Support the shift towards low-carbon electric mobility in Ecuador Accelerate the introduction of low-carbon electric mobility and reduce fossil fuel consumption, greenhouse gas emissions and air pollution in the transport sector of Ecuador Note: Disbursement data provided is cumulative and covers disbursement made by the project Agency. The direct project beneficiaries include participants involved in the demonstrations and the trainees and future trainers attending the capacity building activities of the GEF-7 project and the global programme. On a broader sense, this project has been designed to explicitly include an assessment of the benefits and costs resulting from the transition to e-mobility. Its benefits can be summarized in the following three main categories:    Environmental benefits    GHG emissions  According to the Third National Communication for Climate Change of Ecuador (2017), energy stands out as the largest emitting sector in the country, with close to half of Ecuador’s emissions (46%). In turn, emissions in the energy sector are largely dominated by the transport sub-sector, accountable for 45% of the sector’s contribution. The energy source for the fleet is: 86.30% gasoline, 13.22% diesel, 0.45% hybrid, 0.02% electric and 0.01% LPG[1], being the higher consumption of gasoline due to individual transport (automobile, pick up, SUV and motorcycle) and of diesel due to low and heavy-duty transport.     In Ecuador, electricity generation is largely dominated by renewable energies, with a 76.3% share from hydroelectric, 21.9% thermal and a 1.8% share from other renewables (biomass, wind, biogas and solar), and an average grid emission factor of 0.4509 kg/kWh, relatively lower than the global average. A large share of renewables is also expected for the mid-term future: according to Ecuador’s grid capacity expansion plan (the Electricity Master Plan), around 6 GW of new capacity will be introduced between 2021 and 2027, 81% of which will come from hydro power plants and other renewable sources.[2] This represents a great opportunity for the introduction of electric mobility, which will be largely powered by a clean grid. Thus, shifting from a fossil fuel-based mobility to electric mobility has been identified as one of the prominent strategies to achieve the reduction of GHG required to meet the country’s Nationally Determined Contribution (NDC).[3]  Air quality  As in most countries in Latin America, in Ecuador problems related to outdoor air pollution exist mostly in cities. Quito for example is a city close to the zero parallel, located at an altitude of 2830 meters above sea level. Due to its high location, the city has less oxygen in the air, resulting in less efficient combustion. In addition, it is surrounded by volcanic mountains that prevent optimal wind circulation and high levels of sunlight favor the formation of ozone at ground level. The main source of pollution in Quito is vehicular traffic and combustion. Buses and other diesel vehicles, often old and maintenance-free, are the main contributors to air pollution, as the use of low-quality diesel emits heavy metals; car fleet age and fuel quality issues are discussed in further detail in the baseline section. In Quito, between 2008 and 2018, the average level of PM2.5 in 24 hours exceeded the threshold recommended by the World Health Organization (WHO); the average annual level of PM2.5 exceeded both national and WHO standards. Similar results are reported in other cities in the country. [4]   Through the introduction and expansion of electric vehicles, the project will help to replace ICEs in the country in the medium to long term, reducing air pollution from road traffic-related emissions and thus improving air quality for the citizens of the country. Moreover, the project will also provide incentives to reduce the age of the ICE fleet, improve their emission standards and the type of fuel that these vehicles use: all of which will further contribute to an improvement in air quality.    Waste  Finally, by focusing on safe management and disposal of vehicles at the end of their lifetime, the project also tackles long-present environmental issues, developing policies and regulations to mitigate environmental costs of the transition to e-mobility. However, by providing a direct focus on solid waste management of vehicles (both electric and conventional), the project aims to have a net positive effect on the environment through the reduction of derelict dumped vehicles.       Economic benefits  As discussed in the baseline section -and as a result of insufficient domestic refining capacity to meet local demand- Ecuador is an importer of petroleum products, despite its production and exports of crude oil and petroleum liquids. In general, Ecuador exports heavy refined products, such as fuel oil, and imports lighter products, including gasoline, diesel, and liquefied petroleum gas (LPG). In 2020, national oil company and refinery Petroecuador imported 50.3 million barrels of derivatives (= USD 2,630 million) and exported 14.8 million barrels (=USD 485 million), resulting in a net deficit of USD 2,145 million[5]. The transition to EVs will serve to reduce this deficit, contributing to the overall competitiveness of the Ecuadorean economy. From a fiscal point of view, the introduction of EVs will generate important savings as the net deficit is not translated entirely due to the presence of subsidies. At the time of preparing this proposal, extra and ecopaís gasolines (91% of the gasoline market) receive 11% and 18% of subsidies, respectively; whereas diesel has a subsidy as high as 39%. Hence, the transition to EVs can generate an important fiscal benefit to the country.    From the perspective of private and public fleet owners, the introduction of EV technology has important operational savings potential. Despite the high rate of subsidies for diesel and gasoline in Ecuador, a comparative analysis for the present operation estimates that an average electric bus could save between 65-77% in O&amp;M costs compared to ICE vehicles. [6]      Social benefits  Through its “just transition” approach (output 3.5), the project will explicitly reflect on the allocation of benefits and costs from a social point of view.     Social benefits will result from the environmental and economic benefits discussed above. According to the US Environmental Protection Agency (EPA), fine particle pollution such as that found in vehicle tailpipe emissions causes early death (both short-term and long-term exposure), cardiovascular harm (e.g. heart attacks, strokes, heart disease, congestive heart failure), is likely to cause respiratory harm (e.g. worsened asthma, worsened Chronic Obstructive Pulmonary Disease (COPD), inflammation), may cause cancer and reproductive and developmental harm.[7] Improvements in air quality have the co-benefit of improving citizens' health and lowering associated health care costs and potential death rates, which has become even more relevant due to the COVID-19 pandemic. According to a recent study, the death toll attributed to air pollution is rapidly growing, making it now the world’s largest single environmental health risk (killing more people every year than malaria and AIDS).[8] In 2017, the number of deaths attributable to ambient air pollution in Ecuador was estimated at 3,330, up from 2,100 deaths in the year 2000.[9]    Similarly, the reduction of fuel imports can also have an impact in terms of energy security, replacing foreign fossil fuels by locally available renewable sources, which reduces vulnerabilities in supply and avoids political instability. Moreover, by reducing fossil fuel expenditures, the transition to e-mobility will result in more money staying local and boosting the Ecuadorean economy, funding jobs and increasing national tax revenue / reducing subsidies.           [1] INEC. Anuario de Estadística de Transporte (2019)      [2] Ministerio de Energía y Recursos Naturales No Renovables. Plan maestro de electricidad. (2019)      [3] Ministerio de Energía y Recursos Naturales No Renovables. Balance energético nacional 2019 (2020)      [4] UNICEF Ecuador, El aire que respiramos: los efectos de la contaminación del aire y del cambio climático en la salud de la niñez en el Ecuador (2020).      [5] EP Petroecuador, Informe estadístico enero – diciembre de 2020 (2021)      [6] Bastidas Auquilla, B. W., Estudio de estrategias para la inserción de vehículos eléctricos tipo taxi en la ciudad de Quito (2019). Master thesis, available here.      [7] U.S. Environmental Protection Agency, Integrated Science Assessment for Particulate Matter (2009) EPA 600/R- 08/139F.       [8] Piqueras, P.; Vizenor, A. The rapidly growing death toll attributed to air pollution: A global responsibility (2016). Available here.       [9] Statista. Number of deaths attributable to ambient air pollution in Ecuador between 2000 and 2017 (2022). Available here.