinitial to local decision making with regard to deciding which clean bus technologies may be the most effectiveand cost effective for reducing CO of air pollution. Buses Gas Natural Compressed Insights from Cost-Effectiveness Cost-Effectiveness from Insights Analyses • Battery Electric Buses Hybrid Buses Hybrid

20 Clean Buses in Latin American Cities

Clean Buses in Latin American Cities American Latin in Buses Clean Enabling Environment 4

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. | E

The analysis of those elements provides the framework of Environment nabling 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 bus projects the in were analyzed order in to characterize five citiesfive were identified. reducing atmospheric emissions. Environmental regulations and clean bus standards, such as specific regulations for batterydisposal and re-use options were also analyzed, as as well the existing monitoring quality air network. Energy and infrastructure are important bus clean some since factors enabling technologies may require infrastructure upgrades, such as electricity distribution for rapid-charging or CNG distribution networks. Energy matrices and currently available fuel sources were analyzed order in to identify barriers that may thesehinder of the uptake new technologies. Furthermore, regulation governance, and markets the entities responsible for national and local transport policies, characteristics and the key busof concessionaires and their organizations, fleet conditionsand direct indirector incentives established for fleet Finally, sincerenewal. clean buses have higher typically upfront costs than diesel buses and therefore strain municipal budgets, the currently available options for financing and funding of each of city, are a critical enabling

The identificationof the primary challenges to drivers for introducing new clean bus technologies was conducted using key framework a five of enabling factors, as shown Figure 4.1. in identify the potential urban to improve public To transport services transforming by buses into clean mobility solutions, need we to understand the context these of services the in region. This analyzing enablinginvolves factors, which include the public transport system orderin the to evaluate system and its operational characteristics, such as route compatibility with clean bus technologies and operational costs, previous and status, concessions and tendering experience with clean bus technologies. Environmental policies What makes a good enabling a good enabling makes What of the implementation for environment buses? clean since GHG emissionsfactor, continue to grow worldwide at a faster pace than . is one the of most important global challenges this century. Given that clean buses can help cities local achieve and national GHG and pollutants air reduction targets, each Nationally Determinedcountry's Contribution commitments were(NDC) identified, together with local laws, where applicable, that set targets for 22 Clean Buses in Latin American Cities Clean Buses in Latin American Cities | 4 23 Figure Overview 4.1: of the Five Cities for (data metropolitan regions, unless otherwise specified). Sources: Steer from: AR: (Presidencia de la Nación, 2017), MX: INEGI, Encuesta Origen - Destino en Hogares de la ZonaMetropolitana del Valle de Montevideo’s México UY: Municipality 2017, (EOD) (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. at country A) level. based B) on a five-year budget.C) not available at this level. E) D) There2017, is no official information of the exact number of private concessions in Mexico City. 8% n/a 12% 20% 20% ). The ). Sales as % of bus fleet Table 4.1 117 n/a 800 3,600 3,000 Annual bus sales (estim.) sales 95 n/a 954 554 3904 Average Average company buses per per buses B Motorization ratesrange vehicles from 238 to 578 registered per1,000 people. Cities with higher private vehicle ownership rates tend to have a higher bus mode share.The per-capita GDP the in citiesfive ranges fromaround $8,750 to $15,500, with no clear relationship to . Average bus fares are about $0.30two in cities and more $1.00than three, representing the other in the existence a range of subsidy of policiesfor both drivers and passengers. Bus fares range from 2% wages, daily minimum of withto 11% lower ratios tending to correlate with higher bus mode share. Bus fleet characteristicsvary across significantly the cities, five with fleetsizes ranging from about 1,500 to 30,000 vehicles, and the average bus life ranging from 5 to 20 years ( introduction clean of bus technologies can be challenging cities in with a large number of operators as Buenos Aires (such and Mexico). While annual bus sales data for the cities are not readily available, an estimate can be made from the bus demand market from these cities. Fleets that currently have higher sales rates may be better positioned for faster transformation to clean bus technologies, which could be accelerated via fleet rationalization, route optimization and increased scrappage rates. The current fleetof cleaner buses operatingin the citiesfive 870, aboutis includeswhich 440 trolley buses, 300 CNG buses, BEBs 17 and 14 hybrids. 7 4 27 193 200+ Operators A 5 5 13 8.4 age ~20 Average Average ). The ). 6,681 1,560 18,412 14,957 30,641 Fleet size Fleet Figure 4.1

P

e t City Buenos Aires City Mexico Santiago Montevideo Paulo São

Source: Steer from local sources Table 4.1: Bus fleet characteristics fleet Bus 4.1: Table A A B stimated wo public operators, 16 BRT concessions and 27 corridor concessions, plus an unknown number of individual concessions Public transportPublic is a vital source mobility for of peoplemany Latin American in cities and buses play a very important role thisin context due to their to urban to adapt flexibility growth and their identify the to provideability wide coverage. To potential for improving public transport services thein cities transforming by buses clean into mobility solutions, need we to understandthe role played them by the in region. This section presents overview an the of role the buses play the in cities five addressedby this project. The following section describes the current situation public of transport and the role theof bus system, current public transport tariffs, costs. operating and mechanisms collection fare The processes the in involved development of bus projects are also discussed, and attention is drawn to the clean bus technologies already tested each in city. Public Transport System Context In order to understand the enabling environment for clean bus technologies, it isimportant to consider the current features the of public transport systems the in cities five and the factors that influence them. The public transport modal share ranges from the in cities five and includes to 45% 32% rail, bus and , with buses responsible for the vast majority trips of ( density people varies to 3,341 from per 461 square with no clear relationshipkilometer, with public transport modal share. A. ublic Transport 24 Clean Buses in Latin American Cities Clean Buses in Latin American Cities | 4 25 can weaken the Most cities have tested new bus operators are technologies, but resistant to change due to concerns about the performance, operations, maintenance and costs of new technologies. Although the capital costs for clean bus technologies are higher be can these buses, diesel for than offset by operatinglower maintenance costs hybrid for CNG, and BEBs. operation and maintenance of unfamiliar BEBs. as such technologies Cities that place age limits on buses help to accelerate fleet renewal, which can feed secondary markets and create additional value for fleetowners. The lack secondary of markets bus new for technologies business model for clean buses.

•

with no immediate plans to introduce 21 F in Santiago, and a mix of Euro II and III models in Montevideo. Most the of cities have already tested a variety cleanof bus technologies and appears to be a popular technology solution countries. five all in Operators are however costs, performance, the about concerned However, public transport system inefficiencies caused by, informal for example, services offeredvehiclesby small withhigh operating costs, seem to be greater of concern to city authorities and the public than pollution from emissions. The public improvement of transport systems, with towards largera move buses, could open opportunities technologies. new for Adoption of stricter bus emissions standards would support cleaner of the uptake technologies. present, At Mexico only and City Santiago mandated VI Euro standards for new buses from 2019 . In the other cities higher emitting buses the up majority make the of fleets, Euro VIEuro models. or example, 50% of Euro III buses in Buenos Aires and São Paulo, 78% Euro III

Figure 4.2: Lower-emission bus technologies in the region. the in technologies bus Lower-emission 4.2: Figure Source: Steer Summary of Public Transport Barriers Barriers Transport Public of Summary Drivers and • 21 • • : 17 : 29 /GDP: 2 2.5 10 level 48% 30 Brazil (2017) PM PM CO 1.03 (2017) -75% vs. 2005-75% Area of São 40 ppb (2016) Metropolitan Paulo (RMSP) Paulo /GDP: 2 : 27 31% level : 62 Chile 10 2.5 13 CO (2017) PM -30% vs. 2007 13.4 ppb 13.4 PM Santiago Santiago Region (RM) Region Metropolitan 0.68 ppm (2017) ppm 0.68 /GDP: 2 level 50% : 1 : 19 : 26 10 6 Uruguay 2.5 CO n/a -49% vs. 1990 (2015) PM (AMM) NO2 Area of PM 0.40 (2015) 0.40 shows the monitoring quality air stations Montevideo Montevideo Metropolitan /GDP: 2 32% level cities with better slightly results (Buenos Aires also haveand the Montevideo) lowest number monitoringof points the in network. Deficiencies monitoring quality air in – both terms in the of specific pollutants monitored,and the locations and distribution monitoring of stations the - limit cities of ability to effectively identify andrisks target their emission reduction strategies. planning and strategy development. In Mexico City, São and Santiago, Paulo real-time used is networks these by produced information to identify dangerous pollutant air concentration levels and trigger emergency actions such as rationing the circulation of and trucks. Table 4.3 for each and city the continuously measured pollutants. : 20 Mexico : 23 : 43 CO 10 2.5 42 2.5-10 -40% vs. 2013 (2016) PM PM PM Metropolitan 30 ppb (2015) Zone (ZMVM) Zone Mexico Valley 0.67 ppm (2016) 24% : 13 baseline : 27 Argentina 3 10 2.5 -25% vs.-25% BAU n/a n/a (2016) PM PM (10 micrograms (10 (20 micrograms/ (20 Buenos Aires Region (AMBA) 10 2.5

3 levels

2 emissions Transportation sector share of total CO National NDC GHG mitigation target (by 2030) Station Average CO value Average PM value (µg/m3) Mean O Source: Steer with data from CAIT Climate Data Explorer Table 4.2: Country GHG reduction commitments and transportation share of GHGs transportation of and share commitments reduction GHG Country 4.2: Table Stations in the city, not metropolitan level like the others. Also, in this case the CO emissionsconcentrations correspond of CO (average to annual of 8 hours) averages for the metropolitan of the maximum region daily *Ppm: parts per billion. http://www.aire.cdmx. MX: http://apps.who.int/gho/data/view.main.AMBIENTCITY2016?lang=en. y https://data.buenosaires.gob.ar/dataset/calidad-de-aire AR: Source: gob.mx/descargas/publicaciones/flippingbook/informe_anual_calidad_aire_2016v1/informe_anual_calidad_aire_2016.pdf.https:// Montevideo. CL: Intendencia de UY: https://cetesb.sp.gov.br/ar/wp-content/uploads/sites/28/2013/12/relatorio-ar-2016.pdf BR: sinca.mma.gob.cl. The cities five have particulate matter theabove WHO recommendations for PM Only Montevideo, according to them2). city’s PM acceptable shows records, this in case monitoring levels (although /m2) stations are not located at pedestrian The level). most critical situations found are Santiago in and Mexico City, followed São by The Paulo. B. Environmental Policies Environmental B. countryEach has set nationally-determined goalscontribution for mitigating GHG (NDC) emissions emissions (with targets set against a range different of base years). Air pollution is important an concern each in the of citiesfive due to itsimpact on health,of quality life and the economy. has city Each automatic an atmospheric monitoring network that produces historical data used local in environmental Table 4.3: Air pollution monitoring stations per city 26 Clean Buses in Latin American Cities Clean Buses in Latin American Cities | 4 27 ) that have been Table 4.4 2 of origin - 100% within 20 years; PM - 95% 2 emissions by 14% and NOx and PM emissions by 50% (below proposed in city transport plans are primarily co- primarily are transport plans city in proposed benefitsof transport management efforts. mitigation measures ( program (no-drive days) for private vehicles started in 1989. in started vehicles private for days) (no-drive program The 2017 Clean Mobility Plan aims to reduce CO 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. Local plans include vehicle-scrapping programs for public transport agencies and technology substitution. The CirculaNo Hoy 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 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-emissionzone, restrictions for vehicles older than 10 years and modal change incentives. A new regulation establishes emission reduction targets: CO within 20 years; NOx - 90% within 20 years. 2015 levels by 2035). The plan includes initiatives such as clean bus technologies pilots, low-emissions zones and improvements measurement. quality air in

