Latin American and Caribbean (LAC) nations are facing serious climate and health impacts from diesel trucks and have economies that are strongly dependent on freight transport. A new analysis pinpoints key actions and interventions the finance sector and these national governments must take now to accelerate zero-emission freight-transport adoption.
Expanding Access to Financing for Zero-Emission Trucks in Latin America and the Caribbean finds that rapid growth of zero-emission trucks (ZETs) is needed in the region in order to maintain and grow the road freight economy while mitigating the dangerous impacts of diesel truck emissions on communities. Representing up to four percent of LAC countries’ gross domestic product, freight transportation helps drive economic growth in the region. At the same time, freight trucks account for close to 27 percent of on-road greenhouse gas emissions, more than 60 percent of health harming nitrogen oxides emissions, and over half of particulate matter emissions.
In order to decouple economic growth from diesel pollution, this analysis shows how international development finance institutions (DFIs) can accelerate ZET adoption by unlocking affordable finance through key actions to increase concessional funding for ZETs and charging infrastructure, accelerate large fleet electrification, ensure new investments in highways and grid infrastructure are future-proofed and provide support for small owner-operators.
“Investment in zero-emission trucks in the region is still nascent. To put this into perspective, the funding mobilized for this segment by DFIs over the past five years was only 0.001 percent of what Inter-American Development Bank (IADB) alone mobilized for highways. The technology is ready, fleets want it, and DFIs can accelerate this market as they have already done with electric buses,” said Ricardo Garcia Coyne, CALSTART Program Manager, who co-authored the analysis with Grupo Emobilitas.
The analysis also finds that national governments have a key role to play and can facilitate access to affordable finance. Governments can do so by reducing market uncertainties through regulations and other key levers. They can also include zero-emission trucks in country strategy negotiations with development banks and other global facilities. And lastly, they can professionalize the freight sector.
“Many countries in Latin America and the Caribbean are all too familiar with, and all too vulnerable to, the impacts of climate change. Despite not having contributed to the global emissions to the degree countries in the Global North have, many are now leading on solutions, like Chile, for example, with the introduction of fuel efficiency standards. They want to secure the climate, clean air, and economic benefits we all know these technologies can deliver,” said Stephanie Kodish, Senior Director for CALSTART and head of its Global Commercial Vehicle Drive to Zero program and campaign (Drive to Zero) program.
In the LAC region, six countries are already demonstrating their commitment to accelerating their zero-emission transport future. Aruba, Chile, Curaçao, Dominican Republic, Sint Maarten, and Uruguay are signatories to the Global Memorandum of Understanding on Zero-Emission Medium- and Heavy-Duty Vehicles (Global MOU), which calls for 100 percent new zero-emission medium- and heavy-duty vehicle sales by 2040, with an interim target of 30 percent by 2030. Through this global initiative co-led by the government of the Netherlands and CALSTART/Drive to Zero, these countries and others from around the world are working collaboratively to reach this ambitious goal.
“Many private sector innovators in Latin America are poised to capture the economic, jobs, and operational benefits that zero-emission trucks bring. With the right financial tools and policy shifts, companies can grow their global leadership as well as their economic, climate, and health benefits by adopting zero-emission trucks,” said Gustavo Jimenez, Executive Director of Grupo Emobilitas and co-author of the report.
In Mexico, for example, Grupo Modelo (Anheuser-Busch InBev), in partnership with Element Fleet Management and Global MOU endorser Megaflux, deployed the first fleet of heavy-duty electric trucks in the country in 2021. One year later, Grupo Bimbo announced the acquisition of 1,001 additional electric delivery vehicles, becoming the company with the largest number of electric vehicles in Latin America (over 2,300 by 2023). These are two examples, among many, of fleet managers showing a strong commitment to reduce their carbon footprint. Increasing access to finance will not only accelerate the speed of the transition, but also ensure that emerging economies and small fleets are part of the solution.