The convergence of energy and mobility through battery electric vehicles can unlock new opportunities for emission reductions. Such vehicles replace fossil fuels with electricity and at the same time create the potential to add storage capacity to the electricity grid. Moreover, vehicles with swappable batteries also have the ability to contribute to greater distributed renewable energy (DRE) access for areas away from the grid. This ultimately contributes to a more flexible and resilient electricity grid that is able to buffer electricity from renewable energy sources while enabling a greater amount of DRE to be generated and used.
Yet transportation electrification projects face a number of barriers when it comes to accessing carbon finance, including relatively low emission reductions per vehicle, high marginal investments costs, unpredictable technology uptake by users, and complicated monitoring, reporting and verification (MRV) procedures when dealing with numerous distributed assets like vehicles, charging stations, and batteries.
In the midst of these challenges, electric two- and three-wheeled vehicles show promise within emerging economies, although uptake remains slow, in part due to limited carbon finance. Potential solutions to existing challenges include a digital approach to MRV that can aggregate small-scale carbon transport projects at a low cost, as well as engaging carbon markets under Article 6.2 of the Paris Agreement.
This report, supported by the Shell Foundation and together with Ampersand and the International Growth Center, explores the potential of carbon market mechanisms for electric two-wheelers through a case study example in Rwanda.