Local policy pertainingLocal policy transportation to • • • • • • • City São Paulo São Mexico City Montevideo Santiago Buenos Aires Buenos Source: Steer with information from local emissions policies Table 4.4: Examples of local environmental Examples policies of pertaining transportation to 4.4: Table Each of the of citiesEach five has prepared local plans to contribute to achieving national GHG mitigation goals, and reducing local pollutants. air Specific Source: Recommended Steer. number of stations per city population-wise: Guidelines for Ambient Air Quality Monitoring (CPCB, 2003) Figure 4.3: Air quality monitoring systems ). or reuse Figure 4.4 The cities are committed to reducing GHG and local pollutants, although improvements are needed in their air quality monitoring systems to provide a better understanding of emissions sources. Noise is a significant concern but has not been treated with the same as atmosphericpriority emissions. There is a lack of regulations for BEB battery disposal and a need for analysis on options for BEB re-use for energy storage. Regulations BEB for battery disposal have not yetbeen developed the of any in cities. This potential for secondary use BEB of batteries for energy storage should be explored withjointly electricity suppliers. Improper disposal batteries of can lead to heavy metal The benefitscontaminationof soil of and water. battery re-use and the costs disposal of should be included in full cost analyses.

C. Energy C. energy and matrix energy the existing that Given distribution infrastructure cities of impact urban bus emissions, the success clean of bus deployment efforts dependwill upon an and easyappropriate access supply of, low- to, emission fuels and energy sources. The vast majority transportation of energy in the countries five is currently oil-based. The two biofuel 20% exceptions are Brazil (approximately ( natural and Argentina gas) (20% use), An assessment the of current fuels of availability for clean buses reveals that ultra-low sulfur diesel VI Euro and hybrid buses,for use with is V, Euro commercially available the all in cities except Montevideo. Compressed natural gas is available the all in cities, although Mexico has City a limited distribution network. While the mandatory share biodiesel of the in diesel mix is expected to increase Brazil, in Argentina and Uruguay, biofuels are not available to fuel buses Mexico in or City Santiago. The mitigation GHG of arising from the use of BEBs depends on electricity the of availability • / 2 , SO 3 , O 2.5 at national at

has been addressed cities in as having

), increasing), the number stations of and 2 SH locations. their improving Local air pollutants WHO above recommended levels. Santiago has the highest PM levels. Air monitoring quality systems, especially Buenosin Aires and Montevideo, need improvement, including expanding the monitoring other of pollutants (PM Environmental commitments Environmental and local levels are important drivers for the introduction clean of buses. The five countries have established NDC targets and strategic climate change actions to reduce GHG emissions. In Mexico, the transport sector accounts for the highest GHG levels of emissions, while Brazil in and Uruguay land use change and agriculture emissions are more significant. In addition to these national goals, each the of cities five possesses environmental plans and targets to reduce local air pollutants. a lower priority than pollution. air São Paulo and Buenos Aires are developing strategic noise maps to better understand traffic-related noise, and Buenos Aires is pursuing traffic-calming actions to help reduce levels. Noise

Some these of cities alreadyhad previous legal requirements that were not compliedwith, as thein case São The of Paulo. previous law city requiredon climate change the annual (2009) replacement 10% of the of bus fleetand stipulated the end fossil of fuel buses within a decade (2018). this target was from far being met,However, due to themainly failure the to align law with the terms bus of concession contracts, and the lack and controlling monitoring, for mechanisms of enforcing cases non-compliance of with targets. In (mostly trolley-buses), the of fleet 2018, 1.4% only met the 2009 goals. The new São law Paulo establisheshowever annual targets for emissions reductions, andfailure to meet these targets will result monthly in fines for the operatorsof each non-complying vehicle. In this the way, has city bolstered the credibility the of regulations and their to enforce ability operators to meet the new targets. • Summary of Environmental Barriers Barriers Environmental of Summary Drivers and • • 28 Clean Buses in Latin American Cities Clean Buses in Latin American Cities | 4 29 The transport sector is primarily dependent on oil-based fuels, but fuels, alternative of the availability renewable sources of energyand distribution infrastructure are opening transitions. technology opportunities for New investments will be needed in electricity distribution networks to supporthigh BEB penetration, with costs conditions. local on depending shows the electricityenergy matrix generated from low-carbon sources. Most of the the of Most sources. low-carbon from generated countriesfive have set targets forincreasing electricity production from renewable sources. Figure 4.5 for each country and their goals for different time horizons. The electricity providers consulted thein cities five claimed that there is sufficient capacity on their networks to launch operations, but upgrades may be required for penetrationhigh levels and the construction a of fast-charging infrastructure. Source: Steer with data from the International Energy Agency. Absolute numbers represents thousands of tons equivalent ofoil (ktoe) Figure 4.4: Energy sources for the transportation sector main characteristics bus of concessionaires fleet conditions(organization, and direct or indirect incentives for fleet studied.renewal)

In order to identify the main governance and regulation barriers and drivers, the bodies responsible for national and local transport policies were consulted and the D. Governance and Regulation and Governance D. Source: with Steer, 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. EneroGeneradoras 2018. de Chile. BR: Ministério de Minas e Energia do Brasil - MME (June 2017). Figure 4.5: Energymatrix for electricity generation 30 Clean Buses in Latin American Cities Clean Buses in Latin American Cities | 4 31 There is potential for Electricity providers The lack new of concessions, Strategic partners.Strategic can act as partners the in deployment of BEBs by installing or facilitating charging , subsidizing energy tariffs and forging business innovative and financial partnerships with bus financing, operators (e.g. bus or battery leasings, battery reuse and energy purchasing agreements with fixed electricity prices for the duration contracts) of Economic development. increasing clean bus manufacturing capacity thein region, especially Argentina, in Brazil and Mexico, where vehicle manufacturers are already working to produce electric, CNG and hybrid buses. Bus procurement. together with the automatic renewal expiring of concessions, for it difficult makes some cities to design a formal framework containing incentives for adopting new technologies. Bus concessions Buenos in Aires, Mexico and MontevideoCity are granted directly to concessionaires with no competitive tendering. Although Santiago and São have Paulo initiated some tendering opportunities, some elements still present barriers to new bidders. Contracts are generally signed for a minimum 10of years, for except Montevideo where there are no time fixed limits. All the cities provide a set incentives of for concessionaires to renew their fleets: Buenos Airesand Paulooffer São encouragement such as the in form “carrots” of attractive secondary markets for buses, while Buenos Aires, Mexico and Montevideo City have such as subsidy reductions“sticks” and non- renewal of concessions.

• • • A variety of local, of A variety The concentration high Complex institutional coordination and competitionlimitations market to are the main barriers identified in the five provide may concessions New cities. opportunities to introduce clean the on is Electromobility technologies. policy agenda and there is potential to increase cleanbus manufacturing the in region. Policy priorities.Policy Electromobility has attracted broad interest and is now beginning to enter the policy agendas countries. five all in The new transport bidding processes São in Paulo and Santiago provide potential opportunities for the introduction new of bus technologies. In Buenos Aires, the expiration bus of concessions presents fresh opportunities re-organizing for public transport system.the city’s Market competition. publicof transport service delivery a few by companies with strong power market can lead to low service levels andfares. high While limited competition is a significant barrierin most cities, bus operators resist changing operating practices and technologies. In São and SantiagoPaulo shortly (both to hold the requirements enter tendering to processes) the bidding processes are complex and the limit foreign of eligibility companies. In Mexico City, Buenos Aires and Montevideo, the concession processes operators allow to stay the in market for(except andBRT transport indefinitely corridor operators Mexico in City). Institutional coordination. metropolitanand nationalinstitutions regulatebus types, concession allocation, service assurance, quality fares, subsidies and timetables the in cities. five The lackof institutional coordination among national local and regionalministries transport and/or system managers is the main barrier most in theof cities. In cases, many fragmented governmental authorities have failed to integrate transport system planning and policies.

• Summary of Governance and Markets Markets and Governance of Summary Barriers and Drivers • • Commercial banks have Most the of cities are Innovative business, ownership and Most the of cities have direct public Financial institutions.Financial knowledgeminimal the of bus and market are risks on new tounwilling take technologies. Most theof cities finance their bus fleets frompublic sources, commercial banks and bus suppliers. An exception is BuenosAires, where commercial banks have some low-level participation, and Montevideo, where the national pension fund is Partial creditthe guarantees main financier. are often supported public by bodies. Innovation. procurement models that (e.g. reward low TCO leasing, rental, energy company participation, service can help contracts) overcome high upfront costs. This means that longer-term cost savings can be anticipated purchasing in decisions, which ensures that vehicles will remain affordable for operatorsand users alike. These business models are new to the cities five and require further analysis and development. Subsidies. subsidies to help capital and cover operational costs. Most them, of Mexico except City, also have some subsidies of level for diesel fuel. The subsidies are designed to ensure that public transport is affordable to usersand that concessionaires' revenues are adjusted this type subsidies of accordingly. However, presents strong a disadvantage to cleaner vehicles powered non-fossil by fuel the over diesel vehicles. conventional Budgetary pressure. under pressure to reduce, or at least to cap the subsidies of level for bus transportation, as well This it more makes as fares keep difficult low. to secure new financingand funding for clean technologies. costsHigh capital costs. upfront higher The of clean buses can exacerbate funding and financing challenges. The cash typical flow for a bus project is usually at the high outset view in theof outlay initial on the vehicles. Whereas financing can be used to access up capital front, financing mechanismsare generally debt or equity related, time implying that over the revenue stream from one or more funding can userbe used tariffs) sources to pay (e.g., back the debt incurred at the outset, as as well for defraying operating and maintenance costs and payments to private operators.

• • • • •

22 Cities lack typically The maturity of busfinancingThe maturityof expired in 2017. Efforts are being made to reactivate it.

