How Santiago became one of the first cities to electrify public transport at scale

In 2017, a public transport electrification project was presented to the Green Climate Fund: the goal was to electrify 25 per cent of Santiago, Chile’s public bus fleet by 2025. “They didn’t believe it was feasible,” says Sebastian Galarza, Executive Director at Centro de Movilidad Sostenible (Centre for Sustainable Mobility), a non-profit based in Santiago. That year, the first pair of electric buses arrived in the city. 

Fast forward to 2023, 30 per cent of Santiago’s buses are electric – a fleet of almost 7,000 buses – and in August 2023, ten new double-decker electric buses entered operation. The Chilean government has since moved up its 100 per cent electrification goal from 2040 to 2035; one hundred per cent of most vehicle sales would be zero-emission, including public buses. 

GovInsider speaks to key project leaders, including Chile’s former Minister of the Environment Marcelo Mena Carrasco on how Santiago came to possess the largest electric bus fleet in the world, outside of the People’s Republic of China. 

An equalising force 

Why invest in electric buses? In many countries in Latin America, public transportation systems are used primarily by the lower-income trenches in the country, while electric cars remain financially inaccessible to most, Galarza tells GovInsider.

Galarza and team were the project partner for the Zero Emission Bus Rapid-deployment Accelerator (ZEBRA) Partnership launched in 2019 by C40, a global network of nearly 100 mayors in cities across the globe. 

“Using public transportation as the main point of entry for electric vehicles hence allows the common citizen to be able to take advantage of the benefits that electric mobility has to offer,” he says. 

According to Mena, who set in motion many of Chile’s environmental commitments during his term as Minister of the Environment, one of the key reasons for the city’s success is integrating air quality and climate policies. Santiago’s air pollution control programme consisted of a combination of measures – including the replacement of firewood-based heaters – which led to a 70 per cent reduction in “bad air days” from 2013, Mena tells GovInsider. 

In the past, air pollution caused at least 4,000 premature deaths a year, primarily from the high levels of fine particulate matter (PM) from firewood burning for heating and cooking, as well as vehicular emissions. This cost Chile’s health sector at least $670 million, and in 2015, forced 1,300 businesses to close and 40 per cent of cars to be taken out of operation due to an environmental emergency. 

Today, there are about 500,000 fewer emergency room visits for respiratory diseases, Mena tells GovInsider. Premature deaths also decreased to 3,700 at the last estimation in 2017. 

While diesel buses probably did not contribute to a large percentage of particulate matter that plagues Santiago, Mena says that it does make a difference in citizen’s lived experiences. 

“Where people live, function and move, passengers are much more directly exposed to PM during their trips by public transport when they are waiting at bus stops or riding behind another bus, so this improves exposure for civilians drastically,” he says. 

As opposed to countries that produce technology in-house, Chile is a net importer of technology – which means it has to strategise differently when it comes to promoting electromobility, says Mena. 

“When China or the US subsidises an electric car, they are also subsidising their internal industry. But when you subsidise an electric car in Chile, you are subsidising a higher-end vehicle, which can be seen as only supporting high-income people,” Mena tells GovInsider. 

“A $10,000 subsidy, for example, is much better spent changing out ten very dirty wood burning stoves – each one as polluting as 2,000 vehicles – than one electric car. In the same way, it also made much more sense to work in the public transportation system,” he adds. 

Starting stringent 

Another key factor for success that Chile’s Ministry of Transport took was to first implement the most stringent emission standards that were available at the time for incoming vehicles, according to Galarza. 

This began in 1991 when an initial ban on non-catalytic converter cars resulted in the average age of a vehicle in Santiago to be much lower than in the rest of Chile, Mena tells Govinsider. Subsequently in 2018, this policy was again renewed such that cars that were not meeting the Euro V standards were taken out of operation.  

This was accompanied by an emissions tax for the NOx and CO2 emissions, meaning that diesel vehicles were penalised with higher taxes. “This led to a natural acceleration of lower-emission standards for new vehicles – importers were selling Euro VI cars instead of Euro V cars so as to pay less emissions taxes,” Mena tells GovInsider. 

As for public buses, Mena and team fought hard to have Euro VI bus standards. The key difference between Euro VI and Euro V emission standards is that Euro VI mandates PM filters – this gives rise to a 90 per cent reduction in PM emissions when a Euro VI bus is in use.

When the push for electric buses came in 2017, the investment gap from Euro VI to electric was much smaller than it would have been, says Galarza. 

“Today, what I’ve heard is that the gap between electric and Euro VI buses is now around $50,000 instead of $100,000. That means that the payback is going to be much smaller than before. Within a year, you could probably get a return on investment on an electric bus versus a diesel one – and that’s why it is a replicable model [for other countries to emulate],” says Mena.

Government as the market guarantor and regulator 

According to Thomas Maltese, Project Manager for the ZEBRA partnership at C40, a final key success factor for Santiago’s electrification efforts was an innovation that came from the Ministry of Transport. 

B2B interactions were only made possible when the national government stepped in. When a new business model was introduced where third parties were allowed to own and operate the buses, investors had no guarantee that they would be paid back if the operator ceased to exist. 

“That’s where the Ministry of Transport provided a backup guarantee that it would cover the bill if the operator should stop paying its dues,” says Maltese. 

A similar business model was implemented in Bogota, Columbia, where a municipal guarantee helped attract investors that would have the financial muscle to invest in hundreds of thousands of electric buses, Maltese adds. Sao Paolo, Brazil, may soon also do the same. 

Not all cities can exercise this option. In places like Mexico City, the Bus Rapid Transit system has a trust fund that plays the role of guarantor to the lender. “It’s very situational, but we acknowledge that there is an overarching lack of guarantees in the region, and it’s something that we’re looking into,” says Maltese.  

Keeping markets open was also critical to having electric buses be imported at affordable prices, says Mena. “Chile has free trade agreements with China, the EU, and the US. Protectionism is not a good way to decarbonise. If it’s cheaper to get an electric bus from China, that’s what we should be doing,” he says. 

Other countries or cities that want to prioritise local manufacturing might see higher prices, which causes the illusion that clean technology is more expensive than it actually is, Mena adds. 

While Santiago is definitely on track to reach its 2035 goal, outside of Santiago is where efforts are focused now. Other cities and countries may not enjoy as formalised a public transport system, which makes it more difficult for governing bodies or investors to inject capital or make changes due to the many actors involved, says Galarza. 

In August 2023, the first 40 electric buses arrived in Antofagasta, a city in the north of Chile. It is one of the first large fleets of electric buses that have entered Chile outside of Santiago. 

“We’re starting to see progress, but we need to drive the speed of this transformation in order to be able to make our [2035] commitments,” he says.

Also read: Charging ahead: The case for electrifying commercial fleets to advance green mobility