Why is a bank interested in e-buses?

Interview with Ian Jennings from EBRD

The electrification of bus fleets combines the benefits of public transport and electric mobility in terms of reducing air and noise pollution as well as for cutting transport related CO2 emissions, particularly in urban areas. E-buses offer a reliable technology, a stable operating environment, a practical daily range and ready access to a variety of proven charging systems either in depots and/or on-street. They are thus a key to the decarbonization of transport systems.

The recently published policy paper Going electric. A pathway to zero-emission buses aims to support the development of schemes for the further development and funding of e-buses. Changing Transport talked to Ian Jennings, Senior Specialist for Urban Transport at the European Bank for Reconstruction and Development (EBRD) and one of the key authors of the policy paper.

Why is a bank like EBRD interested in e-buses?

The European Bank for Reconstruction and Development – EBRD has a long history of financing projects in the municipal and transport sectors across our countries of operation over the last 30 years, since the bank was created. And electric buses are of course a transformation in transport that we wish to be part of and support our clients in. The Bank has now committed to making all our projects Paris-aligned by the end of 2022, and we have also committed to making 50% of our investments in the green economy by 2025 to support the green transition. Electric technology fits into that portfolio. Moreover, with the EBRD Green Cities Programme we are supporting eligible cities in investing in their priorities across transport, solid waste, water and district energy and which also provides a platform for promoting the policy paper Going electric. A pathway to zero-emission buses.

So, we are very active in working with our cities in identifying the right kind of investments that they should be making, and electric technology is part of that bigger picture.

What is the role of EBRD in clearing the pathway for zero-emission buses?

We are a funding bank, so our main product is loans and investments. We also finance the private sector, we do equity, we do different types of loans but currently, our main products in e-buses are loans to the city or loans to the state (sovereign lending). However, we are a development bank, and we fully appreciate that making the right investments requires good preparation up-front. We thus support our clients in making sure projects are well-defined and prepared, including feasibility and due diligence studies – ensuring the right choice of fleets and charging systems and of related facilities to support good public transport operation. We also help our clients after the investment to provide capacity support and make sure these assets are well operated within a well-functioning and well-used public transport system. This assistance is provided with the support of many funding partners and donors, who provide their funds alongside EBRD investments.

E-buses are important for decarbonizing transport. With Moving Chile, GIZ is supporting the Ministry of Transport and Telecommunications in their effort to bringing e-buses to cities outside of Santiago (© Ministry of Transport and Telecommunications Chile)
The paper was developed collaboratively. That sounds like a complex process! Could you tell us more about it?

Indeed, we had already worked together with UITP and GIZ on a previous paper on bus reform, which was about how to improve public transport in cities which are loosely regulated with a lot of operators into a system where there is stronger regulation and higher potential for investment. So, this new policy paper is a continuity of our collaboration. We value this collaboration as we bring different and complementary skills towards a common goal. EBRD is a bank which provides investment funding to our clients, so we are at the delivery end of the urban transport sector. GIZ is very much about promoting good practice in sustainable mobility and supporting capacity development, with long established programmes with several cities. And UITP presents the voice of the market and the sector in urban transport, which is particularly important to support such a market transformation towards battery electric mobility.

At EBRD we mobilised some of our own funding under our Infrastructure Project Preparation Facility (IPPF) and hired a specialist transport consultant (Transport Investments Limited- TIL) – and I wish to acknowledge the great support and expertise from David Leeder and Alok Jain here – to support a market workshop at the Bank in 2019 and technical development of the policy paper. EBRD managed this work and brought in GIZ and UITP as partners to enrich the policy paper, make it more relevant and make sure that it was adapted to what the market is doing and what can be achieved. And importantly, to ensure the policy paper was reaching a wider audience.

Where do you personally see the value of such a collaborative approach?

I think it is about bringing the right skills to the table. I think it is about recognizing that making these kinds of changes – whether it is bus reform or electrification – requires a lot of consensus, and efforts in different areas. So, by putting together actors who are working on these transformations, I think we can be more effective in assessing where the market is, the needs and challenges of our cities, in developing solutions and in engaging with our clients. The hope is that we don’t just launch a paper, we launch an approach. So, as we think about doing more workshops with clients and other actors of the market, we can come together and use this as a partnership to enhance our communication with the sector.

Who is the audience of the paper?

We have targeted city authorities in this paper, those who are making decisions about how to go about engaging in electric transport and make the right investments, which make sense for their cities and their citizens. The paper describes that decision-making process, it lays out the possibilities to the market, what are the different components of making these decisions, what comprises the investment, where do the benefits come from. It paints a picture of how the city can engage in those decisions, and where relevant, build from existing systems. Many cities in the EBRD region did not lose their street charging infrastructure, such as tram and trolleybus networks, and we are keen to explore these as an asset in supporting new hybrid technologies such as battery trolleybus and charge in motion systems. And for the industry side, the paper provides some visibility on how cities will be defining their needs and developing solutions, with an overview of different market products and suchlike. Additionally, with our partner UITP, we are looking to translate the paper into other languages, possibly Spanish and Russian, to reach a bigger audience.

Did you use the policy paper Going electric – a pathway to zero emission buses in one of your projects so far? What is the feedback from your clients?

Yes, we are developing some electric bus projects in Serbia and in Jordan, for which the paper is supporting our due diligence work. It is probably a bit early to get feedback, but it provides a very useful reference for us in engaging discussion with them. Our hope would be that in a years’ time or so we could get cities together and use the paper as a reference to discuss what has been done, what has worked, what can be done better, how the market is developing and share feedback.

What would you tell a decision-maker who argues that e-buses are too expensive for them and that they can not compete with fuel-driven buses?

Firstly, we discussed with a lot of mayors and city officials on this position, so it is certainly not unique. There are a lot of different local contexts around the world, especially the cost of existing fuels, such as gas which is much cheaper in many countries in EBRD region compared to the European Union or UK, which results in a higher investment gap for electric buses, on a life-cycle cost and affordability basis. So, this is the reality and we know that one size does not fit all!

We work with a lot of clients and always look for the best solutions based on local conditions. Whilst we need to ensure the financial case for electric buses, my argument for them would be to get engaged with this technology, because this technology will develop, and it will provide more affordable transport in the future. But there will be a transition towards that. In some countries it will be longer, in some shorter. And in some countries there will be stronger market conditions to drive that transition. But I think now, every city needs to think about how they will engage in that transition process. In some places, it can be about introducing a small number of electric buses in the fleet, which may be more expensive in the short run, but which allow the city, its operators and its staff, to get familiar with the technology and see how it can be used efficiently. Then, when those buses do become cheaper, their uptake can be much quicker.

So, the message is to get familiar with the technology now to be ready for the future?

That’s exactly right!

Ian Jennings at the ITF Forum in 2019