Fundo Clima Fundo

Bus suppliers provide substantial financingin theall cities, using their extensive knowledge conditions market of and motivation to sell their product. present At concessionaires are experiencing difficultiesfinance even obtain to bus technologies. conventional for Brazil’s Brazil’s sufficient financialsufficient resources to support adequate public levels of transport serving very large catchment areas. The cities five under study are no exception. The funding busof fleetsin these cities depends a on public of sources,variety commercial banks and bus suppliers, often using partial credit guarantees. Only Mexico and São City Paulo have funds a portion to cover the of differential cost for accessing clean bus technology. Funding availability. Funding Finance markets. Finance markets is closely related to the of quality (regulatory transport systems public local financial sustainabilityand market power, structure, including competition levels of among Limited financing operators). sourcesand lack fundsof for promoting clean technologies are major barriers. In Brazil, the main financing programs require buses to be made domestically with a majority local content. Meanwhile, currency instability in Brazil remains a significant barrierinternational to financingof bus transportation. This program includes the requirement for vehicles to contain technologies bus a proportion clean Mexico’s components. manufactured ofdomestically program has provided $10 million to support 800 CNG buses, budget. but national this the in renewal annual on dependent is program

Summary of Funding and Finance Finance and Funding of Summary Barriers and Drivers • The gap between urban transport needs and their provision isoften blamed on the lack of appropriate funding and financing streams. There is no doubt thatthe higher upfront costs cleanof bus technology are a major strain on already limited budgets. E. Funding and financing and E.Funding 22 • 32 Clean Buses in Latin American Cities Clean Buses in Latin American Cities | 4 33 shows the self-assessment outcomes Mexico presents City better results on environmental policy and public transport, although there are still public transport management issues that need to be improved to increase new of technologies. the uptake São produced Paulo similar results to the other cities, although it scored lower than expected on finance,given that city hasfinancing several mechanisms. Buenos Aires scored lowest on the government theme, reflecting overlappingthe responsibilities different of authoritiesin the public transport area. Based on the diagnosis the of current situation eachin the of cities, five offerwe now general recommendations for generating improvements in each the of enabling five factors to advance the deployment clean of bus technologies. Source: Steer Figure 4.6: Self-evaluation results for the Five Cities Figure 4.6 for the cities. five Santiago gained thehighest average score (between 4 and the 5 for all areas while Montevideoevaluated), came second, in with balanced results the in differentareas perhaps relation in (except to financing, as detected the in diagnosis done the by Project). Cities typically lack sufficient resources meeting fully for public transport needs using current technologies. The higher upfront costsof clean buses fundingcan exacerbate and finance commercial since challenges, especially banks have only minimal knowledge of technologies. these Self Evaluations The diagnosis the of factors five validatedwas and enhanced as the result input of from LAC counterparts during the Iguassu Falls workshop. The goal Latin American was to evaluate and Caribbean cities based on theexperience and expertise the participating of stakeholders. The self-assessment mechanism enabled a broader benchmarking on clean buses and led to better a understanding the of most critical issues the in region, although some results have might been constrained by participants' knowledge and viewpoints. of thewas finding evaluation thatalthoughA key the environmental, health and social benefitsof clean buses are recognized, resources have not been allocated to subsidizetechnology change, and price incentives or tax penalties toencourage the use cleaner of fuels have not been introduced mostin the of cities or countries represented by the workshop attendees. there is still an Moreover, absence common of technical standards for CNG propulsion, or electric bus charging or leasing schemes usedbatteries. to finance busesand/or A further point is that although cities many have piloted certain clean bus technologies, little such on projectsinformation has been published. Most the of cities surveyed have set standards for urban bus emissions, and technology change has been led specific by institutions. There hasalso been progress tariffs, on(night electricity tariffs peak, non-peak and most cities rates, have etc.) systems energy their of re-assessed capacity the readinessin for introducing clean buses (electric fleets on a / CNG) large scale. The cities five have madeall environmental commitments to adopt technologies. bus clean

34 Clean Buses in Latin American Cities Clean Buses in Latin American Cities | General Recommendations 35 5 To meet the NDC targetsTo andcountermand the increasing threat global of warming, countries in Latin America must scale-up rapidly the adoption cleanof vehicle technologies public in transport, as as well the transport sector general. in The study reviewed, city, by the city costs and feasibility several of clean technologies, including CNG and electric. Recommendations specific to each are city provided Chapter in 6 (City-specific Recommendations). The present chapter provides guidance which applies to cities LAC in addition in general in (i.e. to the cities covered Given the the by study). recent, global advances the in life and costs of batteries, electric vehicles seem set to dominate the future clean of technologies Latin America in and worldwide. While the recommendations below to the mainly apply and evaluation adoption clean any of technology the in area public of transport, they tend to point to the increased use electricof buses. While each city faces distinct technical, economic and and economic technical, distinct faces city each While general of a set generate to able were we issues, institutional drivers and barriers the of analysis on based recommendations cities. five the in implementation bus clean to General Recommendations

3. Improving data collection on airand noise pollution is essential inorder to capture more fully the benefits of cleanvehicle technology. While monitoring quality air has improved across cities Latin America, in gaps remain identifying in particular sources of pollution and using monitoring stations to track urban quality. air Since is quality the air single biggest beneficiary theof introduction clean of technologies, it is vital for cities to measure and collect reliable data on andair noise pollution caused vehicles by using fossil fuels.traditional 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 reliable of and data relevant 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 order in greaterto achieve clarity on these issues.

2. A Total Cost of2. Ownership A Total (TCO) methodology is recommended to evaluate the financial performance of clean technology buses, particularly BEBs. captures bothTCO the higher upfront costs of BEBs and their lower operating costs the over span life. It is necessary to assess a vehicle’s of the cost batteries, of which is the single biggest item determining the higher cost electric of vehicles. 1. Theselection of clean bus technology corridor-specific both consider should distance, (e.g. requirements performance speed, capacity, as well as noise) the city-wide of availability infrastructure. high-capacity,For trunk corridors the optimal technology may differ from that for feederlines and commuter routes. City-wide requirements for cross-route compatibility,and flexibility redundancy should also be taken into account. 36 Clean Buses in Latin American Cities Clean Buses in Latin American Cities | 5 37 7. Improving market competition7. and advance can processes concession the deployment of clean buses. Cities such as Santiago and have, encouragedfor example, the participation of third parties such as energy and vehicle leasing companies to share financial burdensand risks and expand the possibilities for BEBs. In addition, businessinnovative vehicle leasing, models (e.g., rentals, third party involvement, service contracts) can spread risks and help overcome upfront high costs so that longer-term cost savings can be anticipated purchasing in decisions, which should ensure that vehicles will remain affordable for operators and users alike. 6. Policies which address market distortions vehicles conventional the operations of in and harmonize emissions standards will do outcomes the economic improve to much arising from private sector involvement vehicles. clean of the adoption in Market distortions are the single biggest risk to introducing and scaling electric up vehicles LAC.in With the Mexico exception of City, our sample cities possess inadequate emissions standards, and provide direct public subsidies for operational and capital costs as as well for diesel fuel. With the the price diesel of artificially lower, financial accountingvehicleof operations tends lower to favor conventional vehicles. Moreover, emissions standards conventional vehicles allow to ignore some the of externalities generated by them, thus also impacting the financial opticsin favor conventional, of fossil fuel-powered vehicles. Addressing these sources distortion market of will be challenging, but this is essential for enabling a more realistic assessment the of and financial economic performance clean of vehicles. 5. City5. 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. The lack information of noted on energy-related issues also affects technology aspects regarding the performance batteries of and the related operational performance electric of vehicles. This restrains effortsby nationaland city governments forward to move on the clean vehicle agenda. There is a pressing need at the city, national and international for research level and dissemination efforts to educate stakeholders. Since BEB technology is improving, rapidly with impacts on performance it is vital levels and TCO, that information on the latest improvements is communicated and distributed widely within the PTcommunity.

38 Clean Buses in Latin American Cities Clean Buses in Latin American Cities | City-specific Recommendations and Implementation Roadmaps 39 6 How can we overcome and barriers those take advantage of the opportunities? Which institutions are responsible their for implementation? Recommendations Barriers and Drivers What are the main barriers and drivers? Project Selection Project What are the right projects to achieve it? Objectives What is to beachieved? How does this link with the city's objectives? Source: Steer The specific recommendations, and implementation roadmaps, roadmaps, implementation and recommendations, specific The priority of levels timeframes, suggests cities five the of each for and necessary Strategic questions involvement. stakeholder These Plan. Bus a Clean launching before considered be should choice appropriate an making towards cities guide will questions deployment. their and technologies bus clean of City-specific RecommendationsCity-specific Roadmaps and Implementation

$0.31 $0.12 $0.15 $0.07 $0.07 $0.07 $0.57 $0.05 $0.05 C ha rge Electric Fast Electric $0.16 $0.15 $0.09 $0.09 $0.07 $0.57 $0.40 $0.40 $0.05 $0.05 Depot Elec tr ic C ha rge Interestpayment Fuel tax $0.14 C NG $0.57 $0.03 $0.03 $0.26 $0.22 $0.22 $0.05 $0.05 $0.12 $0.19 $0.19 $0.23 $0.57 $0.04 $0.04 $0.22 Biofuel Capital investment Fuel Fuel subsidy 0.13 - $0.11 $0.23 $0.20 $0.20 $0.57 $0.04 $0.04 $0.22 $ Diesel E6 0.12 - $0.11 $0.21 $0.19 $0.19 $0.57 $ $0.04 $0.04 $0.22 Diesel E5 Staff Maintenance tax Purchase $- $1.75 $1.25 $1.00 $1.50 $0.75 $2.25 $2.00 $2.50 $0.25 $0.50 $-0.25 Source: Steer for the World Bank based on various sources summarized Appendix in A. Figure TCO/km. 6.1: for buses in Buenos Aires, assuming São Paulo bus prices and reduced interest rates credit lines from

B

National and local funds: the National Bank or the creation fund a of to capture the cost externalities of caused by other transport modes, such as on-demand transport apps taxes. or city

• TCO comparisonTCO for clean bus technologies in Buenos Aires revealed a wide difference between traditional diesel technologies and electric buses .Diesel fuel subsidies electric make buses even less attractive. Pre-tax BEB prices Buenos in Aires are the higher same models(comparing bus), of than and São in 42% and Santiago Paulo 36% by respectively.High interest rates for bus financing increase for buses the TCO that are already purchase. to expensive shows a scenarioFigure 6.1 which in the same purchasing arrangements for BEBs Sãoin Paulo are applied Buenos in Aires. The figure assumes increased competition market that reduces bus prices, annual and a lower interest rate (an that could be achieved simulated rate 7.5%), of through revolving and guarantee funds using a currentlymix of available funding and financing Aires. Buenos in resources A. Aires uenos 40 Clean Buses in Latin American Cities 41 Clean Buses in Latin American Cities | 6 sector Private Private NP N NP N NP N Nation Stakeholders L L L Local Government ► ► Long Term Term Medium ● Timeframe ● ● ● Term Short financing,and / or Export Credit Agencies support. (ECAs) the lessons and learnt the in course PANTyCC of Clean Mobility implementation Plan are fully disseminated and shared. Socio-environmental assessments should be included together with details financial project of evaluation methodologies. When clean buses areintroduced on a larger scale, it will be important the to evaluate requirements for electric / gas network and charging / fuelling infrastructure investments and their associated financingimplications. assist promotion actions of To within the PANTyCC targeted at public transport buses powered by cleaner energy sources, funding and financing mechanisms could be investigated and tested, either developing by structures or systems to facilitate access to green funds, or evaluating by Two main plans are currently beingTwo developed in Buenos Aires, both promoting low-carbon public transport good providing and opportunities for the introduction clean of buses: the National Transport and Climate Change Action Plan and the Clean Mobility Plan. (PANTyCC) Status Desirable Desirable Essential Supportive Supportive Supportive Table 6.1. The current diesel subsidy Recommendations centivise clean bus projects bus clean centivise rocesses. onduct periodic stakeholder outreach to to outreach stakeholder periodic onduct Develop mechanisms to facilitate to access funds green finance to access incentivize and Diversify mechanisms. Evaluate the feasibility of budget reassignment from other ministries to in Conduct technical analysis of energy system system energy of analysis technical Conduct capacity to support large-scale bus fleets. Specify the lead entity or body to coordinate clean bus deployment strategies and c gauge reactions to Clean Buses Include emission and noise reduction reduction noise and emission Include elements in cost-benefit evaluation p Local and international lending options: These could include Green Bond issuance, (IFC) Corporation Finance International support, Climate Investment (CIF) Funds National subsidies: peris $8,500 bus. This could be USD/year redirected to setting a revolving up fund or to guarantee a financing mechanism with lower interestrates and longer payback periods. FFF2 FFF3 FFF8 ENE1 ENV4

