Pay As You Save for Clean Transport LAB INSTRUMENT ANALYSIS

The report proposes the PAYS for Clean Transport instrument to address the high upfront costs of electric buses, which can be up to 40% higher than diesel alternatives. Under this model, utilities invest in batteries and charging infrastructure and recover costs through a fixed charge on the bus service provider's (BSP) electric bill. This approach shifts capital expenditure from the BSP's balance sheet to a monthly operating expense, reducing the need for grants and leveraging private finance. Modeling for a 100-bus fleet in Santiago, Chile, indicates that PAYS can make electric buses cheaper than diesel over their lifecycle and leverage over 70 dollars of private investment for every grant dollar provided.

• Electric buses face a significant upfront cost barrier, costing up to 40% more than diesel competitors, primarily due to batteries and charging infrastructure.
• The PAYS instrument allows utilities to invest in batteries and charging stations, recovering costs via a charge on the bus service provider's electric bill that is lower than the estimated operational savings compared to diesel.
• PAYS reduces the financial burden on bus service providers (BSPs) by moving upfront capital expenditures for infrastructure from balance sheet debt to a lower monthly operating expense with no additional liability.
• In a modeled 100-bus transaction in Santiago, Chile, electric buses using PAYS are approximately US$ 104,000 cheaper than diesel buses over their lifecycle.
• The PAYS mechanism significantly increases the leverage of grant funding; in the Santiago case, every grant dollar leverages more than 70 dollars of private investment, reducing the total grant need by 97% compared to non-PAYS programs.
• Widespread adoption of electric buses globally (excluding the US and Western Europe) could involve 127,000 units annually, potentially abating 57 million tons of CO2, 12,900 tons of PM 2.5, and 2.2 million tons of nitrogen oxides.
• Utilities benefit from PAYS through increased electricity sales; for a 100-bus fleet in Santiago, this is estimated to generate approximately US$ 25.6 million in additional revenue over the buses' useful life.

APA

Climate Policy Initiative (2018). Pay As You Save for Clean Transport LAB INSTRUMENT ANALYSIS. https://www.climatepolicyinitiative.org/wp-content/uploads/2018/10/PAYS-for-Clean-Transport_Instrument-Analysis.pdf

Chicago

Climate Policy Initiative. Pay As You Save for Clean Transport LAB INSTRUMENT ANALYSIS. 2018. https://www.climatepolicyinitiative.org/wp-content/uploads/2018/10/PAYS-for-Clean-Transport_Instrument-Analysis.pdf.

Wikipedia

{{cite report |author=Climate Policy Initiative |title=Pay As You Save for Clean Transport LAB INSTRUMENT ANALYSIS |date=September 2018 |url=https://www.climatepolicyinitiative.org/wp-content/uploads/2018/10/PAYS-for-Clean-Transport_Instrument-Analysis.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{climatepolicyinitiative2018pay, author = {{Climate Policy Initiative}}, title = {{Pay As You Save for Clean Transport LAB INSTRUMENT ANALYSIS}}, institution = {Climate Policy Initiative}, year = {2018}, month = sep, url = {https://www.climatepolicyinitiative.org/wp-content/uploads/2018/10/PAYS-for-Clean-Transport_Instrument-Analysis.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }