The Inter-American Development Bank (IDB) is providing a $43 million credit line to increase the rollout of public transport electric vehicles (EVs) in Ecuador.
The first operation of the credit line will promote financing of private investment in EVs and encourage the replacement of internal combustion vehicles. In addition, the operation has a gender inclusive orientation aimed to benefit women entrepreneurs in the taxi sector.
This first operation will also help provide scrappage certificates or bonds to those who in addition to purchasing an EV, agree to withdraw their internal combustion cars from circulation.
With these actions, the programme takes an integral approach to the promotion of EVs, according to an IDB statement.
On the one hand, it tackles the issue of financing costs and terms by offering more affordable and longer term credit to reflect the longer amortisation period of EVs. On the other hand, it will foster the retrieval of more polluting vehicles from circulation, stimulating the renewal of Ecuador’s automobile fleet.
The project is expected to finance the purchase of approximately 80 buses and 370 taxis in the country, which will provide a clean public transportation service.
In addition, the programme has a component of approximately $1 million to help fund the technical, financial, and legal structuring of the projects in support of national and municipal government agencies and transport operators.
CO2 emissions in Ecuador have been steadily rising over the past decade with emissions from transport increasing by almost 80% in that period to account for 42% of the emissions in 2018. Buses are the main form of public transport in the cities and diesel the most commonly used fuel.
EVs have been found to have reduced operating costs compared with fossil fuel powered vehicles, but the challenge for purchasers is the initial capital expenditure, which can be up to four times higher.
The project document notes that the government of Ecuador is working on a regulatory environment to promote investment and use of EVs through technical norms and tax incentives, on which a National Plan for Electromobility will be developed and will also include differentiated electricity tariffs.
Under the Energy Efficiency law, all new vehicles destined for the public transport system should be electric starting in the year 2025.