GOV4 PANTyCC includes initiatives of a variety The PANTycc intended to reduce environmental impacts caused the by transport by mainly sector, promoting public transport buses powered cleaner sources. energy alternative, There by is therefore a clear opportunity with to align the local government to bolster its efforts and pursue the introduction cleaner of buses. A few actionskey have been identified as a starting point for the successful implementation of The suggested timeframesthe PANTyCC. and stakeholder types are listed in The first key action is to adefine leading agency, institution or task force to ensure that the all efforts The secondcomplement key oneanother. action is to ensure that the data gathered and Source: Steer Table 6.1: Key recommendations for the PANTyCC (Buenos Aires) (Buenos PANTyCC the recommendations for Key 6.1: Table • • sector Private Private N N N N NP N N N NP N Nation Stakeholders L L L L L L L L L L L Local Government ► ► ► ► ► ► Long Term Term Medium Timeframe Term Short implementation the of Clean Mobility Plan. The suggested timeframes and stakeholder types are listed Table in 6.2 The clean bus technology program, pilot currently being provides implementation, developed for importantan opportunity to test the feasibility technologies. clean introducing Implementing of these effortsin parallel with the clean bus program presents a valuable opportunity to developintegrated an database on emissions, and on variables to monitor clean and evaluate bus policies. implementation whetherLack knowledge of specific (e.g. technologies or can be used the in city/country identified a barrierwas as for concessionairesnot) to embark on piloting clean buses. Data collected from projects pilot should serve as evidence theof benefitsand challengesof the different technologies. Status Desirable Desirable Desirable Desirable Desirable Essential Essential Supportive Supportive Supportive Supportive Supportive

Recommendations

Create incentives for clean buses and fuels goals reduction emission support that Develop mechanisms to facilitate to access funds green finance to access incentivise and Dversify mechanisms Explore leasing schemes for buses and batteries and guarantees to reduce technical risks Pursue regulatory & contractual in frameworks participation company energy promote to BEB deployment Evaluate the potential for cross-modal subsidies to support public transport Create commonCreate technicalfor bus standards charging Promote independent and open knowledge oftransfer performance data from pilots with conditions concession Strengthen or payments bus guarantee to mechanisms of risks reduce default Include emissions and noise reduction reduction noise and emissions Include elements in cost-benefit evaluation processes zones emission zero/low prioritizing Evaluate or corridors Strengthen urban bus emission standards emission bus urban Strengthen PT2 FFF1 FFF7 FFF2 FFF6 FFF3 ENV2 ENV5 ENE3 ENV4 GOV1 GOV3 Source: Steer ways to diversifyways and encourage access to financing mechanisms with national government support. Using model sensitivity results, reduced interestrates and lower bus prices (similar to prices such other in cities the in region), approachan these would make technologies more competitive. These actions could initially be tested, and later scaled leading up, to the introduction clean of buses Buenos in Aires, and to serve as a catalyst for further expansion Argentina. throughout Clean Mobility Plan The Clean Mobility aims to Plan reduce emissions quality. The air and improve various initiatives being pursued under this plan, including the clean bus technology program, pilot are important for facilitating the introduction these of technologies across the country. actions A few key have been identified as effective starting points for the Table 6.2: Key recommendations for the Clean Mobility Plan (Buenos Aires) (Buenos Plan Mobility Clean the recommendations for Key 6.2: Table 42 Clean Buses in Latin American Cities Clean Buses in Latin American Cities | 6 43 energy companies and bus (MAyDS) and the Ministry of (MAyDS) (National Transport Commission), a a (National Transport Commission), -- the leading national agencies involved Stakeholders stakeholdersThe key Buenos in Aires for clean bus are: implementation The Ministry of Environment and Sustainable Development Transport implementationin the of PANTyCC. The CNRT Transport decentralized of the entity of Ministry responsible for overseeing the bus transport system within the AMBA region. The Secretary Transport of the of CABA Government, responsible the implementation for theof Clean Mobility Plan. wholly Other be should involved that stakeholders or partially the in process include the Ministry of Energy and , operators’ trade associations. To ensure thatTo all concessionaires, manufacturers, investors stakeholders and other key can trust the evidence presented,recommend we that the support independent,government an transparent technical assessment process designed to facilitate knowledge transfer making by pilot performance data readily available to the general public and interested parties. Bus acquisition, charging infrastructure and operating costs should be sharedwith the public orderin to engender better decision-making processes. The need for financinginstruments lower interestto achieve possible rates (and funding is important mechanisms) for clean bus deployment. These mechanisms include might cross-modal subsidies, improved access to green funds, bonds, or to other long-term financial instruments with the achieving of aim competitive for clean busTCO technologies. the Finally, pilot resultscould help identify clean bus technologies that are worth pursuing Buenos in Aires (based on local costs, benefitsand and it is feasibility), recommended that the evidence be used at the national to support level the development fresh of incentives for the use clean of fuels, and to help cleanmake bus technologies more attractive to the different stakeholders. (from the current 12.5%) the current 12.5%) (from . 24 T Operational and monitoring system audits; Fare collection operators; Fare collection trust funds; Public and private bus concessionaires; Metrobús. of 6.2% over five years. New BRT Lines; renewalFleet process on traditional bus corridors. his rate is similar as the green bond issue in 2016 in MXN, at an interest rate

for hybrid and electric buses is shown the in TCO comparison Figure in 6.2 main typespublic of transportTwo projects currently underway Mexico in are City both candidates for clean bus implementation: Such mechanismsbe may applied to the upfront thepayment credit over total life. A scenario in which a financial mechanism is used to reduce the interest rate to 6.5% • • • • • 24 • • New BRT Lines The planned BRT network expansion represents an opportunity for clean buses, since the system as structured reduces the financial risk for creditors, and facilitates the implementation zero- of or low-emission corridors. The system consists of individual concessions for each component: : government to , to extend debt periods 23

M T promote better public transportation systems and cleaner technologies:public the fund for mobility and roadway safety (Fondo Público de Movilidad y Seguridad Vial) and the public transport financing fund (Fondo de Promoción Transporte Financiamiento del Público). para el underwrite loan guarantees or leasing payment mechanisms with public funds such as the National for Climate Change, Fund or other locally available funds Local and international lending options: a green bond issue, International Finance support,Corporation (IFC) Climate Investment financing,and Export (CIF) Funds Credit support. Agencies (ECAs) National and local funds and/or enable reduced interestand/or rates.

he Mobility Law for Mexico City describes two possible mechanisms to

23 • • Although clean buses Mexico in have a low TCO City, upfront costs for hybrid and battery electric buses higher than for are to 75% 50% diesel buses. This is a clear deterrent for cleaner technologies. Providingincentives financial to reduce interestrates for purchasing clean buses may be necessary to encourage their use. Setting a revolving up fund the toimprove financial conditions for clean bus purchases or accessing other available financing mechanisms can help encourage the switch to clean technologies. Otherincentives financial to guarantee funds include: B. City exico 44 Clean Buses in Latin American Cities Clean Buses in Latin American Cities | 6 45 P P sector Private Private NP NP N NP Nation Stakeholders L L L L L L L L L L Local Government ► ► ► ► Long Term Term Medium Timeframe ● . ● Term Short A few key actionsA few key have been identified as effective starting points for the incorporationclean of suggested The expansions. network these in buses timeframes and stakeholder types arelisted in Table 6.3 BRT systems have been implemented, taking into account the specific conditionsof each corridor. Line 1 uses example, For bi-articulated buses, Lines 2, 3, 5 and 6 have articulated buses, Line 4 operates with Hybrid and V low-platform, Euro 12m buses, and the recently-opened Line 7 has double- decker VI Euro buses. This shows that route compatibility analyses can consider different potential technologies, such hybridas busesfor routes with higher commercial speeds and long-distance services, BEBs for shorter routes with lower speeds or the land availability and configuration to support required charging infrastructure. Status Desirable Desirable Desirable Desirable $0.12 Essential Essential $0.18 $0.22 $0.36 $0.23 $0.05 Supportive Supportive Supportive Supportive C harge Electric Fast Electric $0.19 $0.22 $0.47 $0.15 $0.07 $0.23 $0.16 Interest payment Fuel tax Depot Electric C harge $0.17 $0.16 $0.15 $0.33 $0.33 $0.23 $0.34 $0.45 $0.05 Hy brid $0.11 $0.11 C NG $0.36 $0.33 $0.25 $0.23 $0.34 Capital investment Fuel Fuel subsidy $0.22 $0.08 $0.33 $0.23 $0.49 $0.28 $0.05 Diesel E6 Recommendations $0.21 $0.31 $0.08 $0.23 $0.49 $0.28 $0.05 Decouple the credit payment from the tariff trust in the small fare operators Integrate funds managed by an external trustee Pursue regulatory and contractual contractual and regulatory Pursue company energy promote to frameworks in BEB deployment participation Evaluate the potential for cross-modal subsidies to support public transport Develop mechanisms to facilitate to acces funds green Promote benefits of noise and emissions use land to changes study and reduction restrictions for depots and terminals with conditions concession Strengthen or payments bus guarantee to mechanisms ofrisks reduce default Conduct route compatibility analysis with analysis compatibility route Conduct clean bus options to define the best suitable technologies Promote independent and open knowledge oftransfer performance data from pilots Evaluate prioritizing zero/low emission zones zones emission zero/low prioritizing Evaluate or corridors Diesel E5 Staff Maintenance Purchase tax PT1 $- PT3 PT2 FFF1 FFF2 FFF4 FFF5 ENV5 GOV1 GOV3 $1.75 $1.25 $1.00 $1.50 $0.75 $2.25 $2.00 $0.25 $2.50 $0.50 Source: Steer for the World Bank based on various sources summarized Appendix in A. Figure 6.2: comparisonsTCO/km for buses assuming interest rates City, Mexico in Source: Steer Table 6.3: recommendations Key roadmap for new BRT lines in Mexico City sector Private Private NP NP N N Nation Stakeholders L L L L L Local Government ► Long Term Term Medium Timeframe through Banobras: runs the (PROTRAM) focused(PROTRAM) on mass transit Mexico City’s Secretariat of Mexico City’s Responsible for leading on local economic Term ● Short ● SEDEMA: Environment is the public agency responsible protection sustainable and environmental for development, with quality, air climate change and sustainable mobility as its focus key areas. SEDEMA was responsible for establishing the conditions that led to the creation Metrobús of in 2005. It also managed the carbon bond financing mechanisms for several projects, as as well other public transport-related financingand funding mechanisms Mexico in City. Secretariat Mobility of SEMOVI: Mexico City’s manages public transport concessions Mexico in City, and at present directs the fare trust fund expansion among the various public transport providers. SEMOVI currently manages the “Fund created in Mobility and Pedestrians”, for Taxis, 2015 the of to cost collect each of 1.5% trip made on app-based mobility services to encourage public transport and active the mobility in city. SEFIN: policy, the Secretariat Finance of sets the budget for public transport operators such as SM1 and STE,and provides funding for their bus fleets when required. FONADIN Federal Transportation Public Support Program infrastructure. FONADIN has been a major funding source for national BRT and Metro projects since its creation 2008. in Status Desirable Desirable Desirable Essential Supportive

