Fast track to green: European city buses ahead of schedule

The transformation of the bus fleet is a clear indicator of the energy transition in Europe. The entire fleet has some 750,000 vehicles in total. With 535,000 for inter urban routes and 215,000 city buses, it is an essential part of the transportation sector. Most of this fleet runs on diesel, but in recent years, electric buses with noiseless engines that do not emit exhaust pipe emissions are taking over from their diesel predecessors. The change is especially visible within the alternative fuels fleet (see figure 1), where last year, electricity powered buses have increased by 11,000 vehicles, almost doubling in a year.

Nevertheless, when looking at the bigger picture and comparing the alternative fuel fleet to the total fleet, we see that there is still a long way ahead. Only 2% (18,000) of the total bus fleet is powered by battery electric vehicles (BEV), plug-in hybrid electric vehicles (PHEV) and hydrogen powered vehicles (H2). Low emission fuels such as liquified natural gas (LNG), compressed natural gas (CNG), and liquified petroleum gas (LPG) add an additional 3% (26,000) of alternative fuel vehicles to the total fleet.

An interesting development is the stagnation in the registration of CNG buses. The advantage of CNG over diesel was the reduction in toxic emissions (NOX and CO, among others) and small particles. Recently, this advantage has diluted for new buses, due to the upgrades in the emission control systems of diesel engines seen in Euro 6 standard vehicles and above. In addition, gas engines are less efficient than diesel engines in kilowatts hour equivalent. As a result, they do not improve energy efficiency in the bus fleet.

The most exciting development is occurring in the city bus category (215,000 buses in total). As previously forecasted, electric city buses (BEV in figure 2) overtook diesel in new vehicle registrations in the EU, reaching a 41% share of all new city buses in 2023. This is a remarkable achievement, considering that only five years ago, BEV barely accounted for 10% of new registrations.

The rapid growth of BEV sales seen in recent years has a twofold explanation. On one side, the climate goals of many European cities, as explained in our previous article. On the other side, investments in battery technologies and economies of scale have increased the volume performance of batteries and lowered the price of the technology. These market developments have positively influenced the trend of BEV bus registrations. The market trend is so positive that achieving zero diesel city bus sales by 2027 is likely, and it may not require changes in diesel sales targets, as Transport & Environment had previously thought necessary.

As previously explained, the market for city buses is shaped by political targets adopted by the cities who often tender the corresponding mobility services. However, fleet operators are not immune to city budget constraints, so initiatives at EU level are also instrumental in facing the initially higher CAPEX requirements of electric buses, as the technology further improves. This can be seen in Madrid, where the NextGenerationEU project will fund EUR 41.2m out of the 81m necessary for the acquisition of 150 electric city buses. Beyond such programs, other EU institutions such as the European Investment Bank (EIB) are also key financers of the transition. For example, in 2019, the EIB signed a 115m loan to the public transport provider De Rotterdamse Electrische Tram (RET) in Rotterdam to electrify its fleet.

The electric city bus adoption has accelerated in the last year. 2023 saw an increase of 2000 registered vehicles compared to 2022, a 54% increase following the 21% increase registered in previous year (see figure 3). Last year, we estimated that at least an 18% sustained year-to-year growth rate was necessary to achieve a 100% zero emission (electric and hydrogen) city bus registration market by 2030. Currently, the market is growing at more than twice that 18% target of required growth. If the current 54% growth rate is sustained, in time this would mean that we could see 100% zero emission sales in the market for city buses as soon as 2025.

However, it may be too hopeful to expect sustaining a 54% year-to-year growth rate in the long run. But even if we adopt a more modest growth rate of 40% (average of the last three years), then all bus registrations would be zero emissions in 2026, and the entire 215k European city bus fleet would be zero emissions by 2031.

Electric and hydrogen powered buses have achieved a side benefit in 2023 by saving 400 million liters of diesel (see figure 5). To put this into perspective, the average daily consumption of diesel for all road transport in the Netherlands is 14m liters. This means that the new electric bus fleet has saved the equivalent of 29 days of the total Dutch road diesel consumption last year. This is a significant step toward reducing our carbon footprint and transitioning to more sustainable solutions. Additionally, the diesel retail prices in the last two years have been particularly volatile. In the Netherlands, for example, we have seen an increase of 45% on price volatility, while EU-wide the increase is almost 30%. And though volatility is never appreciated by consumers, it is even worse when the trend has been toward higher prices (see figure 4).

If the price trend were to continue in the diesel market, monetary savings would be even bigger for the early adopters who could benefit from lower fuel costs (electricity). Looking forward, if the total 215,000 EU city bus fleet were to become electric, savings would reach 5.6bn of liters of diesel, equivalent to a year of road diesel consumption in the Netherlands.

The electrification of public transport in Europe is speeding up, with electric city buses overtaking diesel in new vehicle registrations and becoming the most popular option in 2023. The ambitious climate goals of many European cities, as well as the support from European initiatives and institutions, and technological improvements, are driving this remarkable growth. The adoption of electric buses is not only helping to reduce emissions and achieve decarbonization goals but is also bringing significant fuel savings. If the current trend continues, the entire urban city bus fleet (215,000 vehicles) could be fully decarbonized by 2031. Even accounting for a decrease in registrations growth, European city buses are on track to surpass the goal of achieving zero diesel bus registrations by 2030.