Is unsubsidised energy transition possible? Feasibility of replacing diesel buses with electric ones

Abstract

This study assesses the economic viability of replacing the existing diesel vehicles with electric ones in the public transport sector of mid-sized European cities. It analyses the win-win situation that would result from a public-private financing of such vehicles. The proposed methodology is designed to revisit and improve public sector decision-making and its tools. The procedure entails an analysis of the acquisition and operating costs of electric buses, accounting separately for internal costs and externalities, applying different discount rates for the concessionaire and for public funds. The data used for this study comes from literature review and open-source data for Zaragoza, a medium size city in Northeast Spain. The results obtained show that investment in electric buses, by itself, is not profitable if approached only from the private sector and therefore requires public subsidy. The study, replicable in other locations, reveals the importance of this type of analysis during the decision-making process, considering public funds for sustainable urban mobility development as one solution to address energy transition.