Low Carbon Emission Bus Fleets: Case Study of Shenzhen, China

Introduction

In the recent years, climate change and increasing pollution levels in urban areas have brought our attention to the detrimental impact of the fossil fuel based transportation sector on the environment. In 2010, the transportation sector alone contributed to 14% of 2010 global greenhouse gas (GHG) emissions. 95% of the global transportation energy in 2010 came from fossil fuels that are highly polluting (EPA, 2018). Considerable reduction in the GHG emissions can be achieved and urban air quality improved by shifting to low-emission vehicles that run on clean fuel. Low emission vehicles use alternative fuels such as biodiesel, natural gas, hydrogen (fuel cells), ethanol, propane, compressed biogas, biomethane, electricity and so on. Electric vehicles are the cleanest amongst these, with zero tailpipe emissions during operations. Every zero-emission pure electric bus eliminates about 1,690 tons of CO2 over its lifespan of 12 years, which is similar to removing 27 cars off the road (US Department of Transportation, 2016). This article takes the case study of Shenzhen, China to understand the initiatives taken by their authorities to develop the largest electric bus fleet in the world.

Case Study of Shenzhen, China: World’s Largest Electric Bus Fleets

Located in the Pearl Delta region, the city of Shenzhen is a major financial, industrial and technological center in Guangdong Province, China. It has developed rapidly due to its special economic zone (SEZ) status and its proximity to Hong Kong. As of 2015, Shenzhen is home to about 11.6 million residents and covers an area of 1,991.64 square kilometres (Shenzhen Bureau of Statistics, 2016).

In Shenzhen, 0.5 percent of the city’s total vehicle fleet is diesel buses, but they accounted for 20 percent of the city’s transport emissions (Ying, 2017). Switching to electric vehicles was one of the solutions to improve air quality substantially in the industrial hub. The city of Shenzhen began introducing electric buses (e-buses) in 2009 and since then it has pushed for 100% electrification of its bus fleets. As of 2018, Shenzhen has electrified its entire fleet of 16,359 buses (Lu, Xue & Zhou, 2018).

Cost Management

Even with the current advancements in technology, the upfront cost of an e-bus is still higher than that of a diesel bus, and public transportation organizations had to find ways to deal with the massive investment deficit. The authorities in Shenzhen took initiatives at many levels to be able to implement 100% electrification of their buses. It was made possible through:

Subsidies

Capital investment in the form of national and local subsidies made it possible to electrify 16,359 buses in Shenzhen. For example, a 12-meter e-bus in Shenzhen received $150,000 in government subsidy covering more than half of the vehicle’s price (Shenzhen Municipal Development and Reform Commission, 2016). Apart from the e-buses, the government has also promoted clean energy vehicles by:

  • Providing financial subsidies for using charging facilities for other private electric vehicles
  • On the purchase of electric taxis and passenger cars within their city limits.

Cost of the Batteries

According to the bus operators, the high upfront cost of e-bus (2 to 4 times of a traditional diesel bus) is one of the major hindrances in adapting to this technology. (Shenzhen Urban Transport Planning & Design Institute, 2017). The batteries attribute a majority of the higher cost of e-buses. With growing technology and economies of scale, cost of the battery for electric vehicles have steadily declined over the years (Figure 1) (Bloomberg New Energy Finance, 2018). Figure 2 shows that for a longer route the Total Cost of Ownership (TCO) of e-buses is lower than that of diesel buses (Bloomberg New Energy Finance, 2018). TCO includes the upfront cost, operating and maintenance cost.