Recommendations

Develop mechanisms to facilitate to access funds green Pursue regulatory and contractual contractual and regulatory Pursue company energy promote to frameworks in BEB deployment participation Evaluate the potential for cross-modal subsidies to support public transport Include emission and noise reduction reduction noise and emission Include elements in cost-benefit evaluation processes with conditions concession Strengthen or payments bus guarantee to mechanisms of risks reduce default FFF1 FFF2 ENV4 GOV1 GOV3 Source: Steer Table 6.4: Key recommendations roadmap for fleet renewal in Mexico City Mexico in renewal fleet for recommendations roadmap Key 6.4: Table Fleet renewal processes on traditional bus corridors fundingPublic instruments such as the National for Climate Change,Fund aimed at reducing the differential purchase cost betweendiesel and CNG buses, and other bus scrapping funds, are budgetary instruments that are not always available to concessionaires. funds, theseStrengthening revolving other together with the mechanisms to guarantee against payment default, would help the improve clean of busesuptake on those corridors where their efficiencyFare is proven. collectiondevices are desirable on these services. Mexico does City not possess a public transport registry nor up-to-date an buses, of inventory concessions and routes, which it extremely makes to define difficult effective policy actions and measure their impacts. The implementation a of public transport registry, as specifiedby current is recommendedlaw, the in short term. Stakeholders Metrobús: As a public planning institution, Metrobús can set the standards for new corridors, procure new concessions and develop new payment formulas for clean bus services. 46 Clean Buses in Latin American Cities Clean Buses in Latin American Cities | 6 47 $0.12 $0.38 $0.06 $0.06 $0.09 $0.98 Electric Fast Charge Fast Electric Interestpayment Fuel subsidy $0.12 $0.12 $0.50 $0.50 $0.06 $0.06 $0.98 C ha rge Electric Depot 0.39 - $0.13 $0.15 $0.22 $0.25 $0.98 $ Capital investment Fuel Diesel E6 0.38 - $0.21 $0.13 $0.13 $0.22 $0.98 $ Diesel E3 Staff Maintenance $- Contribute to thedevelopment public of policies to reduceGHG from the transport sector by optimizing transport energy consumption, conducting studies on the life cycle and impacts batteries, of etc. Promote the electrificationof the transport sectorimplementing by projects pilot testto five electric buses different by bus concessionaires. Contribute to a culture change towards a smaller , and promote sustainable transport. $1.75 $1.25 $1.00 $1.50 $0.75 $2.25 $2.00 $2.50 $0.25 $0.50 $-0.25 $-0.50

Source: Steer for the World Bank based on various sources summarized Appendix in A. • • • Figure 6.3: TCO/km. assuming the same acquisition price as São Paulo for BEBs and an interest rate of 5.5% Funded by the by Funded Global Environmental Facility the project is led MIEM by and MVOTMA,(GEF), and aims to: The project $21.7 investment an over involves of actions and to supportmillion the government´s targets a four-year period. over meet the project´s (Fideicomiso del Combustible): del (Fideicomiso Combustible): (FUDAEE) is a support (FUDAEE) mechanism Climate Investment Funds (CIF); Climate Investment (CIF); Funds Export Credit Agencies (ECAs). Green bond issuance; (IFC); Corporation Finance International The Plan for Energy Efficiency grants credit guarantees energy to improve efficiency. This is a money-back incentive provided to bus operators based on the number kilometers of driven. This may represent a saving the in case electricof buses. Uruguayan for Energy Trust Saving and Efficiency providing financial leverage for projectsand activities that promote energy efficiency. Diesel subsidy Diesel

• • • • • • • High costs are one the of main barriers to the clean of busesuptake the in region, both in terms vehicle of purchase price and associated financing costs. BEB pricesin Montevideoare 45% higher than São in and higher 50% Paulo than in opportunities improve adoption for To Santiago. cleanof buses Montevideo, in open an for market bus acquisition to lowering is the BEB key prices in linewith international levels. market If BEB acquisition prices were reduced to the same as electric level São in Paulo, buses would $0.33 only of have a TCO /km more than diesel $0.05/kmbuses(i.e.s less than the current diesel subsidy). The current funding other for diesel subsidies (or available resources), could be reallocated to provide incentives for clean buses via revolving funds which provide guarantees for creditors or direct subsidies. The available local mechanisms include: C. Montevideo C. These mechanisms would help to augment the savings from the funds currently applied to the diesel subsidy. the national government In November 2017, launched efficient and an the project “Towards sustainable urban mobility system in Uruguay”. International mechanisms can also be used to to used be also can mechanisms International (e.g. financial bettercreditimprove conditions Such mechanismsinterest rates). may include: sector Private Private N N N N NP NP Nation Stakeholders L L L L Local Government ► ► Long Term Term Medium ● Timeframe ● Term Short Towards an efficient and Towards sustainable urban system mobility Uruguay in The implementation the of bus five pilotsin Montevideo could be opportunity an to test and theevaluate performance clean of technologies, and to provide evidence for the introduction of outcomes knowledge, The standards. relevant and evidence gathered from these initiatives should be openly shared and disseminated using independent and transparent methods to increase stakeholders’ confidencein the level transport system. Bus purchasing, tariffand operating costs data should be also shared order in to inform consolidated better Promoting decision-making. and competitive fleet acquisition processeswould also be beneficialof clean to thebuses.uptake The cost high buses of with cleaner technology was found to be a major obstacle for bus concessionaires. It is therefore recommended that funds available access them help to mechanisms should be explored and evaluated. This could be through information, the provision of achieved advice on funding processes, creating by or even new funds the to improve appeal clean of bus technologies. Status Desirable Desirable Desirable Essential Supportive Supportive

Recommendations

Develop mechanisms to facilitate to access funds green Evaluate the feasibility of budget reassignment from other ministries to projects. bus clean incentivize Include emission and noise reduction reduction noise and emission Include elements in cost-benefit evaluation processes. commonCreate technical for bus standards charging Promote independent and open knowledge oftransfer performance data from pilots Create standards for secondary standards use, Create vehicle of disposal final and/or batteries Promote energy in efficiency thepublic transport sector. Promote sustainable transport, Rationalize the current metropolitan transport (STM), system (fare transport system integrated an Promote and integration), PT2 FFF2 FFF8 ENV4 ENE3 ENV3

At a localAt the level, Municipality Montevideo of is working(IMM) towards implementing different initiatives contained its in Mobility for Plan Montevideo 2010-2020, which has been aligned with national environmental objectives and energy efficiency goals. PlanThe sets nine out strategic objectives, with four related them of to public transport: Source: Steer Table 6.5: recommendations Key for the project “Towards an efficient Uruguay” in system mobility sustainable urban and • • • • Multiple projects are being pursued to meet the strategic objectives, the notably implementation of integration the and corridors segregated of public transport. In a 2017 report, the Municipality expounded a strategy to introduce electromobility publicinto transport to increase the reliability of system. the 48 Clean Buses in Latin American Cities Clean Buses in Latin American Cities | 6 49

P sector Private Private N NP Nation Stakeholders L L L L L L Local Government ► Long Term ● Term Medium Timeframe ● ● ● Term Short The analysis above should provide a clear idea of current challenges andthe steps that need to be to overcometaken them.. In addition to evaluating availablefinancing mechanisms, the study should, look closely at current bus operation subsidies to identify incentives any such as diesel subsidies that may undermine the competitiveness the of new technologies. Stakeholders The recommendations listed are above for relevant the following stakeholders: key Ministry Energy of and Mines and Ministry (MIEM) (MVOTMA), Environment and Land-use Housing, of responsiblejointly an for the project “Towards efficient and sustainable urban systemmobility in Uruguay”. Municipality responsible Montevideo of for (IMM): implementing the Mobility and Plan overseeing bus services the in city. Status ssential Desirable Desirable Desirable E Supportive Supportive Recommendations isks echnologies Explore leasing schemes for buses and batteries and guarantees to reduce technical r Conduct route compatibility analysis with analysis compatibility route Conduct clean bus options to define the best suitable t finance to access incentivize and Diversify mechanisms. Evaluate prioritizing zero/low emission zones zones emission zero/low prioritizing Evaluate or corridors commonCreate technical for bus standards charging Strengthen urban bus emission standards emission bus urban Strengthen PT1 FFF6 FFF3 ENV2 ENE3 ENV5 Table 6.6: Key recommendations for the Mobility Plan for Montevideo 2010-2020 Montevideo for Plan Mobility the recommendations for Key 6.6: Table Mobility Plan for Montevideo 2010-2020 mobility plan and itsMontevideo's urban mobility resilience actions are identified as opportunities for the introduction clean of buses. Some key 6.6 actions are listed Table in strategy advancethe to Municipality's To introduce electromobility its in public transport system, common technical standards for bus charging need to be analyzed and introduced. This will help to open the providing by market the of choosing flexibility among different suppliers, and reduce the need to customize infrastructure for each project. As the capital costs for BEBs are a major obstacle for concessionaires in Montevideo, multiple options should be explored such asto leasing mitigate evaluating this barrier, schemes for buses and batteries and providing guarantees to reduce technical risks. encourage bus concessionairesTo to renew their fleetsand promote cleaner technologies, recommendwe studying the financing mechanisms that are currently available to bus concessionaires. This will help identify existing financing optionsand their feasibility for assisting the rollout new of technologies. Source: Steer lists recommendations to favor risk Early implementing uptake: 200 BEBs. This project is already underway with, contract arrangements to incorporate additional new buses and Diesel through (BEB fleet VI), Euro renovation. and/or expansion Table 6.7 reduction and to enable maximum learning to be derived from the introduction electric of buses. The recent financingof BEBs through leasing schemes structured the by private sector (ENEL and has ENGIE created energy companies), an interesting opportunity for other parties to join other energy companiesthis and (e.g. market Thenew authorities manufacturers). should also look to at attract ways more potential financiers to this market. The leasing scheme includes the provision a second of battery when the vehicle has reached mid-life. This initiative needs to be analyzed more in detail to ensure that the systems are notoverpricing the technological risk, since batterycosts continue to decline, and technology is maturingterms in autonomy of and capacity. Introduction the of 200 BEBs Santiago in provides a unique opportunity to gather real-world relevant operational data from the different technologies. Providing data on clean bus performance for independent and public analysis and peer review technicalin reports, will help to ensure that lessons are learned consideration into and taken futurein bidding processes. Santiago faces some find appropriate to difficulty spaces for bus depots and operations centers. Providing evidence at e-terminals on noise and emissions reduction could help support changes land in use restrictions with a view to making more spaces available for the necessary transport facilities. $0.11 $0.17 $0.10 $0.10 $0.57 $0.29 $0.05 $0.05 Electric Fast Charge Fast Electric Interestpayment Fuel tax $0.11 $0.17 $0.14 $0.07 $0.07 $0.57 $0.38 C ha rge Electric Depot C NG $0.07 $0.07 $0.24 $0.57 $0.29 $0.25 $0.09 $0.05 $0.05 interest rate of 7.5% Capital investment Fuel All technologies with an an with technologies All

