Transition to Electromobility in Brazilian Cities

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Brazil is the largest economy in Latin America with a 2.05 trillion GDP and 209 million population, both about a third of the total in Latin America and Caribbean (LAC). Given its very large size, Brazil’s CO2 emissions per capita is constantly lower than the LAC average and many larger peer economies in LAC . This is resulting from a very high share of renewable energy (43.8%) in final energy consumption compared to the regional average of only 27.6%. However, with its progress in reduced deforestation, Brazil still ranks the top 7 world emitter and leads the regional CO2 emissions from fuel combustion . The country will undoubtedly need to continue to decarbonize all its sectors, particularly in urban areas where over 86.3% of population reside, get around, consume energy and produce waste. Cities in Brazil have a key role to play in decarbonizing the transport system. This can be achieved through avoiding unnecessary trips with transit-oriented development (TOD), improving operations efficiency, infrastructure and vehicle technologies, and more importantly, shifting more people from personal vehicles to public transit. For example, in the most populous city Sao Paulo, public transport currently provides 32% of the annual trips by citizens. As many cities are or will be going through a new process of concession bidding of its public transport sub-systems, there are opportunities to improve the service of mobility in bus systems and make a gradual transition to cleaner vehicle technologies (particularly electric drive), which can facilitate modal shift and reduce carbon emissions from the use of personal vehicles and overall transport system.Electromobility in transit buses is disruptive in essence but has various benefits. It impacts many aspects of our life and society, such as mobility modes, energy consumption and efficiency, local air quality and global climate change. It induces changes in market and governance, such as automobile industry, energy market, labor market, policies and regulations in favor of low-carbon development. Moreover, in transit systems, it facilitates innovations in business models and financing mechanisms, bringing incentives to redesign the bidding and concessions process and improve service quality. For the energy sector, vehicles charging at off-peak hours can improve grid stability and increase revenue to power utilities and distributors. Various benefits in transport, energy and environment can become incentives to promote electric buses. The introduction and scale-up of electric buses is enabled by multiple areas and is an incremental process with thoughtful planning and implementation. The Clean Bus Implementation in LAC Cities NDC-SF Technical Assistance (P164403) analyzed the barriers and opportunities in five capital cities in LAC (Sao Paulo, Mexico City, Buenos Aires, Montevideo and Santiago) and summarized five key enabling areas to pay attention to . These areas are: i) Environmental Policy, ii) Public Transport, iii) Energy and Infrastructure, iv) Governance and Regulation, and v) Funding and Financing. There is no one-size-fits-all solution to all cities, but Brazilian cities can benefit from this regional analysis and especially the experience in Sao Paulo. A recent study by World Resources Institute suggested the stakeholders involved and actions needed throughout the lifecycle in e-bus adoption: from early planning and pilot, setting targets, formalizing long-term infrastructure plan and bus procurement plan for mass adoption, to the end-of-use of buses. Brazilian cities, depending on policy readiness and on-the-ground implementation level, can take different actions to ensure quality adoption and enhancement.The World Bank is currently engaged in developing new bus concession programs and with the introduction of clean bus fleets in major metropolitan areas in Brazil. For instance, the team work in collaboration with the metropolitan areas of São Paulo and Belo Horizonte with funding from the NDC and SFLAC (Fondo Español para America Latina y el Caribe) respectively. The World Bank has also actively engaged with the Ministry of Mines and Energy to discuss the power reform in Brazil and its impacts in the planning, tariff and financing. The implementation of EV is a technology disruption that significantly affect the utilities business models, power system planning and operations for cities and financing approach.The project comprises five components in preparing the transition to electromobility in Brazil, summarized below.Component 1 - Industry analysis for introduction of electromobility in Brazil - US $ 67,500. This component comprises the following activities:a. present the recent literature on electromobility, particularly the domestic and/or international cases in public transit for passengers; topics include financing and business models, public transport operations, energy and infrastructure, governance and markets, and environmental standards;b. perform a specific diagnosis for Brazil at national, state and city levels of government, understanding the main barriers to implementation and recommendations to remove these barriers;c. conduct market study for electric buses to understand industry situation and its development prospects, including different types of vehicles technologies (battery-electric and hybrid-electric) and variance in configurations;d. analysis of the regulatory framework (standards and legislation) and institutional arrangement to identify existing gaps and suggestions to address the gaps;e. understand the local context and legislation. Component 2 - Structuring for implementation of electromobility - US $ 240,000. This component develops the methodology and framework for the implementation of electromobility, which identify barriers and opportunities in local contexts, and establish the Guidelines for cities in local, state and federal level to support the preparation and adoption of electromobility in Brazil.Specifically, this component includes the following activities step by step:a. review the characteristics and situation of transport in targeted municipalities; b. enabling areas for electromobility (e.g. overcome political barriers, setting mechanisms, technical capacity); c. how to plan and structure projects and proposals; d. how to mobilize investments (e.g. municipal budget, alternative financing and funds); e. how to ensure the implementation with clear rules and responsibilities, high quality projects, monitoring and evaluation; f. review methodologies in the Guidelines based on the results of the pilot project (Component 4); g. identify and enhance how the projects can be more advantageous to the least favored, specially woman and disabled people;h. guide electromobility development in cities.Component 3 - Financing of electromobility - US $ 304,500,000. This component should develop / strengthen the structures for funding for electric bus introduction in Brazil and the need to increase infrastructure for the transition to electromobility, including the development of a Facility for project financing. Are guiding aspects of this component increased economic activity and the attractiveness of the private sector, environmental sustainability. This component includes: a. guidelines for the preparation of concession projects an d / or PPP; b. structuring of financing proposed model; c. technical and legal elements to support the creation of funds and credit lines focused on electromobility; d. guidelines for the improvement of public policies; e. mechanisms to select and evaluate. Component 4 - Pilot project for the implementation of electromobility - US $ 250,000. This component is designed and structured in at least two Brazilian cities, and the result is expected to electromobility project ready to be submitted to a lender. a. identifying the candidate cities and apply a selection framework that includes cities readiness parameters, such as financial