Figure 1: Lithium-ion battery’s price survey – volume weighted average (Source: Bloomberg New Energy Finance)

Figure 2: TCO comparison for e-buses and diesel buses with different annual distance travelled (Source: Bloomberg New Energy Finance)

Defining the Role of the Stakeholders

A change of battery is required once during the lifetime of the bus and costs almost half the price of the buses. Shenzhen bus operators worked out a procurement deal with the manufacturers to provide a lifetime warranty on vehicles and  batteries. Manufactures providing warranty for the vehicles and batteries reduced a significant part
of the maintenance cost for the bus operators (Lu, Xue & Zhou, 2018). This distributed the financial risks among the major stakeholders. Some of the major stakeholders include:

  • Central and local government
  • E-bus operators (Shenzhen Bus Group Ltd)
  • E-bus manufacturers (Build Your Dreams)
  • Power supplier and distributor (Shenzhen Power Supply Bureau Ltd)
  • Transmission system operator (China Southern Grid Corporation)
  • Charging infrastructure operator (Potevio Ltd)

Figure 3: Illustration of major players and their interactive role (Source: C40 Cities, 2016)

Some operators also leased the buses and charging facilities instead of buying them upfront. Outsourcing charging and maintenance facilities turned-up to be profitable. Through such initiatives and subsidies, Shenzhen was able to
adapt to electric buses within a span of 6 years (Shenzhen Urban Transport Planning & Design Institute, 2017).

Local Support

Shenzhen has a strong local technical and industrial support in the form of home-grown high-tech companies like Build Your Dreams (BYD). Over the last three years, through technological innovation and mass production, BYD has managed to bring down their battery costs by half. These have a longer lifetime, faster charging time and better safety features. BYD, central and city government officials have worked together to achieve Shenzhen’s sustainable urban development goals through corporate innovation and government policy (Chen & Ogan, 2016).

Optimising Operations

Charging and operations were optimized by procuring e-buses that can support a full day of operation (around 250kms) in a five-hour charge (Lu, Xue & Zhou, 2018). Apart from this, bus routes furnish sufficient battery charging infrastructure to ensure undisrupted service. Currently, the ratio of charging outlets to the number of e-buses in Shenzhen is 1:3 (Shenzhen Urban Transport Planning & Design Institute, 2017). E-buses are fully charged overnight and supplemental recharge is done during off-peak hours when the electricity prices are lower. To promote the use of electric vehicles within the city, these charging facilities are also available for private cars and taxis at a subsidized price.

Figure 4: Electric bus adoption in Shenzhen, China (Source: Shenzhen Urban Transport Planning & Design Institute Co., Ltd)

Benefits Achieved

The environmental benefits of 100% electrification of the city bus fleet have been highly positive. In the year 2015, Shenzhen saved standard fuel of 84,000 tons and reduced 150,000 tons of GHG emissions (C40, 2018). The estimate suggests that the average total mileage of one e-bus will be approximately 174.4 kms with reductions of (Ying, 2017):

  • 48.6 tons of nitrogen oxides
  • 62.1 tons of non-methane hydrocarbons
  • 1.2 tons of particulate matter

By implementing 100% e-buses fleet, the city saves 345,000 tons of fossil fuel per year. Apart from reducing air pollution, e-buses have other benefits (Ying, 2017):

  • They are more fuel-efficient
  • The cost of fuel is lower
  • The engine does not produce any noise

Take-aways

Major cities, like London, Amsterdam, France, etc. have started switching to electric buses in their own capacities. The case of Shenzhen however, is a lot of different since it is the first city which has managed to convert its entire fleet to electric buses. From this case study, major takeaway is that it is possible to convert traditional diesel bus fleets to e-buses by:

  • Encouraging electric vehicles through subsidies
  • Having strong technical assistance from local manufacturing industry (like electric vehicles and batteries)
  • Leasing bus and charging infrastructure
  • Getting buses and battery warranty from the manufacturers
  • Outsourcing maintenance and operation services

The city of Shenzhen is working to reduce pollution and improve air quality with the use of clean fuel in their transportation sector. From the current state, the city of Shenzhen has now turned its focus to electrify their taxis by 2020 (Sisson, 2018). However, this case study also shows that in the current scenario, only large cities that have the financial capacity to provide subsidies can attempt for electrification of their public buses.

Featured image source: Getty Images