$0.21 $0.24 $0.57 $0.27 $0.06 $0.06 $0.04 $0.04 $0.08 Diesel E6

Staff Maintenance tax Purchase Tendering process providingTendering for Transantiago: further opportunities to introduce clean buses. Early uptake: implementing 200 uptake: Early BEBs. $-

$1.75 $1.25 $1.00 $1.50 $0.75 $2.25 $2.00 $0.25 $2.50 $0.50 Source: Steer for the World Bank based on various sources summarized Appendix in A. Figure 6.4: TCO per kilometer, considering an technologies. all for 7.5% of interest rate • • Battery electric buses benefit fromfinancing incentives to that reduce interest rates from 7.5% These5.6%. incentives enable competitive a TCO for clean technologies, but the main perceived barrier for clean was the bus risk uptake of introducing a technology that to bus is unfamiliar concessionaires. Santiago has two important initiatives underway that are suitable for clean bus uptake: D. Santiago Santiago D. A series complementary of measures will be processconsidered the implementation during aimed at improving and accelerating clean bus uptake. 50 Clean Buses in Latin American Cities Clean Buses in Latin American Cities | 6 51 sector Private Private NP N NP N NP NP NP NP N Nation Stakeholders L Local Government Long Term Term Medium Timeframe Term Short process. While the previous tendering process tendering previous the While process. specifiedsimply the numberof BEBs required, it would be better for the new process to clearly specify the services required, to define corridors, appropriate terminals, etc., and to determine thesize and characteristics the of new fleet. Although the MTT has been leading BEB the elements other of implementation, electromobility strategy call for (2016-17) more specific leadership to ensure betterinter-sectoral engagement. sector private and coordination, recommend,We looking for example, carefully at cost and risk reduction opportunities such as those related the present to battery replacement scheme at bus life mid-term. Status Desirable Desirable Desirable Essential Essential Essential Supportive Supportive Supportive Recommendations Explore leasing schemes for buses and batteries and guarantees to reduce technical risks. Strengthen concession conditions with with conditions concession Strengthen or payments bus guarantee to mechanisms of risks reduce default. Specify the lead entity or bodyto coordinate Clean Bus deployment strategies and to outreach stakeholder periodic conduct gauge reactions to Clean Buses. Promote independent and open knowledge oftransfer performance data from pilots. Promote benefits of noise and emissions use land to changes study and reduction restrictions for depots and terminals. Conduct technical analysis of energy system system energy of analysis technical Conduct capacity to support large-scale bus fleets. with analyses compatibility route Conduct Clean Bus options to define the best suitable technologies. Include emission and noise reduction reduction noise and emission Include elements in cost-benefit evaluation processes. Decouple the credit paymentfrom the tariff. PT1 PT2 PT3 FFF4 FFF6 ENE1 ENV4 GOV1 GOV4 Table 6.7: Recommendation roadmap from implementing and learning from from learning and implementing from roadmap Recommendation 6.7: Table implementing 200 e-buses uptake: Santiagoearly in Tendering processTendering for Transantiago: providing buses clean more opportunities for The tendering process that is currently under preparation, and similar bidding exercises the over next few years, present a unique opportunity to incorporate new technologies via a competitive process. The sheer number buses of required will generate interest from bus many manufacturers. 6.8 lists theTable main recommendations for making the tendering processes more even competitive in and efficient termsobtaining of the best combination transport of technologies, reducing risks and bringing down costs. The previously aborted tendering process defined VIEuro as the standard for new buses, conformity in with thein definition the recentlyapproved Environmental Decontamination suggest Plan. We that this norm should be maintained for the new Source: Steer sector Private Private N NP NP N N N N NP NP N Nation Stakeholders L L L Local Government Long Term Term Medium Timeframe Term Short Ministry Transport of and Telecommunications (MTT) (MTT)3CV as the technical authority for performance measurements Environment of Ministry Ministry of Finance Energy of Ministry Consorcio Movilidad Eléctrica – Private (Public Group) Working Manufacturers Energy Companies

Stakeholders The main stakeholders for clean bus deployment Santiagoin include: • • • • • • • • Status ssential Desirable Desirable Desirable E Supportive Supportive Supportive Supportive Supportive Supportive

Recommendations articipation in BEB deployment. articipation onduct periodic stakeholder outreach to to outreach stakeholder periodic onduct isks. echnologies. estrictions for depots and terminals.

Create incentives for clean buses and fuels goals. reduction emission support that gauge reactions to Clean Buses. finance to access incentivize and Diversify mechanisms. Decouple the credit payment from the tariff. Explore leasing schemes for buses and batteries and guarantees to reduce technical r Pursue regulatory and contractual contractual and regulatory Pursue company energy promote to frameworks p Specify the lead entity or body to coordinate clean bus deployment strategies and c Promote independent and open knowledge oftransfer performance data from pilots. Promote benefits of noise and emissions use land to changes study and reduction r Evaluate prioritizing zero/low emission zones zones emission zero/low prioritizing Evaluate or corridors. with analyses compatibility route Conduct clean bus options to define the best suitable t Ex-post performance analyses and public information sharing. Private energy companies provide financing (leasing) and reducing risks; Incentives provided for cleaner technologies, and MTT leads implementation, but closely works with the Energy and Environment Ministries; The existence a framework of that allows as much competition as possible; PT1 PT2 PT3 FFF7 FFF6 FFF3 FFF4 ENV5

GOV4 GOV3 Table 6.8:Recommendation roadmap for the new tendering processes for Transantiago processes for tendering new the for roadmap 6.8:Recommendation Table Source: Steer Elements for successElements for elementsKey for the successful introduction of clean buses at scale Santiago in include: • • • • • 52 Clean Buses in Latin American Cities Clean Buses in Latin American Cities | 6 53 Fundo de Fundo . One item within this credit line , has a credit line called Paulista Development Agency has Garantia do Tempo de ServiçoGarantia do Tempo – Workers’ which is available forGuarantee Fund), (under the controlof the financing Ministryof the renewal expansionor bus fleetsof Cities) for companies that have concessions or permission to run urban transport services. Caixa Econômica Federal (Federal (Federal Federal Econômica The Caixa Bank) Housing as part the of Pro-Transportation REFROTA ( Program funded the by FGTS Green bonds, (IFC) Corporation Finance International support, or Climate Investment (CIF), Funds Financing and Export Credit Agencies (ECAs) support. The promoted through sustainable development long-term credit operations for small and medium-sized companies in São Paulo. The agency has a funding program with a technology incentive line called the Linha Economia Verde refers to the substitution fossil of fuels with clean fuels for use public in andprivate transportation gas, biodiesel,(natural ethanol, electricity, etc), fleet renewaland switching fromdiesel-powered busesto biodiesel, ethanol or electric. However, bus fleet has beenfinanced none São of Paulo’s with this credit line to date. The National Bank Economic for and Social Development – BNDES offers a creditline called FINAMEto finance the manufacture and purchase accredited of domestically- produced machinery and equipment. This includes financing for buses, trucks,and other machinery.

• • • • • • • Other financial mechanismsin Pauloinclude São international lending options such as: Figure 6.5 shows the effectinterestof lower rates peron the kilometer TCO for different clean bus technologies. $0.12 $0.14

$0.39 $0.58 $0.09 $0.09 with Electric Fast Charge Fast Electric Interestpayment Fuel tax 7% interest rate $0.15 $0.14 $0.58 $0.52 $0.09 $0.09 C ha rge Bothelectric buses Electric Depot $0.17 $0.15 $0.39 $0.08 $0.08 $0.58 $0.09 $0.09 Biofuel Capital investment Fuel $0.17 $0.41 $0.15 $0.10 $0.10 $0.08 $0.08 $0.58 Diesel E6 Maintenance Staff provides low interest loans to support projects recovery of for the improvement and/or environmental quality. The Especial Fundo do Meio Ambiente e Desenvolvimento Sustentável (FEMA) $-

$1.75 $1.25 $1.00 $1.50 $0.75 $2.25 $2.00 $0.25 $2.50 $0.50 • The present analysis value per on the TCO kilometer shows that biofuel buses are more competitive thanthe other clean bus technologies thisin city, although electric buses are less than 10% higher than the other two evaluated. Providingincentives financial for zero-emission technologies to reduce the interest rate from the may enablecurrent BEBs to be 11.1% high more competitive with the other bus technologies with interest 7% (credits rate have been previously available for fleet purchase). The mechanisms available São in for Paulo funding the appropriateincentives financial and establishing guarantee funds or direct subsidies, are the following: E. Paulo São Source: Steer for the World Bank based on various sources summarized Appendix in A. TCO/km forTCO/km buses in São Paulo, assuming an interest rate of for 7% BEBs P sector Private Private NP N NP NP N NP NP N Nation Stakeholders L L L L L L L L L L Local Government ► ► Long Term Term Medium Timeframe ● Term Short ● battery leasing or substitution least programs (at thein first stageof the procurementand process) helping to transfer knowledge to concessionaires. The terms the of bidding processes should enable a range interested of parties, such as energy companies,institutions, financial manufacturers and others, to participate directly the in concessions. This could help the minimize risks associated with the limited financial capacityof bus concessionaires their concern about and/or facilitating by leasingtechnology risks (e.g. to be schemes However, or capital contributions). effective fully also it will be necessary to revisit the model strengthen and commercial the concession rules with mechanisms that can guarantee or reduce the long-term risks default of on payments. Status Desirable Desirable Desirable Desirable Desirable Essential Supportive Supportive Supportive Supportive Supportive

Recommendations

Evaluate the potential for cross-modal subsidies to support public transport. finance to access incentivize and Diversify mechanisms. Explore leasing schemes for buses and batteries and guarantees to reduce technical risks. Specify the lead entity or body to coordinate clean bus deployment strategies and to outreach stakeholder periodic conduct gauge reactions to clean buses. Conduct route compatibility analyses with analyses compatibility route Conduct clean bus options to define the best suitable technologies. Promote independent and open knowledge oftransfer performance data from pilots. contractual and regulatory Pursue company energy promote to frameworks in BEB deployment. participation Evaluate prioritizing zero/low emission zones zones emission zero/low prioritizing Evaluate or corridors. commonCreate technical for bus standards charging. of economies and possibilities the Evaluate lower for tariffs slow charging at night. Create standards for secondary standards use, Create vehicle of disposal final and/or recycling batteries. PT1 PT2 FFF1 FFF3 FFF6 ENV5 ENE3 ENE4 ENV3 GOV3 GOV4 Source: Steer São Paulo's New BusSão Process Tendering Paulo's theEvaluation of current bus routes that could operate exclusively with clean buses facilitates planning, cost evaluation, charging infrastructure installation and results monitoring. The identificationhigh of pollutionareas, and creation zero- of or low-emission zones or corridors restricted to clean buses, could enable their gradual implementation areas city in liable to benefit most from investment. early The bus tendering process could also include route compatibility analyses to define the priorities for BEB implementation, selecting routes with the potential for service improvements efficiency to overcome current technology limitations. Manufacturers can also play active an role the in introduction clean of buses, offering maintenance, Table 6.9: RoadmapTable 6.9: for São Paulo's new bus tendering process 54 Clean Buses in Latin American Cities Clean Buses in Latin American Cities | 6 55 sector Private Private N NP NP N NP Nation Stakeholders L L L L L L Local Government ► ► Long Term Term Medium Timeframe Term Short The government City can promote the benefits reducedof noise and pollutant emissions, and study normative changes to land use restrictions for bus depots and terminals. São is Paulo currently mapping noise levels, whichwill help establish noise reduction targets critical in areas and stimulate the implementation corridors of operating with BEBs. recommendWe diversifying and encouraging access to available financing mechanisms. In addition to the options described new above, projects could be financed through valueland capture mechanisms to other linked measures, which would require integrated an approach to planning the by Mobility and Urban Planning Secretariats. Status Desirable Desirable Supportive Supportive Supportive Supportive Recommendations Diversify and incentivize access to finance finance to access incentivize and Diversify mechanisms. Promote benefits of noise and emissions use land to changes study and reduction restrictions for depots and terminals. Pursue regulatory & contractual in frameworks participation company energy promote to BEB deployment. Evaluate prioritizing zero/low emission zones zones emission zero/low prioritizing Evaluate or corridors. Promote independent and open knowledge oftransfer performance data from pilots. Include emission and noise reduction reduction noise and emission Include elements in cost-benefit evaluation processes. PT3 PT2 FFF3 ENV4 ENV5 GOV3 Table 6.10: Roadmap for new bus corridors with clean buses in São Paulo Source: Steer Newbus corridors with clean buses Network planning and the construction of new bus corridors and terminals represent opportunityan simultaneously to implement zero- or low-emission corridors. It also provides opportunity an introduce to value-for-money methodologies that include emission and noise reduction factors the in cost-benefitevaluation evaluated be should corridors The processes. takingby account into the externalbenefits to the urban population arising from improved environmental and quality better health outcomes due to emissions and noise reduction. This would selected be to technologies cleaner encourage where, although costs the direct (internal) may the new technologiesbe higher, will due in course provide better solutions. value-for-money which is instrument an the of

is working with 2030 GIZ and Rota to

National government - Ministry Cities: of manages financing programs, well as as the creditline Program, Pro-Transportation the of REFROTA, which uses the National Guarantee Workers Fund to finance the renewalexpansion or of bus fleets. National government - Ministry Environment: of manages the non-reimbursable climate fund Clima) (Fundo National on Climate Change. Policy The fund aims to finance studiesand projects to reduceGHGs emissions and adapt to climate change impacts. Ministry Industry, of and Services Foreign Trade (MDIC): develop plans to promote the electromobility industry in Brazil.

Stakeholders These recommendations would require actions to local, by be taken state and national government entities, as follows: Local government - São Transporte Paulo subordinated to the Municipal SA (SPTrans): Secretary Mobility of and Transport, manages all the municipal bus routes São in Paulo. Local government – Municipal Secretariat for Green Spaces and the Environment (SVMA): responsible for climate change, and quality air atmospheric emissions at the municipal The level. SVMA, together with other municipal secretariats and institutions, form the São Municipality Paulo Climate Committee, advisory an body created in 2009 the by previous law city on climate change 2009). of No. 14,933 (Law São State Government: Paulo responsible for the provision metropolitan of public transport systems, including metropolitan buses managed EMTUby (Metropolitan Urban Transportation Company São of Paulo). 56 Clean Buses in Latin American Cities Clean Buses in Latin American Cities | 6 57 fleetsand generally improve public transport services, reduce fleetfinancing costs and relieve pressure onuser fares and / or public subsidies. Overcoming barriers to clean bus deployment activewill involve stakeholder participation, a transparent approach to technicalperformance and implementation costs, and extensive an review available of financing mechanisms. projectsPilot are essential for measuring the real-world consumption, performance, capacity, costs and compatibility clean of buses on specific routes. The tendering processes for fleet purchasing must be openand competitive, and contain clearly defined bus performance contractual innovative requirements. Moreover, and business models should be pursued to reward technologies,low TCO share risks andovercome the challenges represented upfront high by costs. theImplemented recommended together, innovations in public transport, environmental policy, energy and infrastructure, governance and markets and funding and finance can help cities to accelerate the deployment clean of bus technologies that are capable yielding of significant economic, socialand environmental benefits. While clean may be bus constrained uptake by various barriers depending on environmental, energy, regulatory, institutional and financial contexts, there are mechanisms for overcoming these barriers and for fostering enabling an environment the in for their region. uptake Since the operating and maintenance costs of battery electric these buses buses are lower, are the best option from point of the TCO view Mexico in and Santiago. City However, concessionaires are reluctant these to pilot technologies due to their limited knowledge of the operational and maintenance requirements Itinvolved. is true that these technologies have operational constraints requiring evaluation prior implementation. their to cities in Even where BEBs at present have higher thenTCOs diesel buses, the reduction diesel of subsidies would help to encourage the adoption cleanof bus technologies. On the negative side, other city- and corridor-specific barriers may increase implementation costs given the need for depot reconfiguration, electric power network battery- the in costs involved and extensions charging infrastructure. Clean buses are opportunity an to incorporate new third parties schemes in to provide new Conclusions 58 Clean Buses in Latin American Cities Clean Buses in Latin American Cities | References 59 World Bank (2018), “Cost-effectiveness of clean bus technologies for five LATAM cities.” [in press] “Cost-effectivenessof clean cities.” Bankbus (2018), technologiesWorld LATAM for five Steer (2018), “Clean Buses in LAC: Recommendations.” World Bank [internal report]. Buses “Clean Bank [internal LAC: in World Recommendations.” Steer (2018), “HealthUS Environmental and Protection Environmental Effects Agency a), Particulate EPA, (US of https://www.epa.gov/pm-pollution/health-and-environmental-effects-particulate- Matter(PM).” matter-pm “HowYour Health,” US Mobile Environmental Protection Source Agency Affects Pollution b), EPA, (US https://www.epa.gov/mobile-source-pollution/how-mobile-source-pollution-affects-your-health#smog IEA. (2015). “World Energy Outlook.” https://www.iea.org/publications/freepublications/publication/ “World EnergyIEA. Outlook.” (2015). WEO2015.pdf BusLopez Financing Dodero, Urban in Transport A. Projects Mexico: in H. Challenges (2016). and Opportunities. Bank Mexico Group. The City: World Buses “Clean LAC: in report]. Diagnosis BankSteer [internal Report.” (2018), World ICCT. (2017). “Low-carbon (2017). technologyICCT. pathways urban for -free bus fleets in 20 megacities.” https://www.theicct.org/publications/low-carbon-technology-pathways-soot-free-urban-bus-fleets- 20-megacities The International Washington: Council on Clean Transportation. EU Clean Fleets (2014). Clean Buses – Experiences CleanEU Fleets Options. (2014). with and Technology http:// Fuel www.clean-fleets.eu/fileadmin/files/Clean_Buses_-_Experiences_with_Fuel_and_Technology_ Options_2.1.pdf “Low carbon technologiesIADB. bus fleets- (2013). can transform Lessons Latin America’s from the C40-CCI https://webimages.iadb.org/publications/english/ Hybrid Program”. & ElectricBus Test document/Low-Carbon-Technologies-Can-Transform-Latin-America-Bus-Fleets.pdf CIVITAS WIKI consortiumCIVITAS “Smart choices (2013) for http:// your - Clean city Buses for your .” city civitas.eu/sites/default/files/civitas_policy_note_clean_buses_for_your_city.pdf “ImpactsDelucchi, M. biofuels of (2010). on climate change, Annals water use, of and land use,” Academy Sciences. of New https://nyaspubs.onlinelibrary.wiley.com/doi/pdf/10.1111/j.1749- York 6632.2010.05457.x C40 (2016). “Daring Cities Make Bold Air Quality Commitment To Remove All Diesel Vehicles By 2025.” “Daring All Diesel Cities Remove Bold 2025.” By Make Air Vehicles Quality CommitmentC40 To (2016). https://www.c40.org/blog_posts/daring-cities-make-bold-air-quality-commitment-to-remove-all- diesel-vehicles-by-2025 emissions “GHG interactive http://www.c40.org/other/gpc-dashboard dashboard.” C40 (n/d). Carnegie Mellon University “Which (2017). Buses? Alternative is Best Technology for Transit Fuel Scott https://www.cmu.edu/energy/education-outreach/public- Institute for Energy Innovation.” outreach/17-104%20Policy%20Brief%20Buses_WEB.pdf Bloomberg New Energy Finance (2018). “ElectricBloomberg Buses New CleanerEnergy Cities:in Driving Finance (2018). Air and Towards https://about.bnef.com/blog/electric-buses-cities-driving-towards-cleaner-air-lower-co2/Lower CO2.”

• • • • • • • • • • • • • • • • References

60 Clean Buses in Latin American Cities 61 Clean Buses in Latin American Cities | Appendix A: Key Assumptions for World Bank TCO Analysis - 10 - 10 0.16 $7,000 0.103 0.103 USD/kWh USD/kWh Electric bus Fast charge Fast Electric bus Fast charge Fast 10 0.14 0.22 0.22 10 12,500 0.15 0.15 0.10 0.10 Depot $ $132,000 Depot USD/kWh $170,000 $170,000 USD/kWh Electric bus 0.78 km/kWh0.78 km/kWh 0.87 Electric bus 0.78 km/kWh km/kWh 0.78 km/kWh 0.87 3 3 - 10 .34 $0 15,882 $15,882 $15,882 - 2.65% 12.65% 12.65% 10 264,000 $330,000 $285,000 $0 $12,500 $7,000 CNG bus 1.37 km/m 1.76 km/lt Biofuel bus 0.63 USD/lt 10 $0 0.33 0 - 10 $0 2.7 km/lt Hybrid bus CNG bus .90 km/m3.90 .33 USD/m3 USD/m3 .33 1 clean bus costs are quite and dynamic these inputs represent a snapshot only time.in 0 10 VI $0 - VI 10 $0 Diesel Euro Diesel Euro 0.66 USD/lt USD/lt 0.66 - V 10 $0 0.28 0.28 12.65% 12.65% 12.65% 1 $15,882 $15,882 $15,882 $ $220,000 $230,000 $360,000 $ - 1.85 km/lt 1.85 km/lt 10 1.06 USD/lt 1.06 USD/lt 1.06 USD/lt 0.49 USD/m $0 Diesel Euro 0.22 0.22 0.26 0.22 17.50% 17.50% 17.50% 17.50% 17.50% 17.50% $41,400 $41,400 $41,400 $41,400 $41,400 $41,400 $170,000 $170,000 $180,000 $200,000 $170,000 $425,000 $367,030 1.96 km/lt km/lt 1.96 km/lt 1.96 0.63 USD/lt Diesel Euro V SD/m3 m/m3. Years km/lt, km/kWh, k USD/lt, USD/kWh, U USD/km USD USD/year % Units USD USD USD/year % Years USD/km USD km/lt, km/Kwh, km/m3 USD/lt, USD/kWh, USD/m3 USD Units USD Labor Costs Labor rate Interest life Useful Fuel Costs* Maintenance Costs Infrastructure Costs** Second battery Acquisition Fuel performance Vehicle Acquisition* Acquisition* Vehicle Labor Costs Interest rate life Useful Fuel Costs* Maintenance Costs Infrastructure Costs** Second battery Acquisition Fuel performance Vehicle Acquisition* Acquisition* Vehicle *Including taxes. ** Part or all the cost of infrastructure may be included in Fuel Costs. 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. Table A.2: data Key inputs and assumptions underlying World Bank TCO Analyses - Mexico City Sources: Instituto Metropolitano Protransporte de Lima, Agrale, Comisión Nacional de Regulación del Transporte,Ambiente Ministerio y Desarrollo de Sustentable, Ministerio de Energía, interview with Metbus Chile, Steer. Table A.1: data Key inputs and assumptions underlying World Bank TCO Analyses - Buenos Aires Following data inputs are key and assumptions estimates. Bankunderlying TCO World As noted, Appendix A: Key Assumptionsfor Appendix A: Key Analysis Bank TCO World

- 10 - 10 0.12 0.17 13.50% 5.60% $12,500 $70,701 $7,000 $44,278 $388,620 $259,090 Fast Charge Fast Fast Charge Fast Battery Electric Battery Electric 10 0.12 10 0.17 13.50% $12,500 $70,701 $180,000 5.60% $12,500 $44,278 Bus Depot $120,000 $300,000 0.78 km/kWh0.78 km/kWh 0.87 Bus Depot 0.045 USD/kWh0.045 USD/kWh 0.05 0.78 km/KWh 0.87 km/KWh Battery Electric Battery Electric 3 - - 15 0.22 - 13.50% 10 $70,701 $0 0.29 7.50% $44,278 $225,267 C NG bus 1.84 km/m 0.60 USD/lt 0.083 USD/kWh USD/kWh 0.091 - - 15 0.22 13.50% $70,701 - $150,000 $180,000 $450,000 10 2.50 km/lt 2.50 km/lt $0 0.32 USD/lt 0.32 USD/lt 0.24 7.50% $44,278 Diesel Euro III Diesel Euro VI $196,964 2.15 km/lt 0.69 USD/lt 0.69 Diesel Euro VI km/lt, km/Kwh, USD/lt, USD/kWh, USD/km Units USD/km USD USD/year % Years USD USD USD USD/km USD/year % Years USD km/m3, km/Kwh, km/lt USD/kWh, USD/m3, USD/lt USD Units

Labor Costs Labor rate Interest life Useful Fuel Costs* Maintenance Costs Infrastructure Costs** Vehicle Acquisition* Acquisition* Vehicle Second battery Acquisition Fuel performance Interest rate Interest life Useful Fuel Costs* ** Maintenance Costs Infrastructure Costs*** Costs Labor Vehicle Acquisition* Acquisition* Vehicle AcquisitionSecond battery Fuel performance 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. Table A.4: data Key inputs and assumptions underlying World Bank TCO AnalysesSantiago - Sources: Municipalidad de Montevideo,Intendencia de Montevideo, Administración Nacional de Usinas y TransmisionesEléctricas (UTE), Decreto 411/010 del Ministerio de Economía y Finanzas, Ministerio ANCAP, 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.3: data Key inputs and assumptions underlying World Bank TCO Analyses - Montevideo 62 Clean Buses in Latin American Cities Clean Buses in Latin American Cities | Appendix A: Key Assumptions for World Bank TCO Analysis 63 - 10 0.09 11.10% $7,000 $40,468 $268,700 Fast Charge Fast 0.12 USD/kWh Battery Electric 10 0.09 12,500 124,456 11.10% $ $311,140 $40,468 $ Bus Depot 0.11 USD/kWh 0.78 USD/kWh 0.87 USD/kWh Battery Electric - 10 $0 0.15 11.10% $40,468 $120,000 1.91 km/lt iofuel bus bus iofuel 0.926 USD/lt 0.926 B - .15 10 10% $0 0 40,468 11. 120,000 .82 km/lt $ $ .93 USD/lt 1 Diesel Euro VI % Years USD/kWh, USD/ltUSD/km 0 USD USD/year USD km/Kwh, km/lt USD Units Interest rate Interest life Useful Fuel Costs* Maintenance Costs Infrastructure Costs** Costs Labor Vehicle Acquisition* Acquisition* Vehicle Second battery Acquisition Fuelperformance *Including taxes. ** Part or all the cost of infrastructure may be included in Fuel Costs. Sources: Federação Nacional do comércio de Combustíveis e de Lubrificantes, Asociación BrasileñaVehículos de Eléctricos, InternationalICCT: Scenario Study on Public Policies for Electric Vehicles in Public and Private Fleets in Urban Areas, Interviewwith Metbus Chile and Steer. Table A.5: data Key inputs and assumptions underlying World Bank TCO Analyses - São Paulo

64 Clean Buses in Latin American Cities Clean Buses in Latin American Cities | Appendix B: TCO Estimates for Each of the Five Cities 65 0.15 0.22 0.18 0.00 0.09 0.42 0.42 0.57 0.05 1. 7 7 0.07 0.24 0.36 0.23 0.00 0.00 0.05 1. 2 9 fast charge fast Electric Bus Bus Electric Electric bus bus Electric Fast Charge Fast 0.12 0.15 0.22 0.31 0.19 0.00 0.55 0.54 0.57 0.05 0.07 0.47 0.23 0.00 0.00 0.07 1. 4 9 2.05 Depot Depot Electric bus bus Electric Electric bus bus Electric 0.22 0.22 0.14 0.15 0.00 0.05 0.26 0.57 0.03 0.33 0.34 0.45 0.23 0.34 0.05 0.00 1. 5 0 1. 8 8 C NG bus Hybrid bus 0.11 0.12 0.22 0.19 0.19 1. 6 1 0.00 0.04 0.57 0.23 1. 5 7 0.34 0.25 0.33 0.23 0.36 0.00 0.00 C NG bus Biofuel bus Biofuel VI VI 0.11 0.22 0.22 0.00 0.04 0.20 0.20 0.57 1. 5 7 0.23 0.33 0.28 0.23 0.49 0.08 0.00 0.05 1. 6 8 Diesel Euro Diesel Euro 0.11 0.21 0.21 0.22 0.19 0.19 0.31 0.00 0.04 0.57 0.28 0.23 0.49 0.08 0.00 0.05 1. 5 3 1. 6 5 Capital investment* Interest payment Staff Total Fuel tax tax Purchase tax Maintenance C ost ParameterFuel Diesel Euro V Maintenance Capital investment* Interest payment Staff Total Fuel Fuel tax Road tax Purchase tax C ost Parameter Diesel Euro V *Including taxes and interests. Table B.2: World Bank Clean Bus TCO Estimates - Mexico ($USD/km) City *No tax included Table World B.1: Bank Clean Bus TCO Estimates - Buenos ($USD/km) Aires The following Tables summarize TCO by bus by summarize The TCO following Tables technology for each the of cities. five Appendix Estimates B:TCO for Each Cities Five the of

0.17 0.12 0.19 0.14 0.10 0.00 0.00 0.39 0.58 0.00 0.09 0.00 0.00 0.05 0.29 0.08 0.57 1. 2 6 0.55 0.06 0.00 0.00 0.00 0.33 0.98 1. 5 3 Fast 2.05 Battery Electric Electric Bus Fast Electric Bus Fast 0.11 0.11 0.17 0.12 1. 5 1 0.14 0.72 0.00 0.00 0.52 0.25 0.58 0.00 0.09 0.00 0.00 0.07 0.38 0.57 0.06 0.00 0.00 0.00 0.43 0.98 2.31 1. 3 9 Electric Bus Depot Battery Electric Bus 0.17 0.15 0.13 0.15 0.00 0.08 0.58 0.00 1. 4 7 0.39 0.09 0.25 0.22 0.07 0.00 0.05 0.29 0.24 0.09 0.57 1. 5 7 0.25 0.00 0.00 0.00 0.98 1. 7 4 C NG bus Biofuel bus bus Biofuel 0.17 0.21 0.41 0.10 0.15 0.13 0.21 0.13 0.27 0.00 0.08 0.58 0.00 0.22 0.57 1. 4 7 0.06 0.00 0.04 0.24 0.08 1. 4 9 1. 6 7 0.00 0.00 0.00 0.98

C ost Parameter Diesel Euro VI Staff Total Purchase tax Maintenance Capital investment* Interest payment C ost ParameterFuel Fuel tax Diesel Euro VI Road tax Total Purchase tax Maintenance Capital investment* Interest payment Staff C ost ParameterFuel Fuel tax Diesel Euro IIIRoad tax Diesel Euro VI Electric Bus Depot Staff Total Road tax Purchase tax Maintenance Capital investment* Interest payment Fuel Fuel tax *Including taxes and interests. *Including taxes and interests. Table B.5:World Bank Clean Bus TCO Estimates - São ($USD/km) Paulo *Including taxes and interests. Table B.4: World Bank Clean Bus TCO Estimates - Santiago ($USD/km) Table B.3: World Bank Clean Bus TCO Estimates - Montevideo ($USD/km) 66 Clean Buses in Latin American Cities Clean Buses in Latin American Cities | Appendix B: TCO Estimates for Each of the Five Cities 67